Over the past year, many markets around the world have seen a sort of “risk-off” trade. The strength in the Standard & Poor’s 500 Index has hidden the fact that many markets in the emerging world and in Europe have fallen 30 to 40 percent or more and are trading a multi-year lows in both price and valuation.

We have seen this spill over into other markets. The Commodity Channel Index (CCI) is down over 20 percent from its top in 2012.

What has happened if you look at markets from all over the world is money has come from so-called riskier markets and commodities-orientated economies into Germany, Britain and the United States, all of which are large liquid financial markets that have held up much better than the rest of the world.

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However, on a technical note, something has now happened. After 18 months of lower lows and lower highs, the CCI index finally broke above its 150-day moving average in a decisive way. This could be a sign of a sea of change.

In addition, we are seeing signs of firming and bottoming in Europe, with those markets showing strong signs of basing, and oil and gold are both off their lows.

I think if the European Central Bank does a full-on quantitative easing by month’s end, and if the Federal Reserve follows later in the year, we will see commodities and “risk-on” trades back in vogue.

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Further, if you look at the valuations of stock markets in the so-called PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) or in emerging markets or in precious metals or oil stocks, you will see that they are very cheap. Many are trading at single-digit price-to-earnings ratios, which are often found near major market lows and bottoms. Therefore, I expect these sectors are going to lead the next upleg.

I recommend investors begin to look at a combination of European, emerging-markets, energy and precious metals equities to profit from during the coming round of money printing and the inflation that should follow. I expect that these sectors going forward, after underperforming for years, will begin to outperform.

About the Author: David Skarica

David Skarica is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He also writes the Gold Stock Adviser. Discover more by Clicking Here Now.