Global Equity Rally On The Brink?

Via Dana Lyons' Tumblr,

An index representing equity markets from countries around the globe is testing a potentially critical line of support.

More than maybe any time in the past 2 years, we are seeing signs of dispersion in international equity markets. Some countries remain firmly in an uptrend, with some at or near all-time highs. At the same time, we are seeing equity markets in other countries that are getting slammed. This dynamic makes for interesting analysis in our daily charting trips around the globe. It is also makes for an interesting chart of the collective group of national stock markets, as represented by the MSCI All Country World Index, or ACWI.

We say that as the ACWI is presently testing the Up trendline (near the ~510 level) from its 2016 low which connects the lows from Brexit and the U.S. Presidential election as well as those from March-May of this year.

Will the trendline hold? Nobody knows, but we do not like the fact that the index has tested the trendline now 4 times in the past 3 months. The risk is that all of those touches have weakened the trendline and left it susceptible to breaking.

Should it break, the risk is probably about 6-7% in the near-term. And even if the ACWI does hold this ~510 level, the upside potential may be modest until the index can clear much of the post-January resistance, a task to which it has shown very little inclination thus far. All in all, we’d have to say that risk is probably presently a bit more elevated than global equity bulls would prefer.

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Comments

gdpetti Truther Fri, 06/29/2018 - 17:14 Permalink

Yes, though to be more exact, in the history books, this is called (in english) 'pulling the rug out'..... as everyone assumes the Fed will do what they usually do... they do... but that isn't really expected, is it? The Bank of Morgan did bailout the market... just long enough to setup their next game down.

In reply to by Truther

LawsofPhysics Fri, 06/29/2018 - 13:13 Permalink

On the brink of what, exactly? Please remember what all those equities are priced in!

now ask yourself, are there any real collateral requirements behind the creation of all that currency?

I don't think so motherfucker.

"Full Faith and credit"

same as it ever was!

vladiki Fri, 06/29/2018 - 14:46 Permalink

There are 38.724  fuck/fucker/fuckable/fucking/motherfucker/fucked ........   in the average string of ZH posts.  Wonder how long the fashion will last.

IDESofMARCH Fri, 06/29/2018 - 15:32 Permalink

FED could not survive without a printing press.

AT&t needs $80, Dis needs $55, Amazon needs $100, Tesla needs $9999$$999$$$999.

White House needs $$$$$LOTS and LOTS and LOTS.

Lots of overtime at the FEDs printing factory. 

Oh and don't forget the pallets, but there's tarrifs on wood, gotta make them out of plastic.

 

CouldBeWorse IDESofMARCH Fri, 06/29/2018 - 23:20 Permalink

Just a hairsplitting technicality...if by FED you mean the Federal Reserve, they don’t print anything.  Banks create the money in our system by loaning what you save and the Treasury prints the physical paper we use day to day to meet demand from new loans. Had the trillions on their balance sheet actually made into the economy we would have been the new Weimar Republic.  The Fed only controls interest rates and large bank reserves.  This is why despite growing a huge banking reserve, very little made it into the actual economy ( M2 growth).   It’s a convoluted system.

in keeping with ZH unwritten policy I need to throw at least one f-bomb, but fucking-ah, I refuse to do it. 😉

In reply to by IDESofMARCH

stiler Fri, 06/29/2018 - 18:24 Permalink

Hey, even Atlas had a limit to how long he could hold up the heavens (keep it from raining, through prayer) on all the strange bastardizations of creation. Then the FLood came. They will drown in dollars.