A Plunge in Global Stock Market Trends

Fewer countries are in medium-term uptrends, and that's a warning shot for stocks.

The percentage of country equity indexes trading above their 50-day moving average registered a sharp reversal lower over only a couple of sessions late last week. According to our calculations, positive trends plunged from 90% to below 60%.

countries above 50 day moving average

Over the past 30+ years, there have been 17 other times when the percentage of countries trading above their 50-day average goes from >= 90% to <=60% in two days or less.

For the MSCI ACWI World Index ex USA index, future returns were weak on a short to intermediate-term basis, especially over the next 1-2 weeks.

table msci world index trend reversal

Results look weak on a short to intermediate-term basis for the S&P 500, too, highlighting the interconnectedness of international stock markets. Interestingly, the 1-year performance is good, which would suggest the signal is more than likely to identify a correction within an ongoing bull market.

What else we're looking at

  • Full details on returns in the MSCI World Index and the S&P 500 after trend reversal signals
  • Why it pays to keep an eye on economic surprise indexes
Stat box

The SPY fund, which tracks the S&P 500 index, declined for 5 consecutive days with a total loss of less than 2%. In the fund's history, it has suffered such a persistent - but small - loss only 6 other times.


Fewer highs. In addition to fewer medium-term trends among global stock markets, fewer of them were hitting 52-week highs during the last push higher.

new highs in country indexes

Long-term trends still strong. Even with deteriorating medium-term trends, the bigger picture is still quite positive with 95% of markets still trading above their 200-day moving averages.

country indexes above 200 day moving average

Hardly any corrections. Few countries are in correction mode as well. Unhealthy markets typically see this figure above 40%.

countries in correction

The post titled A Plunge in Global Stock Market Trends was originally published as on SentimenTrader.com on 2021-09-13.

At SentimenTrader.com, our service is not focused on market timing per se, but rather risk management. That may be a distinction without a difference, but it's how we approach the markets. We study signs that suggest it is time to raise or lower market exposure as a function of risk relative to probable reward. It is all about risk-adjusted expectations given existing evidence. Learn more about our service , research, models and indicators.

Follow us on Twitter for up to the minute analysis of market action.

Not ready to signup up for a free trial yet?

Signup for our Daily Lite email to receive highlights of our daily report, research and studies.

Follow us on Twitter:

Subscribe to our Youtube Channel:

RSS Feed

Subscribe to the Blog RSS feed