Gavekal Capital: Something's Gotta Give

Friday, September 19, 2014

Something's Gotta Give

Nearly two-thirds of stocks in MSCI Europe have fallen more than 10% from their highs over the last 200 trading days:


In the past, as the blue line has gone down (representing a rise in the percentage of companies with falling prices), the MSCI Europe (red line) has also fallen.  While the overall index declined in the month of July, it has since stabilized-- in spite of more constituents generating increasingly negative performance.  It seems only logical to conclude that there is decent potential for a more broad-based sell-off in European equities on the horizon.