Below is a look at our one-year trading range chart for the S&P 500.  The dark blue line represents the index’s price, while the white line represents its 50-day moving average.  The light blue shaded area represents the index’s normal trading range, which is one standard deviation above and below the 50-day.  The red zone represents between one and two standard deviations above the 50-day, and any move into or above the red zone is considered “overbought.”  The green zone represents between one and two standard deviations below the 50-day, and any move into or below the green zone is considered “oversold.”

As you can see in the chart below, the S&P just moved out of overbought territory back into the neutral zone for the first time in months.  However, the index remains above its 50-day and within its long-term uptrend channel.

Below we provide one-year trading range charts of major stock market indices for 20 countries around the globe.  Like the US, nearly all countries are trading in strong uptrend channels.

Countries that are in uptrends that have recently pulled back to the bottom of their uptrend channels include Canada, Brazil, Russia, Sweden, and the UK.  If they can hold support here, they become attractive from a timing perspective.

Countries like Hong Kong, Malaysia, India, South Korea, Spain, and Taiwan are in uptrends as well, but they’re still at extreme overbought levels.  It’s best to wait for some mean reversion to occur for these countries.

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For those unfamiliar with the term, we consider an “all or nothing day” to be one where the S&P 500’s net daily A/D (advance/decline) reading is greater than +/-400.  Throughout the financial crisis and most of the current bull market, the frequency of all or nothing days increased substantially relative to the years before.  The reason for the increase was a one-two punch of an easy Fed and ETFs.  As far as the Fed is concerned, easy money and low interest rates increased the attractiveness of equities relative to other asset classes, while at the same time ETFs provided an easy vehicle for investors to gain exposure to stocks while minimizing company specific risk.  The result was an environment of a rising tide lifting all boats and vice versa, and the chart below says it all.  From 1990 through 2005, there were just two years where the S&P 500 saw a double-digit number of all or nothing days, but from 2006 on, their frequency exploded and there hasn’t been a single year where there were less than ten all or nothing days.  In fact, outside of 2006, there hasn’t been a single year where there were less than 20 all or nothing days!

This year, however, has been a different story.  With the year already almost a quarter over, there has yet to be a single all or nothing day for the S&P 500.  While the lack of volatility is definitely one factor at play, even in Tuesday’s decline, the net A/D reading for the S&P 500 was just -370.  So even on a 1% down day, the market couldn’t muster an all or nothing day.  The chart below shows the frequency of all or nothing days in a different context as above by showing the rolling 50-day total.  As shown in the chart, there hasn’t been a single all or nothing day for the S&P 500 since 12/28/16 and that has brought the rolling 50-day total down to zero for the first time since the spring/summer of 2014 and just the second time since the start of the Financial Crisis.  So what’s the root cause for the decline in all or nothing days?  ETFs certainly haven’t become less popular, so that leaves the Fed.  With the Fed having hiked rates twice in the last three months, the days of the Fed lifting all boats are in the rear-view mirror, and future gains are going to have to be on the back of companies/sectors showing earnings growth and/or the beneficiaries of regulatory/tax relief.

From the Financial Crisis lows in March 2009, the global rally in equities has been primarily US-centric.  While the MSCI US equity index is up over 250%, the MSCI Developed World Ex US (98.88%) and the MSCI Emerging Market (100.36%) indices are both up considerably less during this period in terms of US dollar adjusted returns, or the returns a US investor would have seen.  While the three indices performed relatively in line with each other in the first two or so years of the bull market, the US really started to break away from the pack beginning in 2013.

The last several months, however, have been another story. The chart below is the same as above but shows dollar-adjusted returns only so far in 2017.  Rather than leading the pack in 2017, the US is lagging.  As shown, while the MSCI US index is up 6.2% on the year, the Developed World Ex-US index is outperforming the US slightly with a gain of 6.3%.  The real showstopper has been the MSCI Emerging Markets Index which is up more than twice as much as the US and Developed World indices!