Liquidity Factor Investing

Green Shoots In Global Equities

One of my favorite analytical techniques for generating insights on global markets is studying market breadth, and those who know me know I like to take a bit of an alternative angle, and today’s chart is no exception.

Q4 hedge fund letters, conference, scoops etc

Global Equities

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What makes today’s chart so interesting is that (in contrast to most of the stuff out there right now) it presents a bullish take on global equities.  With investor sentiment still mostly on the bearish side, particularly on the fundamentals outlook, anything with a bullish slant should be greeted with particular interest.

The chart shows the count of 52-week new highs for the main equity benchmark across the 70 countries we monitor.  If you look closely you can see a slight tick up.

Global Equities

The chart comes from a recent report I wrote on the outlook for global equities.  As you might imagine I’m in the optimist’s camp.

Focusing-in on the chart, it’s a very familiar pattern we’re seeing here in this market breadth indicator.  I’ll give you a hint, the last few times we saw something like what we’re seeing now was in 2009, 2011, and 2016.

The complete disappearance and gradual reappearance of 52-week new highs has served as a reasonably reliable signal of a major market bottom.  So the punchline is this tick-up in the indicator may very well amount to “green shoots” for the outlook here as global equities teeter between bear market and bull market.

Though it’s early days in what is a relatively choppy indicator, it is certainly something to keep front of mind as we progress through this complex stage of the market cycle.

This article originally appeared as a submission at See It Market

Article by Top Down Charts


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