Here are some of the most noteworthy highs and lows from across the markets for Friday, November 27, 2020.

The Global Dow Hitting New All-Time High

Deutsche Bank $DB Hitting 2-Year Highs

Copper Hitting 7-Year Highs

“Risk-On” High Beta/Low Volatility Ratio Hitting All-Time Highs

Nasdaq 100 Volatility Index $VXN Testing Post-Crash Lows

If you’d like to see these charts as they come out in real-time, follow us on Twitter and StockTwits. And if you’re interested in the daily “all-access” version of all our charts and research, please check out our site, The Lyons Share. You can follow our risk-managed investment process and posture every day — including insights into what we’re looking to buy and sell and when. Plus, our BIGGEST SALE OF THE YEAR — The TLS Black Friday Sale — is going on now!! So it’s a perfect time to join! Thanks for reading!

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A key barometer of the global equity rally is facing an important test.

One of the interesting trendlines in this week’s edition of our regular #TrendlineWednesday feature on Twitter comes from the chart of the MSCI EAFE Index (EAFE). As a reminder, the EAFE Index represents developed countries in Europe, Australasia and the Far East. Like most equity markets around the globe, the EAFE has enjoyed a strong up-move of late, particularly over the past 2 years. The index did hit a snag, though, along with most stocks, early this year in the form of a post-January correction. And the resulting action has the EAFE testing an important line of bull market support.

Specifically, the EAFE is testing the Up trendline stemming from its Brexit lows and connecting the post-U.S. election lows and the lows from this past March-April.

As the chart indicates, the “test” level -- near 2023 -- also happens to signify the approximate convergence level of both the 50 and 200-Day Simple Moving Averages. Obviously, if the EAFE wants to maintain the direction and pace of its current advance, it would behoove the index to hold this key cluster of support. So keep an eye on the approximate 2023 level on the EAFE for a “tell” on the future direction of the global developed market equity rally.

Do we think the EAFE will pass this test? And how much risk opens up should the support area give way? In a Premium Post at The Lyons Share, we share our analysis of the EAFE’s prospects, as well as the clearly defined potential downside and upside targets.

If you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. Plus, our SPRING SALE (25% OFF!!) is going on now so it’s a great time to sign up! Thanks for reading!

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Following a brief pullback, the Global Dow Index is breaking above its all-time highs set 10 years ago.

A month ago, we pointed out a potential speed bump facing the global equity rally. The global equity barometer in question was the Global Dow Index (GDOW), an equally-weighted index of 150 of the largest stocks in the world. The potential speed bump was the GDOW’s all-time high of 2878, set back in 2007. On August 7, the GDOW posted a closing price of 2878.99, prompting our post about the potential resistance at that level based on the former highs hit 10 years ago.

We didn’t suggest that the rally was necesarrilly over, but that it may pause. Specifically, we stated:

"...one reason why we like using the Global Dow as a barometer of the global equity market is because it conforms well to technical charting analysis. And certainly classical charting analysis would suggest that 10-year old all-time highs should at least pose as temporary resistance following a decade-long round trip.”

The GDOW would indeed be rebuffed by the 10-year old resistance, confirming once again the relevance of key historical price points. The index spent the next few weeks in a steady decline. However, the key question, as we mentioned in the August post, was:

“...how temporary, and how much downside risk may there be prior to another potential breakout?”

We answered that question to the best of our estimation in a Premium Post at The Lyons Share:

“How much of a pullback should we look for? Working backwards a little bit, we see the 2015-2016 decline as a key in judging the potential for the post-2016 rally. Using that decline, an eventual target of 3025 seems to be reasonable, if not likely, based on Fibonacci work. Whether that approximate 5% of additional upside above the current 2879 highs is worth one’s while or not is up to them. However, a pullback into a more inviting level would certainly improve the risk/reward characteristics of a potential long play.

Working off of that 3025 level does help us to confirm the key Fibonacci levels below within the post-2016 rally from which to originate our analysis. And based on that analysis, we would look for a pullback to at least the 2825 level, and ideally the 2810 level before trying a trade. Those levels may offer the rising 50-day simple moving average as additional support, depending upon its whereabouts at the time.”

Fast forwarding to today, let’s look back at the past month to see exactly what transpired following the GDOW’s August test of its 10-year old highs, and the key levels involved.

As the chart shows, the GDOW immediately pulled back from the 2878 all-time high, falling over the next few weeks. The index would make a closing low for the move on August 21 of 2810.42, exactly at the “ideal” entry point we were looking for. And after a gradual 3-week bounce, the GDOW exploded higher to start this week, closing at a new all-time high yesterday. Here is the zoomed-out picture.

So what’s next for the Global Dow? Well, first off, it is always nice when chart set-ups play out exactly as suggested. Secondly, certainly overcoming the 10-year old all-time high was a positive development which opens up further (potentially substantial) upside. The fact that the index pulled back already from the first touch of the all-time highs suggests that it has at least rested somewhat and likely stored up enough energy for a sustainable move to new highs.

