A 3 week "everything rally"

Troy Bombardia
2020-04-14
Stocks, gold, and corporate bonds have rallied significantly over the past 3 weeks. In some ways this is only comparable to March 2009.

As I mentioned 1 week ago, more and more countries' stock indices have entered bull market territory. The latest: Australia

Looking at the average 3 week % change of stock indices around the world, this is only comparable to March 2009:

*Countries = U.S, Japan, Hong Kong, UK, Canada, India, Germany, South Korea, Switzerland, Sweden, Australia, Taiwan, Brazil, Singapore, Indonesia, Russia, China, Italy, Spain, France

Since this occurred at the bottom of a massive bear market, the MSCI All Country Index surged over the next year:

The sample size is small, so let's relax the study's parameters to increase the sample size. The following table looks at all historical cases in which the average country's index rallied more than 10% over the past 3 weeks:

Every case saw the S&P rally over the next 6 months. The October 2001 case saw the medium term rally extend before the bear market continued. The 2008-2009 cases all saw global stocks rally significantly over the next year, and the October 2011 case saw the S&P rally significantly over the next 6-12 months.

And it's not just stocks that are rallying. The average 3 week % change among the S&P 500, gold, corporate bonds, and other developed stock markets (MSCI All World ex-U.S. Index) reached its highest level ever. 

The previous high was in December 11 2008, when stocks rallied another +7% before falling to a long term bottom.

Gold's rally has pushed its monthly RSI above 75. Granted, the month isn't over yet:

When gold's momentum was this high, it usually pushed higher over the next 6 months:

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