Oh yes, that Dubai thing…
China ($SSEC) looks like a retest of the July highs is setting up to fail. Other proxies for participating in China are not looking so hot – Hong Kong (EWH), Australia (EWA)and the ETF for China (FXI).
Austria (EWO) is below the 50-day and looks like it has just confirmed a fairly significant top. Austria’s Banking Industry is ridiculously highly leveraged in toxic Real Estate lending. It is considered the gateway to Eastern Europe and the chart looks terrible.
Also keep a close eye on Emerging Market Junk Bond Funds. Internals continue to deteriorate and many Leaders are starting to look toppy or are outright confirming that tops have been formed. I know that the markets in 2009 have been notorious for breaking down and then immediately going vertical, as if no damage had ever occurred, but at some point that game will end and the selling of the big boys will overwhelm the computers of Goldman Sachs, JP Morgan and The President’s Working Group on Capital Markets. You will not want to be in anything illiquid or risky when that occurs.
I am continuing to roll high-Beta into low-Beta and am buying fewer and fewer individual stocks. I want to participate if there is another leg up, but also want to be in the best position to play defense if the much-anticipated correction arrives.
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