Developing attraction

We do track the Russian index, however – or, more accurately the Micex, which covers the same 50 stocks as the RTS but which is priced in roubles rather than dollars. It's weakness meant a reversal of its buy signal of May, which in itself was a reversal of an earlier sell signal in February.

That should tell you all you need to know about taking positions in the country’s markets. Cheap though Russia may eternally look, that is for a reason: trust in its companies or, indeed, its politicians is conspicuous by its absence, leaving its markets prone to wild swings in sentiment. This, therefore. is one Coppock sell signal I’d happily heed until there is a more long-lasting resolution of the conflict taking place in Ukraine, not to mention the long-standing worries over corporate governance, trite though they may seem in comparison to events which have seen 3,000 people so far lose their lives.

Ignoring Argentina - as, given the basket case economy that it is, we generally do – and the strongest performers over the month were Brazil, up a chunky 11.7 per cent, and India, which added another 6.2 per cent to take its 12-month gain up to an eye-watering 47.7 per cent. As Bearbull writes on page 18 this week, the prospect of Modi’s reforms have certainly done the trick, even if as much of the gains came in anticipation of his election in June as did once it was confirmed. Coppock somewhat let us down when it came to spotting this dramatic recovery – the cancelled sell/unofficial buy came only in March, since when the market has risen ‘only’ 22 per cent.

Don’t write off the system too hastily, though: the Coppock Buy on the iBovespa came much earlier, in March, at precisely the end of a five-month downtrend that had seen the index shed a fifth of its value, and would have captured nearly the entire trough-to-peak upside since, a very healthy 30 per cent gain. Oba Coppock!

However, the iBovespa's run did come to an abrupt halt since the month end, with no sign yet of a sell from Coppock. Just as political concern weighed on Turkey in August, so worries over the outcome of elections there have spooked the market - the hopes there are that President Dilma Rousseff, who has overseen the country's slide back into recession, will be defeated by more growth-friendly rival Marina Silva. Were I sitting on quickfire gains of that magnitude, I wouldn't await the outcome - or indeed a Coppock signal - to tell me to bank some of them, especially given the weakening economic backdrop there and sky high valuations of many of its constituent companies.

Coppock's recent record on emerging markets has looked pretty good in the main, though, so let's hope it can continue its recent Bric success with the new buy signal it gave for China's FTSE B35 Index in August, a reversal of the long-held sell signal given in December last year. China's main index has never looked particularly expensive - on a PE ratio of 11, only Russia and Turkey look cheaper. But China is dogged, to a lesser extent, by the same concerns as Russia, not to mention fears that its economic growth may be on the wane and its banks sitting on a mountain of bad loans - a situation that could worsen should its housing market suffer any sharp correction.

Meanwhile, news that Draghi is planning a form of QE in Europe - and about time too many will say - failed to come in time to reverse the swathe of sell signals still hanging across the continent's indices. Nor has a strong month that has seen UK and US indices hit record highs prompted any reversals there - Coppock does not pay attention to valuation but to trailing sentiment; given the former looks increasingly stretched the latter is worth paying attention to, if only to suggest that now is not yet time to buy back in.

Which all means that, according to Coppock, the balance of attractive investment opportunities has swung strongly back to emerging markets - a far cry from the doom and gloom that surrounded them as 2014 began. Given the sharp sell off many emerging markets suffered as nervous investors 'de-risked' in favour of 'safer' developed markets, which subsequently powered ahead, that makes sense. The world map of Coppock indicators above paints a startling picture of this shift.

*New signals for August