Gavekal Capital: Mind the Gap-- or Absence Thereof!

Wednesday, September 10, 2014

Mind the Gap-- or Absence Thereof!

In spite of recent headlines and developments at the ECB, market action has remained fairly subdued, as evidenced by the number of stocks that jump (in a positive or negative direction) at the open of trading. This particular measure of volatility takes a 65-day running total of gaps up by 2% or more and gaps down 2% or more for each individual stock in the MSCI Europe index (blue line, inverted):

As the number of gaps approaches low levels not seen since 2007, one can't help but notice how poorly the overall index has performed each time the number of gaps has subsequently risen in the past. Compared to the other regions in the MSCI World Index, however, European stocks are not as extremely docile-- both MSCI North America and MSCI Pacific have reached all-time lows for as far back as we have data:

About Gavekal Capital

Gavekal Capital is a US registered investment advisory firm that manages the Gavekal Knowledge Leaders Strategy. Knowledge Leaders are a group of the world’s leading innovators with deep reservoirs of intangible capital. These companies often possess competitive advantages such as strong brand, proprietary knowledge or a unique distribution mechanism. Knowledge Leaders are largely service-based and advanced manufacturing businesses, often operating globally. Gavekal Capital seeks to identify the world’s leading knowledge companies through a proprietary process that analyzes corporate knowledge investments.
We offer the Gavekal Knowledge Leaders Strategy in multiple products for global investors. For more information about our product offerings please visit http://www.gavekalcapital.com.
Blogs are posted by our investment team. Find out more about us at here. Read more about our strategy at www.gavekalcapital.com.

Disclosure

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