Overtime
International stocks and currencies
Good morning,
Stocks soared yesterday, and global equities were no exception. We didn’t get to international stocks in yesterday’s Playbook, so we’ll start with a look at the technicals for EAFE and EM.
However, the real subject I wanted to take into Overtime was the dollar. We know DXY’s been in a trading range for more than a year, but a bottom-up look at its components would suggest things are setting up in favor of a breakout.
We’ll review DXY and all of its components from a big-picture lens.
Finally, we’ll end with a few bonus charts that I think are important from yesterday’s trading action.
International stocks
EAFE rallies but still in its base
Foreign developed markets moved higher yesterday, but haven’t escaped this four-month base. In absolute terms, it’s right to expect a breakout higher given the trend. But as has often been the case, the problem is the relative chart where EAFE is flirting with 52-week lows vs. SPX.
EM gains nearly 3%, but fails to hit a new high
The trend in emerging markets remains strong, above all key moving averages, which are rising. However, I do think it’s noteworthy that EEM failed to hit a new high yesterday, as did the two biggest drivers of its YTD outperformance (South Korea and Taiwan) 👇
