Chart of the Week - Global Equity Advance
Here’s a weird technical indicator you might not have seen before…
and it’s telling us some very interesting things about the state of Global Equities (+some related themes & opportunities).
First, we are looking at the “Advance/Decline Lines“ for the three major groups within global equities, and n.b. they have been rebased to 100 = Jan 2018, and standardized to percentage change for comparability. Unlike your typical A/D line, which tracks the cumulative number of risers minus fallers (stock-by-stock), this one looks at country benchmarks… so it is tracking the weekly cumulative rises vs falls across the *countries* that comprise those groups.
The more countries that are seeing their stockmarket go up, the steeper the line will be on this chart (basically the definition of a bull market). The more countries that are seeing their stockmarket go down, the flatter the line will be — or even negatively sloped (which would be the definition of a bear market).
But to get to the point, following the tariff tantrum shakeout in April, all 3 lines have surged… this is the type of behavior you see at the beginning of cyclical upswings and new bull markets.
And by the way, it’s not the only sign of strength… as I’ve previously noted, Global ex-US equities (and in particular Europe) have undertaken a major breakout this year, emerging markets ex-China also broke out last year, and over 51% of the 70 countries we track are up at least 20% vs their 52-week low (and over 80% of countries are tracking above their 200-day moving average).
But it’s also a subtle sign and symptom of a change in leadership —with the global equity bull market starting to broaden out as global vs US rotation steps up.
So an interesting chart with interesting implications…
Key point: The A/D lines are showing a resurgent bull market in Global Equities.
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