Gavekal Capital: European And Asian Stocks Are Approaching Overbought Levels

Friday, May 22, 2015

European And Asian Stocks Are Approaching Overbought Levels

Unlike the majority of this six year old bull market, European and Asian stocks are outperforming North American stocks in 2015 (yes even measured in USD). Asian stocks are nearly 12% higher, European stocks are nearly 10% higher and North America stocks are just about 3%. This surge in Asia and European are starting to hit overbought levels judging by the the % of stocks above its 100-day and 200-day moving average.

Three weeks ago, 89% of Asian developed market stocks were trading above its 100-day moving average. This has fallen back a bit, to 76%, but still remains at an elevated level. 75% of Asian stocks are trading above its 200-day moving average.

83% of European developed market stocks are trading above its 100-day moving average. This is basically the highest level reached for European stocks in a year and a half. 76% of European stocks are trading above its 200-day moving average.

Finally, we have the bull market leader North America. Here we are seeing a slight breakdown in momentum. 65% of North American developed market stocks are trading above its 100-day moving average and 66% of stocks are trading above its 200-day moving average.

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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.
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