[Chart of The Week] US Stocks Are Breaking Out

Here's the S&P 500 versus EAFE Index daily chart, which has broken out to new all-time highs driven by both US Equity and US Dollar strength. This trend has been intact for over a decade and after 8 months of consolidation, it is resuming its trend to the upside. We want to be buying this breakout as long as prices are above their 2018 highs.

Click on chart to enlarge view.

This trend can also be seen at the country-specific ETF level as well.

Here's the short Japan and long S&P 500 trade I outlined on Real Vision about 5 weeks ago, which is well on its way to my downside price objective. While not actionable at current levels (we'd rather be fading strength), there are a couple developed-country ETFs that are.

Here's Norway breaking down from a 3-year base to new lows, signaling the start of a new long-term downtrend that has a price objective roughly 13% below current levels.

After a brief failed breakdown in Q4 of lat year, Ireland is now taking another shot at breaking down from a 7-year base relative to the S&P 500. As long as prices are below their 2011/2012 lows, the bias remains to the downside with a long-term price objective nearly 30% lower.

When talking about unhedged International Equity ETF performance there are two drivers: Equity performance and Currency performance.

For diversified International ETFs life EFA, as well as most of the country-specific ETFs we follow, both of those drivers continue to support US outperformance...especially if the US Dollar Index breaks out above 98.

One day this trend of outperformance will end...but that day is not today. For now, our only job is to continue taking advantage of it.

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Allstarcharts Team