U.S. stock market indexes rallied in January after a steep sell-off in late December:
Figure 1. The S&P 500 index partially recovered in January from the steep sell-off that started in October of 2018.
The major drivers for the weakness in equity markets, such as rising interest rates and a trade dispute between the U.S. and China, are still unresolved. Therefore, we think that volatility is likely to continue in Q1 2019.
In our view, the best investment opportunities right now are in emerging markets:
Figure 2. The chart of the Fidelity Emerging Markets Fund (FEMKX) shows a bullish “double bottom” price pattern.
We especially like the Southeast Asia region based on relative performance:
Figure 3. The Fidelity Southeast Asia Fund (FSEAX) shows improving relative performance, as measured by the ratio of FSEAX and the S&P 500 Index (bottom panel).