THE MOST BULLISH THING A MARKET CAN DO IS GO UP

 

The U.S. equity market has outperformed overseas markets for quite a while. In these reports and during our technical analysis-driven webinars, I have attempted to highlight overseas opportunities as their price and relative strength charts dictated.    

 An indicator produced by Ned Davis Research (NDR) named Global Big Mo Tape Composite recently moved above 77 and into favorable/bullish territory. According to NDR, “this composite uses momentum and trend indicators from the MSCI ACWI markets.” There are no economic and fundamental indicators within the Global Big Mo Tape Composite.

MSCI All Country World Index vs. Global Big Mo Tape Composite Chart.
MSCI ACWI Performance Table.

So what? Big topside moves tend to be global in scope. Based on my interpretation of the NDR indicator above, global participation in the current rally continues to improve. The MSCI EAFE Index chart caught my attention because it recorded a bullish upside breakout, is not overbought on a weekly basis, and, most importantly from a contrarian perspective, I have seen very little discussion about it.

MSCI EAFE Index Chart.

Last-minute Chart: Small Caps have lagged Large Caps for quite some time. This was apparent when viewing various Advance-Decline Lines associated with the Large, Mid- and Small Cap universe. Large Cap A/D Lines have been setting new all-time highs for weeks, while the Small Cap A/D Line last recorded a new all-time high in February. That is until now. As shown in the chart below, the Small Cap A/D Line closed in new high territory last Friday. At the same time, the cash index is still trading below a declining 200-DMA resistance line. More succinctly, the recent new all-time high by the Small Cap A/D Line suggests the odds favor an eventual topside breakout by the S&P 600 Small Cap Index (SML/964.85).   

Small Cap A/D Line Chart

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Day Hagan Market Update Webinar with Donald Hagan, CFA, April 10, 2019 @ 4:15 PM EST

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Art Huprich, CMT
Chief Market Technician
Day Hagan Asset Management

— Written 04.08.2019. Chart sources: StockCharts. The title of this report is attributed to a departed Wall Street veteran, Paul Montgomery. 

PDF Copy of Article: Day Hagan Tech Talk April 9, 2019 (PDF)

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