BOOM. Global stock markets broke out two weeks ago. Not only do they trade for 3 consecutive weeks at all-time highs, they are now closing for a 3d consecutive weeks above their breakout. This is strongly bullish, make not mistake. Will this continue or is this the start of a stock market crash? All indicators are lined up for global stocks to continue to rise after hitting all-time highs for most of the month of November. This is also in line with our Dow Jones Forecast For 2020 And 2021 as well as our other annual forecasts.
We only look at the global stocks charts in this article. The more fundamental as well as intermarket related dynamics that suggest global stocks will continue to rise after hitting all-time highs this month are outlined in many other articles on our blog.
First, the weekly chart of global stocks represented by the ACWI ETF is embedded below.
This chart shows the breakout that started 3 weeks ago. Every candle represents one week. The breakout which lead to all-time highs is powerful.
Yes this is a stand-alone fact that tells us that global stocks will continue to rise after hitting all-time highs.
The second chart is the monthly version of the one above. It is also ACWI ETF but on a monthly timeframe on a 10-year period.
This shows the dominant trend, and zooming out is what investors ALWAYS have to do before making any investment decision.
The big picture trends are the most powerful ones, never take a decision that goes against long term trends!
What makes us very excited is this breakout test highlighted with this green circle. It’s a breakout test, and those are very important. They are always pivotal. Smart investors want to be at the right side of the pivot.
Note that this successful test after the breakout that started in 2017 took place in December 2018. That’s a moment where literally everyone was bearish, and headlines were suggesting a major stock crash was underway. Usually that indicates the end of a downtrend, not the start of it.
How to play this new rising trend, the one that confirms global stocks will continue to rise after hitting all-time highs?
The answer is simple: you need to play the small cap stocks combined with the outperforming stock market sector.
