Chart: WIG20 vs S&P500 futures 5 days, 2012-01-10, stooq.com
The Polish stock market index WIG20 has recently decoupled from the US market index S&P500 quite significantly.
This divergence has lasted for some time now:
Chart: WIG20 vs S&P500 futures 3 months, 2012-01-10, stooq.com
Something will have to correct... But which one?
Or is it just an opportunity for a convergence trade without trying to guess the direction?
Was the yesterday's funny WIG20 action a signal of the future developments?
Questions, questions and more questions... :)
Nevertheless, it's worth keeping in mind that even though Polish and US markets are highly correlated, correlation is not a stable measure. It's much safer to check the spread between the markets based on their cointegration.
Last but not least, S&P500 remains decoupled from the wider risk assets context model.