The S&P generally draws the most attention when it comes to the performance of the stock market. Makes sense. After all, nobody comes close to the U.S. market in terms of sheer size, and what happens here tends reverberate around the world.
But, in the current climate, there’s a pair of indexes that perhaps deserve more attention, according to J.C. Parets of the All Star Charts blog, and they are flashing green lights for global markets.
“Two that I’m particularly focused on right now are Germany and London,” he said. “First of all, these are 2 of the most important indexes in the world. Top 3? Top 5? Either way, both of them are on the Mount Rushmore of Stock Market Indexes.”
So what are they telling us?
The first chart is of the German DAX
which hit an all-time high in the spring of 2015, just a few weeks before the S&P
took out new highs. Parets asks the question: “Is this the retest of a successful breakout and now we rip to new all-time highs?”
Parets says the trendlines in the DAX suggest a breakout to new all-time highs that puts the next target all the way up near 14,700.
Then there’s — the FTSE 100
While the S&P broke out in 2013 above former highs in 2000 and 2007, the FTSE just made its move late last year.
“I think we head much higher: up above 8,100,” Parets predicts, based on the chart below. “When you think about the fact that we are just now coming out of a 20-year base, the upside implications can be historic.”
There is, of course, a bear case to be made, but Parets isn’t buying it.
“Markets trend, so there is a much higher likelihood that this uptrend continues than for it to completely reverse,” he explained. “Consolidations are resolving higher, not lower. This is a bullish market environment all over the world, not just in the U.S. or Germany or the United Kingdom.”