Global Markets
An 88 week stretch with a majority of 47 (46 until 1/1/2018) markets in a Confirmed Uptrend ended on March 19, 2018. During the stretch, the Russell Global Index gained 37% to its January peak and 30% from start to finish. For the purpose of displaying why the 50% threshold is key, we show the results of using a simple strategy of buying the Russell Global the day of a shift above 50% and selling once it breaks below.
The week of April 6, a large number of European markets had a follow-through day and were moved back into a Confirmed Uptrend. This took the percentage back to slightly above 50% where it remains currently. Since the latest shift, the Russell Global is up about 3%. We are cautiously optimistic that these gains can continue due to three factors. First, corporate earnings continue to improve, especially in the U.S. where Q1 2018 earnings season has started positively. Clients can refer to our Strategy View dated April 12, 2018 to see our expectations for Q1 2018 S&P 500 earnings. Next, while the Fed, BOJ, and ECB are all tightening, the rate cycle has been gradual and not caused any major dislocations. Finally, investor bullish sentiment has fallen from a record 17 straight weeks above 60% to the current level of 42%. As a result, we feel there is now a “wall of worry” that stocks can climb from present market levels.
