This week’s indicator is like a scoreboard showing how U.S. stocks are performing compared to the rest of the world. It’s based on something called the Technical Score Spread.
How does it work? Imagine a global competition where each country’s stock market gets scored on two things: technical strength and valuation. The technical side looks at price trends, momentum, and whether a market is rebounding after a dip. The valuation side checks how attractive a market is based on factors like earnings and growth. Combine these scores into an overall ranking, and you get a neat little report card for each country.
Now here’s where it gets interesting. Those green and red spiky bars at the bottom of the chart measure how the U.S. stacks up against the rest of the world (excluding the U.S.). Green spikes mean U.S. stocks are ahead, while red spikes mean they’re falling behind. If the green bars are above 2, it’s a signal to favor U.S. stocks. If they fall below -2, it might be time to consider looking elsewhere.
Right now, the U.S. is scoring big. The indicator has been giving a positive signal since July 12, which means U.S. stocks have been a solid investment choice. Since then, U.S. stocks have outperformed the global stock index by a good chunk. You can see this in the blue relative strength line on the top half of the chart—it’s been climbing steadily.
Why does this matter? If you’re deciding where to invest, this indicator can be a helpful guide. At the moment, it’s pointing to U.S. stocks as the top pick. But of course, markets can always change, which is why it’s important to keep an eye on that score spread at the bottom of the chart.
For now, though, the U.S. market is still in the lead, and the scorecard says it’s a good time to stick with the hometown favorite.
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.
Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Past performance does not guarantee future results.
The MSCI ACWI captures large and mid cap representation across 23 Developed Markets and 24 Emerging Markets countries. With 2,935 constituents, the index covers approximately 85% of the global investable equity opportunity set.