80% of the world is in a Bull Market.
Specifically, 80% of the 70 countries we track are up at least 20% off their 52-week low (with +20% being a common benchmark/trigger for “bull market“).
This is a very positive sign.
The below chart shows this peculiar breadth indicator over time (the red line), and what’s interesting is a few things…
First, this indicator has rarely been above 50% over the past couple decades (yet, it was steadily north of 50% during the 2000’s global equity bull market).
Second, when this indicator surges like this it is typically a very good sign — for instance, see: 2003, 2009, 2020 (the start of new global equity bull markets).
Third, by contrast the time to be concerned is when this indicator peaks and rolls over (no signs of that at the moment).
In essence, this is an unequivocally bullish chart: about as bullish as it gets.
And it lines up with the macro/fundamental developments I’ve been tracking e.g. as documented a couple of weeks ago: Global Growth Reacceleration + Bullish Outlook for EM + Bullish Commodities Outlook.
As I quipped the other day, “there’s always a bull market somewhere, and in this case it’s everywhere!“
Key point: There’s a global bull market in bull markets.
But there are some divergences…
The following two charts were featured in the Latest Edition of the Weekly ChartStorm, and I think they perfectly capture some major Stockmarket themes in play right now — both on the bullish side (but also on the risk-front).
SPXEW vs NDX: the equal-weighted S&P500 is pushing higher, and the Nasdaq 100 is stuck in consolidation mode (as tech is in a bit of a stalemate; awaiting cue on next steps). Basically, the bullish rotation theme remains in play [i.e. the rest of the market is finally having its day in the sun as tech takes a back seat].
Global Tech vs US Tech: similarly, the chart below shows how rest-of-world tech continues to push higher (new highs last week), while US tech pretty much looks to be in a downtrend at this point.
The divergence here and above still has a bullish/constructive hue to it in that you have the rest of the market + global looking good, doing well in absolute terms (for good reason) —and taking up the slack from softer tech performance.
Again, it looks like bullish rotation, yet I think it’s important to remain vigilant on tech as a larger breakdown there would test my optimistic bullish rotation interpretation…
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And another thing…
To illustrate that last point, Tech Sector CDS pricing has been trending higher and higher… while tech sector stocks have been drifting lower. This is enough to keep us on edge on Tech, especially as the downside risks are mounting.
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Thanks for your interest.
Sincerely,
Callum Thomas
Head of Research at Topdown Charts
+Founder & Editor of The Weekly ChartStorm
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