A Halting Development In The Global Equity Rally?

Tyler Durden's picture

Via Dana Lyons' Tumblr,

A key barometer of worldwide developed markets is bumping up against 9-year highs.

While the U.S. stock rally is getting a lot of (deserved) attention here in the States, a perhaps underrated theme of 2017 has been the impressive improvement on the part of international markets. I say perhaps underrated because we certainly have been trumpeting the exploits of markets around the globe this year. Much of the noise has been made in various emerging markets worldwide, as we have noted in a long series of positive posts. However, developed markets have also come on of late to join in the good times.

We’ve highlighted this emergence in posts on Germany, Japan and others recently. Efforts in those countries have contributed to the recent strong performance of a key barometer of developed stock markets around the globe. The MSCI-EAFE (EAFE) Index represents developed countries in Europe, Australasia and the Far East. After a rough 2016, the EAFE has been on a tear this year, tacking on nearly 19%. That’s good news and, perhaps, bad news for the index.

The good news is obviously that the index is in a strong, steady uptrend. The perhaps bad news is that the EAFE has been so strong of late that its rally has brought it to the area of its 2014 peak near the 2000 level. That area represents the high in the index for the past 9 years – and also an area of potential obstruction in the near-term.

So will this 2000 area put a halt to the rally? In our view, it would actually be a welcomed development. The EAFE is on a torrid, nearly unabated, rally over the past 11 months. It could use a digestion or consolidation period to rest and regather fuel for an attempted breakout above this area. Such a digestion would increase the odds of a sustainable breakout once it does occur. Should the EAFE plow right through this area without even a pause, it runs the risk of a “false breakout” that eventually fails.

The next obvious upside target above here would be the 2007 all-time high near 2400. Given the strength of the global equity rally, there is little reason to doubt that the index could attain that target in the intermediate to longer-term. A brief rest may do it some good before it embarks on that next journey, though.

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buzzsaw99's picture

central banks know what the exact correct price is and unless they've told you then you're just guessing.

Cash2Riches's picture

The globale elites want nothing more, than to end this system for the West. They are simply going to scalp as much as they can, before they try to pull out the rug, from under our feet.



abyssinian's picture

This will be your own dip for another 30 years. so BTFD now, don't let all these charts, memes Fud stop you from investing in this market.  I learned my lesson for the last 6 years, buy every dip and you will be just as rich as the central bankers. .

NickyGall's picture

As shown in this article, central bankers admit that there is a new global economic reality:




Because the Fed has adopted policies that have proven to be ineffective over the past two decades, the next recession will prove to be difficult to defeat.



fx's picture

which is why another recession will not be allowed to happen. They will do whatever it takes to prevent it. unlimited cash, negative rates, helicopter money, buying oil, stocks, gold, cryptos, dogshit, you name it... and of course fudging all economic statistics etc. etc. Of course, they cannot prevent a recession forever. But what about for another 10-15 years?

zagzigga's picture

I have similar thoughts. The next crash is not going to happen anytime soon. Despite shitty econo-political conditions, the markets March on like everything is fine. I think CBs will keep propping up markets until they see real impeovement in the economy. 

LawsofPhysics's picture

Don't overthink this asshat.  The Fed is lying in regard to inflation.  In fact, they are not even looking for it because they have changed the very definition of it...

"Full Faith and Credit"

SeuMadruga's picture


Fool's fate is credit !

dlfield's picture

As always, the crash will happen and nobody will know why.  Then, several days later, all the fake explanations will hit the press.

fbazzrea's picture

yeah, i laughed this morning in a MarketWatch article Mark Cambre explained why gold faces headwinds when the dollar weakens because every other time Rachel Koenig explains why gold faces headwinds with a stronger dollar. lol

dollar up or down, gold gets trashed by the financial MSM. 

Hyjinx's picture

Meh. BTFD bitches!

nsurf9's picture

The only reason the market can go down is because there is nothing of value left to efficiently steal from us and the buying power of the money we honestly earned yesterday!