From the desk of Steve Strazza @Sstrazza
Just as we focus on the strongest markets and stocks to find opportunities during equity bull markets, we look to identify the weakest areas during bear markets. We just want to be in the strongest trends, regardless of their direction.
A few weeks ago we ran some statistics to highlight US stocks that were bucking the trend during the selloff, as those would be the areas to focus on if/when equities eventually regained their footing. While many names have fared well, we were a bit early as the market soon broke below our risk management levels, putting us in a position where we no longer want to be long stocks.
As the selling has accelerated recently, we thought it prudent to do a deep dive into World Equity Markets to see where the strength and weakness is, as well as what these indexes are telling us about global breadth. Now that the structural picture has changed for equities it is time to start considering some of the weaker areas around the globe for potential opportunities on the short side.