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<\/p>\nEmerging markets and the S&P 500 are like partners in a three-legged race. As long as they’re both standing upright and moving forward, the race continues. But, when one partner falls, it’s just a matter of time before the other partner stumbles as well.<\/p>\n
Oh sure, the upright partner might be able to drag the fallen partner along the track for a little while. Eventually, though, they’re both going to hit the ground.<\/p>\n
And that fact should worry investors – because in the global stock market three-legged race, emerging markets have fallen down.<\/p>\n
Look at this chart of the iShares MSCI Emerging Markets Fund (EEM)…<\/p>\n
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Now look at the chart of the S&P 500…<\/p>\n
![\"\"](\"https:\/\/jc-stable.s3.amazonaws.com\/ee-assets\/channels\/articles\/mm\/201907\/20190731-MM-02.png\")
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The blue circles on the charts highlight the times over the past two years when the S&P 500 continued higher while the emerging markets stumbled. Each of the previous three occurrences was followed by a sharp decline in the S&P 500.<\/p>\n
In June of 2018, for example, the S&P fell 100 points in just three weeks. The 600-point correction in the S&P during the fourth quarter last year came on the heels of a decline in emerging market stocks. And, the 200-point drop in the S&P two months ago followed a downturn in emerging markets.<\/p>\n
We now have a similar setup.<\/p>\n
The S&P 500 has been rallying. The index broke to a new all-time high just last week. But, emerging markets are trading about 5% below the high they reached in April. And, EEM has been falling all through July, while the S&P has been rising.<\/p>\n
This sort of divergence has often been a good warning sign of an impending correction in the S&P 500. It’s just another reason, in a growing list<\/a> of reasons<\/a>, why investors should be a little cautious on the broad stock market right now.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n P.S.<\/strong> Before you go, one last reminder…<\/p>\n My colleague Jeff Brown just made a big announcement about his new trading system.<\/a> Like I said all last week, it’s unlike anything I’ve ever seen before. <\/p>\n I wanted to make sure you had the chance to watch Jeff’s Accelerated Profits Summit<\/em>… before it comes down at midnight tonight<\/strong>. You can still watch him reveal his new system – and learn how to access his first three trades – here. <\/a> <\/p>\n In today’s mailbag, a Jeff Clark Trader<\/em> subscriber comments on the service…<\/p>\n Prior to this publication, I had never speculated using options. Jeff has done a great job simplifying this strategy of trying to turn a dollar into three dollars with less risk. His explanations of how to look for the particular patterns which could result in double- or triple-digit gains is what I have taken away the most rather than simply the monthly recommendations.<\/p>\n![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
<\/p>\nReader Mailbag<\/strong><\/h2>\n
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