The World is poised for a breakout

The article discusses the global stock market rally and how it is supporting our own market here in the US.

A bizarre divergence between the data and price.

As young people we are ingrained at an early age that if we want to be successful, we must accumulate more facts, master them, and then draw conclusions from them. That is what school is all about. In order to improve our grades, we must learn more of the information and have them at our fingertips at test time.

Aspiring traders wanting to improve trading results often try to apply this linear thinking into their trading process. They assume seeking out more and better information will result in better results. After all, that thinking has worked throughout their whole lives. Why wouldn’t it work for trading?

Unfortunately price often has its own ideas and those ideas often have massive divergences from what the data would lead a sane and smart person to believe.  Listening to economists and watching global PMI’s a person could easily believe the world is on the brink of a recession. That may very well be true,  but let’s look at an array of charts from around the globe to decide how we should be positioned.

Global Indexes

The global indexes are breaking out. Unfounded optimism? Maybe, but price is telling a story and price is what pays. Everything else is conversation.

How about Europe?

By all accounts, Germany is as close to being in a recession as you can be without being in one, and Europe as a whole isn’t growing. Right?

What do the charts say?  Break outs all over the place!

Let’s look into Asia, the emerging markets, Russia, and Brazil

While the trade turmoil has certainly hurt parts of Asia like South Korea in particular and Hong Kong having its own well-covered problems, you’d think its all falling apart.   What do the charts say?

Pulling it all together

While the US certainly has the most dynamic market in the world, there are places to make money outside the US.  As our market makes an assault on all-time highs, it is not in isolation. Breakouts and near breakouts are happening all over the globe and these markets are supportive of our own advance.

The survey of these markets also provides a lesson to we traders. Price action often runs counter to the narratives being advanced by financial media, economists,  and even the hard economic numbers. Price can go up when times are bad and down when times are good.  In a profession where price is king and the arbiter of all discussions, study the charts to determine how you should be positioned.

Can this all turn on a dime? Absolutely!  That said, it is hard to get too bearish as price either attacks all-time highs or having breakouts across the globe.

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Notes:

The charts are and levels are provided as well-informed guidelines. That said, please be aware that exogenous events like surprise tariffs or other events can easily move price through support / resistance zones.

Also, set you stops according to your own risk tolerance. The ones I have provided are to be used only as a guide. The most important aspect of your stop is to honor them. Some trades work, some don’t. Honoring your stop will ensure your loss on a failed trade will be minimal.

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