For years the most prominent feature of Mexico has been its exotic cuisine with all its varied flavors, colorful decoration, and variety of spices while investment options were never taken seriously. Longtime investors have viewed other Latin American economies like Brazil and Argentina with more interest discussing plans possibly sitting in a restaurant serving Mexican cuisine.

While Mexico doesn't quite enjoy the celebrity status of rival Brazil, there is no denying the fact that the country is undergoing something of an economic renaissance. With its last financial crisis more than 10 years behind it, Mexico is enjoying record foreign currency reserves and an investment-grade debt rating, thanks to much-improved fiscal discipline. It even boasts several companies listed on the New York Stock Exchange or NASDAQ and dozens of others that trade over the counter. Money managers are especially keen on stocks in the residential construction business as more and more Mexicans qualify for loans to build their own homes.

Below we have run a number of foreign ETFs through our trading range screen. Most ETFs represent the equity markets of individual countries, but various emerging market ETFs are included as well. Global equities have done exceptionally well in the month of July, and all but 3 of the 30 ETFs highlighted below are currently trading in overbought territory. The only three not currently overbought are Canada (EWC), Japan (EWJ), and Switzerland (EWL). Belgium (EWK), Austria (EWO), the UK (EWU), and South Africa (EZA) are the most overbought based on their historical trading patterns. Italy (EWI), Spain (EWP), Emerging Market Europe (GUR), Emerging Market Middle East/Africa (GAF), and Russia (RSX) aren't far behind. While stocks can become overbought and then stay overbought for some time, we feel that it's important to at least tighten up stops at these levels.

click to enlarge

The S&P 500 has made a nice move back above its 50-day moving average after playing ping pong with it over the past week or so. As shown in our trading range chart below, the index still has quite a bit of work to do if it wants to reclaim the losses seen since late April.

click to enlarge