Gavekal Capital: Rally Like It's 2009

Thursday, October 24, 2013

Rally Like It's 2009

We perform a variety of calculations to understand the often imperceptible changes in the underlying structure of the stock market.  One calculation we make is to measure the percent of stocks making a new 200-day high.  Historically this metric gets the most extended during the first move off a major low--like in September 2009.  Often, peaks in this metric (readings over 15%) are associated with intermediate peaks in stocks.  On Monday, 18% of the MSCI World index (over 1,600 companies total) made new 200 day highs, just short of  the 19% reading on September 18, 2009--after stocks were up 70% from March 2009 lows.