Spreadsheet Of The Week: Why Is The U.S. Underperforming By So Much?

JC Parets
February 17, 2016

This weekend I did my regular global macro review. This is when I go country by country analyzing the weekly and daily charts of all of the stock markets around the world. Each chart includes a momentum study (14-period RSI) and a 200 period moving average that we use to help with trend recognition. I trade indexes all over the world, simply because I can. Why wouldn't I?

But even if you don't, and instead deal strictly in U.S. equities, the value that is derived from going through the process of analyzing all of the international indexes is more valuable than almost anything else we do.

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In late January, on or around Jan 20th, close to 90% of our downside targets were simultaneously hit around the world. These targets were based on either former support levels or key Fibonacci extensions. As those targets were achieved, and where we wanted to cover short positions (initiated in November or prior), I noticed an obnoxious amount of bullish momentum divergences across the board, and on multiple timeframes. This made it impossible for me to stay bearish and therefore started to get constructive towards stocks. This was the first time I had been bullish since late September (the last time we saw global markets giving similar signals).

Members of All Star Charts were obviously notified immediately and a long list of countries that fit this description were sent out. Since then, we have seen some incredible moves higher across the board, and it's only now that the U.S. and other developed economies are catching up (Europe, Japan, etc). As I went through my global review this week, I decided to keep a spreadsheet along the way where I asked 4 questions for each country:

1) Did we put in a bullish momentum divergence on the weekly timeframe?
2) Did we put in a bullish momentum divergence on the Daily timeframe?
3) Did we put in a bullish momentum divergence relative to S&P500 on the daily timeframe?
4) Did this market bottom in January (at or near Jan 20th)?

Here are the results and the results are even more obnoxious than my hypothesis. I figured we would have seen a large percentage of the emerging markets bottom in Jan (on or near Jan 20th) than in developed nations. And I also figured we would have many more bullish momentum divergences on both timeframes, as well as relative to S&Ps, in Emerging while fewer in the developed nations. Boy did I underestimate the results.

Here is the entire spreadsheet in full:

(click on spreadsheet to embiggen)

study

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