Is The Global Stock Rally Hitting A Wall?

Tyler Durden's picture

Via Dana Lyons' Tumblr,

A key global equity index is testing potentially major resistance.

Unlike in recent years when the U.S. market dominated, stocks around the globe have been on fire this year. Just yesterday, we mentioned the latest great looking breakout underway in the South African stock market. Of course, with all of these individual countries exhibiting strength this year, it stands to reason that the broader indices would also be performing well. One such index is The Global Dow Index (GDOW).

The Global Dow is an equally-weighted index of 150 of the largest stocks in the world and it is one of our favorite barometers of the state of the worldwide equity market. Coming into 2017, we mentioned that the GDOW was facing significant resistance in the form of a 10-year Down trendline stemming from its 2007 all-time high of 2878.

After holding for about a month, the GDOW was able to surmount the trendline (near the 2590 level at the time) by late January. That opened the upside in the GDOW to that 2007 all-time high of 2878. Of course, that meant a further 11% rally in the index to get there. Well, roughly 7 months later, the GDOW has arrived.

The red hot index closed on Monday at the 2879 level, equaling its 2007 all-time high.

So, does this mean the global equity rally is doomed? Not necessarily. However, one reason why we like using the Global Dow as a barometer of the global equity market is because it conforms well to technical charting analysis. And certainly classical charting analysis would suggest that 10-year old all-time highs should at least pose as temporary resistance following a decade-long round trip. But how temporary, and how much downside risk may there be prior to another potential breakout?

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GUS100CORRINA's picture

Is The Global Stock Rally Hitting A Wall?

My response: YES!!! Everyone is ALL IN which includes using DEBT to buy stocks. 

Gods's picture

I can not tell you how many people are barrowing money to throw in the markets. Mostly cash strapped millennials

StackShinyStuff's picture

Blah blah blah BTFD blah blah blah

SixIsNinE's picture

it hit a wall long ago... - the Global Lie

research Admiral Byrds' voyages beyond the ice wall of antarctica

gmak's picture

The only wall is reduction in the growth of CB-supplied "liquidity".  No printing, no market-new-highs.  Simple, really.  At the margin, it takes more an more fiat to move the market up the same percentage - as the market hits new highs over and over.  If CBs aren't 'printing' money, there is no fiat growth and therefore there is no growth in fiat allocated to financial assets. Therefore, the market can't rise.

south40_dreams's picture

It's all phony fed-bucks anyway

BandGap's picture

Ever go on a binge during the summer in college? After 2-3 days you start wondering what normal feels like. Then your body tells you that, well, nutrition is important.

Sort of like that.

CorporateCongress's picture

Hence CB's will print foreverMOAR

Toshie's picture

No walls baby. Just keep going up and up. It's too late now :)

shizzledizzle's picture

No, no walls... Just don't look down.

lester1's picture

Rally is not over. Not with central banks and the Federal Reserve buying stocks and bonds. They need to prop up the assets of their wealthy elite masters.


The wealthy elites have the most to lose should this phony stock market plunge.

Snaffew's picture

the market has been in a disribution pattern for months now...the buyers are the fresh lemmings who have stepped in (retail) and they will soon realize why they had stayed out of the markets for so long.

order66's picture

As long as the 2460 area in ES_F is getting bought the fuck up (like it is right now), new all time high's are on deck. Over 2 million net long contracts from this area.

Snaffew's picture

or is today the day that the ppt steps back and watches as there finally is no buying of the dip?  We shall see soon enough.

yerfej's picture

The upside potential is small while the downside is,,, well unlimited at this point. You can't borrow your way to prosperity.

VIS MAIOR's picture

lol they also fake whole us stock ,  but they cant do it long time.. thats why they want war but far away from usa. they only play poker 1 from 100: it will "help usa economy" 

dead horse with crazy geriathric generals junta and crazy gold chicken/kokot 

as some one say usa and dollar  will not be for long "safe harbor" 

caesium's picture

Is The Global Stock Rally Hitting A Wall? Have the Mexicans paid for it yet?

Jtrillian's picture

What rally?  It's the central banks STUPID!  If the markets tank, it's becuase they are turning off the "stimulus" spigot.  It will be by design.

VWAndy's picture

 Aint fiat magic grand?