Where Do We Want To Be: USA or Everywhere Else?
- Posted by JC Parets
- on September 12th, 2012
When doing our top/down technical analysis, we take a look at the entire world and ask ourselves, “where do we want to be?”. This question goes for both asset classes and countries. It’s not just, “oh we need to buy facebook, or apple, or whatever the topic of the day is in the media“. There’s a whole universe of averages and sectors and countries moving that you may not even be able to pick out on a map (I know I’ve run into that a few times). So let’s not forget that with more options come more opportunities.
The guys over at Bespoke have a great chart up showing the relative performance of the United States vs the rest of the world. They’re using the S&P500 to represent the USA and the MSCI World (ex US) Index for everything else. As you can see the US has now rallied all the way back to 2004 levels:
I think it’s interesting how the chart focuses in on the past 4 months as this ratio has been battling with apparent resistance. I’m also impressed by the strength we’ve seen here in the US during this pretty big risk-on rally off the June lows. I would have expected that riskier and more emerging markets would have outperformed in that environment. So I think that says a lot about the US and that maybe we shouldn’t be so quick to move elsewhere. There are a lot of stocks and sectors here at home that we can focus on. And this chart is telling us just that.
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
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