Now, given that our equity outlook is not all that optimistic over the intermediate to long-term, it does dampen some of the enthusiasm here. However, even if the U.S. market gets hit sharply, the international markets could still out-perform, or even excel. We have observed -- and posted on -- positive developments in numerous foreign markets this year. The longer-term prospects, in our view, would seem to be brighter in select spots around the world than domestically. Based on this development, the short-term prospects don’t look too bad there either.

If you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. Considering what we believe will be a very difficult investment climate for awhile, there has never been a better time to reap the benefits of our risk-managed approach. Thanks for reading!

"Earthrise" photo by NASA.

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A key global equity index is testing potentially major resistance.

Unlike in recent years when the U.S. market dominated, stocks around the globe have been on fire this year. Just yesterday, we mentioned the latest great looking breakout underway in the South African stock market. Of course, with all of these individual countries exhibiting strength this year, it stands to reason that the broader indices would also be performing well. One such index is The Global Dow Index (GDOW).

The Global Dow is an equally-weighted index of 150 of the largest stocks in the world and it is one of our favorite barometers of the state of the worldwide equity market. Coming into 2017, we mentioned that the GDOW was facing significant resistance in the form of a 10-year Down trendline stemming from its 2007 all-time high of 2878.

After holding for about a month, the GDOW was able to surmount the trendline (near the 2590 level at the time) by late January. That opened the upside in the GDOW to that 2007 all-time high of 2878. Of course, that meant a further 11% rally in the index to get there. Well, roughly 7 months later, the GDOW has arrived.

The red hot index closed on Monday at the 2879 level, equaling its 2007 all-time high.

So, does this mean the global equity rally is doomed? Not necessarily. However, one reason why we like using the Global Dow as a barometer of the global equity market is because it conforms well to technical charting analysis. And certainly classical charting analysis would suggest that 10-year old all-time highs should at least pose as temporary resistance following a decade-long round trip. But how temporary, and how much downside risk may there be prior to another potential breakout?

In a premium post at The Lyons Share, we discuss reasonable expectations regarding this important test in the Global Dow, as well the important levels to monitor below (and above) this all-time high level. Additionally, we lay out the avenue for potentially taking advantage of this key development in the global equity market.

If you want that “all-access” version of our charts and research, we invite you to check out our new site, The Lyons Share. Thanks for reading!

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A resurgence among international stocks continues as the Global Dow Index just broke out to a 9-year high.

It is no secret that the U.S. has led the way in the global equity rally over the past 8 years, and continues to do so. Meanwhile, international markets, as a whole, have been subject to fits and starts, at best. Presently, international stocks are experiencing one such start (or is it a fit?). The point is that these foreign stocks have been making some noise lately as practically the entire globe has experienced a solid advance since the U.S. presidential election. And the noise is getting louder as these markets are registering some legitimate milestones in their rally.

A case in point involves the Global Dow Index (GDOW), an equally-weighted average of 150 of the largest stocks in the world. We like tracking it because it adheres very well to various technical charting analyses despite the fact that there is not much actual money traded based off of it.  Nevertheless, we have found the index to be a pretty reliable barometer of the health of the global equity market. If that is true, the global market keeps getting healthier and healthier.

Entering 2017, we mentioned that the GDOW was perhaps facing stiff resistance in the form of its post-2007 Down trendline. Well, after holding at that level for about a month, the index was able to break above the key trendline. Despite that breakout, though, we cautioned that there were still obstacles that may prevent a substantial, immediate rally. As stated in a late-January post:

“One immediate obstacle facing the GDOW is the lateral resistance in the 2640′s range, representing the 2014-2015 highs. Yesterday’s high in the index was 2638.54, so we are essentially there now. A pause here and possible test of the trendline breakout level near 2590 would not be a surprise.”

Well, our crystal ball was working that day as that proved to be the high for the rally. And the 2590 test call proved prescient as just 3 days later, the GDOW would drop to 2590.40. After testing the area once more at 2590.03 a few days later, the GDOW has bounced again. And over the past 2 days, the index has scored another milestone, surpassing the highs of 2014-2015 and setting a new 9-year high.

Does this mean we’re off to the races? Not quite. Given the extended nature of much of the equity market, especially in the U.S. (which does have a significant weighting in the Global Dow), the concern is that there may not be enough immediate-term fuel to propel a sustainable rally. That remains to be seen. The good news, for traders, is that the natural delineating line between success and failure, i.e., the former high, is just points away. Therefore, if one is “playing” this trade, either through the ETF (ticker, DGT), or simply by using the GDOW as a tell for their other positions, not much money needs to be risked here.

We’ve no idea whether this breakout will be sustained or not (we don’t actually have a crystal ball). However, based on this barometer, global stocks have already produced a number of positive milestones in recent months -- something they sorely needed.

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The Global Dow Index has broken above its post-2007 downtrend.

One theme we highlighted coming into 2017 was the potential chart resistance facing many global equity markets following the sharp “Trump rally”. This included the Global Dow (GDOW), a broad index of mega-cap global companies, as we mentioned in a late December post. The specific resistance we noted pertaining to the GDOW in particular was a Down trendline stemming from its 2007 all-time high and connecting the tops in summer 2014 and spring 2015.

