S&P vs MSCI WORLD Vertical Escalation
Hello Traders,
The stock market seems to have entered a "TOC" or "Mania" phase of continued Success in what looks like a vertical climb since the 4th of July celebrations. The rate of change has shown that there is some acceleration in the trend, and is also reflected in the SPY ETF a reduction in trading volume and in part the increase in price is probably due to a lack of sellers. Yesterday RSI reflected an overbought of +85% and this may be giving a signal of possible profit taking.
If we compare it to the MSCI World / Emerging Markets or ACWI, the former two seem to be replicating the S&P 500 in detail even though the former replicates the 23 most developed countries. With 85% of the adjusted float of the capitalization of each of these countries. This index reflects 72.08% weighting with the US, 5.68% with Japan, 3.72% with the UK, 2.92% with Canada, 2.81% with France and representing the rest with 12.78%. Its weighting is IT (25.95%), Financials (14.84%), Health Care (11.77%), Industrials (10.68%), Consumer Discretionary (10.17%), Telecommunications (7.8%) among others.
MSCI:msci.com/documents/10199/178e6643-6ae6-47b9-82be-e1fc565ededb
Is this rally sustainable?
The view I have on it is that the current rally looks unsustainable and is sustained on speculation bubbles and has entered a cycle of meaningless inertia. The volatility reached in the index currently stands at 61.28%, VIX has taken levels of 12.88%, but it looks flat, and seems to be moving in a rising direction again as it did in May. If we were to compare it to Bitcoin, it has fallen 20% and S&P500 has ignored the whole thing, and it shouldn't happen.
It is curious that this rally carries a very high concentration in companies like Nvidia which since 2022 have been gaining more weight and the top 5 account for 45% of the gains.
Do you think this rally will cut positions to the lows around 5,193.57 in September?
I look forward to your comments
Ion Jauregui - ActivTrades Analyst
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
The stock market seems to have entered a "TOC" or "Mania" phase of continued Success in what looks like a vertical climb since the 4th of July celebrations. The rate of change has shown that there is some acceleration in the trend, and is also reflected in the SPY ETF a reduction in trading volume and in part the increase in price is probably due to a lack of sellers. Yesterday RSI reflected an overbought of +85% and this may be giving a signal of possible profit taking.
If we compare it to the MSCI World / Emerging Markets or ACWI, the former two seem to be replicating the S&P 500 in detail even though the former replicates the 23 most developed countries. With 85% of the adjusted float of the capitalization of each of these countries. This index reflects 72.08% weighting with the US, 5.68% with Japan, 3.72% with the UK, 2.92% with Canada, 2.81% with France and representing the rest with 12.78%. Its weighting is IT (25.95%), Financials (14.84%), Health Care (11.77%), Industrials (10.68%), Consumer Discretionary (10.17%), Telecommunications (7.8%) among others.
MSCI:msci.com/documents/10199/178e6643-6ae6-47b9-82be-e1fc565ededb
Is this rally sustainable?
The view I have on it is that the current rally looks unsustainable and is sustained on speculation bubbles and has entered a cycle of meaningless inertia. The volatility reached in the index currently stands at 61.28%, VIX has taken levels of 12.88%, but it looks flat, and seems to be moving in a rising direction again as it did in May. If we were to compare it to Bitcoin, it has fallen 20% and S&P500 has ignored the whole thing, and it shouldn't happen.
It is curious that this rally carries a very high concentration in companies like Nvidia which since 2022 have been gaining more weight and the top 5 account for 45% of the gains.
Do you think this rally will cut positions to the lows around 5,193.57 in September?
I look forward to your comments
Ion Jauregui - ActivTrades Analyst
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
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