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Pro: Expect More Downside In Emerging Markets Debt

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Pro: Expect More Downside In Emerging Markets Debt

Sheldon McIntyre was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick. Tune in to the daily broadcast live Monday-Friday at 8 a.m. ET here.

The recent selloff seen across the globe has spared no asset class or region, prompting Sheldon McIntyre of 360° Virtual Advisor to warn of further downside in emerging markets debt.

McIntyre's Moves This Week

McIntyre was a guest on Wednesday's #PreMarket Prep and said that heading into Monday's trading session, he was short emerging market funds that consisted of the "main focus" of his short thesis. On Monday, he covered his short positions and moved to nearly a 100 percent cash position before returning to short emerging market funds on Tuesday.

"I still think there is some major downside to be captured in emerging market debt denominated in U.S. dollars," McIntyre said.

Related Link: 4 U.S. Stocks Set To Defy The China-Triggered Selloff

A Global Perspective

He continued that countries like China, Brazil and India aren't necessarily "emerging" economies, rather they should be classified as "emerged" markets. Commenting on China, he noted the country has had a tendency of "running up really fast and then fall as quickly," so it isn't a "surprise" of the recent market turmoil in the country and it is all part of the cyclical nature of the country.

S&P 500

McIntyre also commented on the S&P 500's trend, noting that one of his macro-thesis projections for the index included a test of the 200-week simple moving average, which correlates to a level of around 1,707. He added that this level "isn't much of a decline" from Tuesday's close and represents around a 20 percent decline from the best closing level for the index.

On the other hand, he pointed out that the average intra-year decline during a secular bull market is only 11.50 percent, which was "pretty much hit spot on" during Monday's trading session.

Image Credit: Public Domain

 

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