What I'm looking at - breakouts, new highs, breadth thrusts, equity put/call, and Pound's surge
With global stocks rallying on trade war news, here's what I'm looking at:
Breakouts, new highs, breadth thrust
The U.S. stock market was among the first to breakout to new all-time highs this year. And now amidst a stream of positive trade war developments, indices that were more beaten down by the trade war (e.g. emerging markets) are also making new all-time highs. For example, the MSCI ACWI Index, which includes emerging and developed markets, has broken out:
When this index made a new 2 year high for the first time in more than 400 days, it typically pushed higher over the next 3-6 months, even if it struggled in the short term:
Since the U.S. accounts for such a large portion of this index (56%), here's what the S&P 500 did next:
Similarly, the NYSE Index broke out yesterday:
When it did so in the past, the NYSE Index typically rallied over the next 3 months and 1 year:
....as did the S&P 500:
And as Robert Lesnicki pointed out, there has been a surge in new highs-new lows on the NYSE:
This was usually bullish for the S&P 500 over the next 6 months:
Meanwhile, the S&P 500 financial sector broke out above its January 2018 high last week:
The history of breakouts for the financial sector is limited, but it did usually lead to more gains (with the exception of 2011).
As a result of the financial sector's recent rally and breakout, the % of members at a new 52 week high has surged above 40% for the first time since the sector last peaked in January 2018:
Here's a longer term look at this indicator:
As one would expect, such breadth surges typically led to more gains for the sector over the next year:
Equity Put/Call
The Equity Put/Call ratio plunged yesterday on the stock market's rally.
This pushed the Equity Put/Call ratio to more than -30% below its 1 year average. When this happened while the stock market was at or close to a 1 year high, the S&P typically struggled over the next 1-2 weeks:
British Pound
And lastly, the Pound broke out to a 1 year high on yesterday's election.
When this happened in the past, the Pound usually continued to rally over the next 3 months:
My trading portfolio
I've been moving countries and changing residencies over the past half year, so I haven't done much trading up until a month ago. Now that I've settled down, I've reopened trading accounts. In the interest of transparency, I'm going to show you what my own trading portfolio is doing, similar to what Jason does.
From October 25 (when I started to trade again) - present:
- My account is up 2.64%
- Currently 100% in bonds
I don't place discretionary trades - these are purely based on my quantitative models.