Stock Markets From Across the Globe Report Significant Gains

Stock Market Indices (S&P 500, Dow 30 and Nasdaq) closed at or near their 52 weeks highs for the week ending March 2, 2012.

The Market was strong all week long.  From examining the charts of all three major indices, each pullback in prices were shallow and the market continues to frustrate investors who have been waiting for weeks for a correction to increase their exposure to equities.

We would like to take this opportunity to present to readers this current run to higher prices in the USA stock market in a bigger picture context – specifically a global picture.  To begin with, let’s take a look at the USA stock markets by using the S&P 500.  Below is a 52 week chart of the S&P 500.   We would like for you to note the following:

1.  The S&P has gone up 22% since the October 4th Bottom.

2.  Even with this great run off the October 4th lows, the  S&P 500 is today exactly where it was on May 2, 2011 (when the index closed at 1,370).

3.  We have highlighted on the chart the primary causes of the July, 2011 correction that lasted for nearly 2 1/2 months and led to the October 4th lows – they are:

  • USA Congressional Debt Ceiling Debacle
  • Greece Default Risk & The European Banking Crises
  • ECRI Recession Prediction for the USA – ECRI has a stellar track record in forecasting the economy.

 

(Please click on any of the charts for a larger picture)

 

Note that around December 20, 2011 is when the USA stock markets began it’s most recent, uninterrupted move higher.

Now to put this most recent move of the S&P 500 into perspective – we have prepared a chart that shows the performance of stock markets from literally the entire globe.

This type of  chart is a Performance Chart – it is used to measure gains (or losses) from a particular starting date of our choosing – we are able to then compare the performance of a stock or index against any other stock or indices of our choosing.  To begin – we will take the S&P 500 – and we will choose the starting date of October 4th – the last bottom as noted in the chart above – and we will assign March 2, 2012 as the ending date.  Now we will compare the S&P 500 performance against the performance of the Major Indices for each of the following countries for this 5 month period of time:

  • Brazil
  • Australia
  • United Kingdom
  • Germany
  • Hong Kong
  • China
  • Japan
  • India
  • Russia

We have all of the major regions from across the globe, including the USA,  Europe, Asia, Australia & South America.  When we compare the performance of the S&P 500 against these nine other countries from the October 4th lows  through March 2, 2012 – the results look like this:

 

 

As you can see – the S&P 500 has returned a very healthy 22% return for the  October 2011 – March 2, 2012 period.  Notice that all nine countries major stock markets are also reporting gains during this 5 month period of time.  There is not a single market reporting a loss.  Brazil & Russia report the highest gains while India and Japan are reporting the smallest gains.

We have one more chart to share.  This chart should demonstrate to readers – if they ever had any doubt –  that the USA markets and economy are not operating in isolation.  Below is another performance chart for the period of October 4, 2011 through March 2, 2012.  We again will compare the S&P 500 to the performance of the same nine countries for this 5 month period of time.

This last chart presents the daily movement of the S&P 500 against the other nine countries for the 5 month period of October 4, 2011 – March 2, 2012.  Examining the chart for just a moment will show you the obvious – – all countries  stock markets – including the USA – – are moving together in the same direction most of the time.

 

 

What you see in this chart is known as correlation.  Correlation is when two (or more) things are related and are dependent on each other.  Correlation is also referred to in market analysis whenever two different items move together in both an upward  and downward direction.

This chart demonstrates as well as anything that the USA economy and markets as of 2012 are interdependent with the world economy.    Economic and financial events that occur in the USA will affect different countries economies and markets to varying degrees.  Likewise, what happens in other countries economies markets will affect the USA economy and markets to varying degrees also.

 

 

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  • Reliance Investment Management LLC is a Registered Investment Adviser in the State of Washington. The adviser may not transact business in states where it is not appropriately registered, excluded or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption.
  • This communication reflects the opinions of Reliance Investment Management LLC and is being provided for informational purposes only and is not intended as a recommendation, an offer or solicitation for the purchase or sale of any security referenced herein or investment advice. It is being provided to you on the condition that it will not form the primary basis for any investment decision. Reliance Investment Management LLC and its affiliates may have positions (long or short), in securities or options on such securities referenced herein. The information contained herein is of the date referenced and Reliance Investment Management LLC does not undertake an obligation to update such information. Reliance Investment Management LLC has obtained all market prices, data and other information from sources believed to be reliable although its accuracy or completeness cannot be guaranteed. Such information is subject to change without notice. The securities mentioned herein may not be suitable for all investors.
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