This trendline held the GDOW back from December into mid-January. However, this week’s global equity rally has seen the GDOW eclipse that post-2007 Down trendline, currently near the 2590 level.

The break of this 10-year trendline removes a major chart impediment and opens up considerable upside for the GDOW. That said, it is not necessarily all free and clear for the index (though, it never is). One immediate obstacle facing the GDOW is the lateral resistance in the 2640′s range, representing the 2014-2015 highs. Yesterday’s high in the index was 2638.54, so we are essentially there now. A pause here and possible test of the trendline breakout level near 2590 would not be a surprise.

As we have mentioned often regarding the Global Dow, one reason we like tracking it is that it adheres very well to various technical charting analyses.

This again may be a surprise for some to learn since there is not much actual money traded based off of it. There is a U.S.-based ETF, however, that tracks the GDOW. It is the SPDR Global Dow ETF, ticker, DGT. And since the Global Dow is priced in U.S. Dollars, the DGT does not have the currency headaches that most internationally-focused equity ETF’s do. For that reason, it tracks the GDOW pretty closely and it too broke above its post-2007 Down trendline this week.

The theme of this week in the equity market has been “breakouts”. And while everyone is well aware of Dow 20,000 by now, and perhaps the more important breakout in the NYSE that we wrote about on Wednesday, it has not just been about domestic stocks. International stocks, which have for the most part lagged their U.S. counterparts for many years, have improved their technical prospects significantly in recent weeks and months. This includes the Global Dow Index, a good sign for the intermediate-term prospects for international equities.

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The commentary included in this blog is provided for informational purposes only. It does not constitute a recommendation to invest in any specific investment product or service. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.

The Global Dow Index is running into its long-term Down trendline stemming from the 2007 all-time peak.

Here in the U.S., equity investors have been a bit spoiled as they’ve watched index after index break into all-time high ground this year. Around the globe, investors have not been so lucky. Yes, most international indices have rallied solidly this year. However, with few exceptions, the rallies have still left these international markets shy of their all-time highs. One illustration of this situation can be seen in a chart of the Global Dow Index (GDOW).

We’ve posted many times on the GDOW due to its reliable conformity to technical charting tools, despite the fact that very little money is traded off of it. Additionally, we have found it to be an accurate barometer of the state of the global equity market. Specifically, the GDOW is an equally-weighted index of 150 of the world’s largest stocks. While this includes U.S.-based companies, its heavy dose of international exposure has led to its aforementioned position below its all-time high.

Furthermore, it is currently running into potential resistance in the form of its post-2007 Down trendline connecting the 2007, 2014 and 2015 tops.

Will this hold? We don’t have a crystal ball, but it has briefly repelled the GDOW thus far. And while most U.S.-based indices have succeeded in reaching all-time high ground, it is important to note that such circumstances are not unanimous. Along with the Value Line Geometric Composite, there are still some key hurdles facing global stocks as we head into 2017.

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A key index of global equities is hitting a significant confluence of chart resistance.

Back in early April, the global equity rally began to look a bit tired after 2 months of rallying. This was especially the case in the major U.S. averages and defensive sectors that had been bearing the brunt of the advance. Shortly thereafter, we saw a number of previously lagging areas of the market break out above key resistance that had been holding them back. This gave the rally some new fuel and propelled stocks higher for a couple more weeks before pausing.

Included among this “new fuel” were global stocks, which had been lagging for some time. And a barometer of global stocks that we like to monitor, the Global Dow Index (GDOW), was able to achieve one of the aforementioned breakouts. In the process, the GDOW jumped above a plethora of key resistance levels, including the post-2009 Up trendline as well as the post-2015 Down trendline. After following through on the breakout for a few weeks, the GDOW was halted at another key level of resistance: the 61.8% Fibonacci Retracement of the May 2015 - February 2016 decline at 2412 (the GDOW closed at 2410 on April 20).

While the GDOW has been unable to surpass this level since, it has also managed to avoid breaking down. And after a handful of attempts to break the index lower, it has once again returned to the former Fibonacci line at 2412 that held it in check in April. If it can finally overcome this level, it could spur on another leg up in the global equity rally. There is one other item of resistance that may make this area an especially tough hurdle this time, though.

At the time of the April breakout, as mentioned, one of the lines that the GDOW was able to overcome was the up-sloping trendline from the index’s 2009 lows. After breaking below the trendline in January, it was able to again reclaim the top of it in April. After the rally stalled later in April, however, the index would again lose the trendline, falling back below it by early May. It has been below the trendline since. However, as the trendline is upward sloping, it has now risen to presently intersect with the Fibonacci Retracement near 2412.

Thus, as the chart shows, the GDOW is now contending with this convergence of the 2 key resistance lines in its attempt to hurdle to new rally highs (as we type, the index is trading at 2413).

Here’s a closer view of the current action.

With sentiment finally getting a bit frothy and U.S. stocks perhaps getting extended, the global equity rally could sorely use some fresh fuel again. As in April, if the laggard areas that aren’t as extended, like the Global Dow Index, can hurdle over current resistance, it could provide the rally with a much-needed jolt of energy.

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