[Premium] Global & India Sector Breadth Update

Below are the 46 International Equities we track in their local currency terms, sorted in descending order by YTD performance. In the columns on the right, I've recorded the trend and momentum characteristics for each on both a weekly and daily timeframe.

Click on table to enlarge view.

The first major takeaway is that in terms of structural trends, 57% are sideways and roughly 79% of them have momentum in a bullish range. With that said, almost all (93%) of those have bearish divergences.

Moving down to the tactical trends, the stats don't get that much better. Only 5% of these markets are in uptrends, 57% are in sideways trends, and 39% are in downtrends. Additionally, 84% of them have momentum in a bearish range.

Since our last post it's clear that there's been a continued deterioration in breadth globally. Given the lack of uptrends across multiple timeframes, it's difficult to make the bull case for Equities as an asset class.

If we look at these markets using the 45 Global Stock Market ETFs we track, these stats are a bit worse due to the US Dollar exposure of these vehicles. For example, the number of tactical downtrends is 39% in local currency terms versus 67% in our ETF universe.

Now that we have a view of stock markets around the world, let's take a look at the 14 India Sectors we track.

In July there were 5 uptrends, 3 sideways trends, and 5 downtrends on a structural basis. Today, there's 1 uptrend, 8 sideways trends, and 4 downtrends. Tactically, the numbers are similar. There were 5 uptrends, 3 sideways trends, and 6 downtrends in July, compared to 1 uptrend, 6 sideways trends, and 7 downtrends currently.

These stats reiterate the themes we've been talking about. The strongest sectors in India have finally succumbed to the weakness in small and mid-caps, as well as the global selloff we are seeing in Equities as an asset class.

The Bottom Line: In July we saw a deterioration in global stock market breadth and that trend has continued into the fall. Until we start to see some of these tactical trends begin to stabilize and momentum get back into overbought conditions, we need to be more cautious on the long side of Equities by holding larger cash positions or trading on the short side like we have been in weaker areas of the market like mid and small-caps.

Just as breadth took months to deteriorate and accelerate lower, it will also take time for the technical damage seen across the globe and in India to repair itself and set the stage for higher Equity prices. There were many clear trends in place that we took advantage of since the spring, however, patience is key in identifying opportunities on the long and short side of this more challenging market environment.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team