Equity and commodities prices around the world are pointing to one thing — the re-emergence of global growth. That likely means that equity prices in the US will continue to rise. I focus on many of these global markets in the morning commentary, but I think when we look at all of these markets together they paint an overwhelmingly bullish picture in my opinion.
Japan – Nikkei
The Nikkei in Japan continues to rise and just this week rose above a significant trend line which it had broken during the December sell-off. For now, the index still has further room to rise and is heading towards 22,000.
The KOSPI continues to rise, and this week it would seem that the index broke out rising above 2,225. The chart would suggest that there is perhaps another 6% for the index to increase in the coming weeks.
One market we haven’t focused on is Australia, which is just 3.5% below its August highs. The country is an exporter of commodities and is heavily tied to China. Should the ASX200 get over a resistance level at 6,200, the index is likely to climb back to the highs August.
One of Australia’s biggest export to China — Iron Ore. The price of the metal, a critical ingredient for making steel, has risen rise nearly 50% to $90 from the $60s in November.
Copper, of course, has been on the rise in recent weeks which I have noted on many occasions.
Silver is another industrial metal on the rise. Believe it on not, according to geology.com, 35% of silver’s use goes to electrical and electronic products. The metal is on the cusp of a big break out as well. Silvers sharp decline started in the early summer around the same time as copper and many of the export-driven stock markets.
While the outlook for Lumber seems less certain. The chart does have what looks to be a cup and handle pattern, which would suggest higher prices may be on the way.
When we start looking at a complete picture it is hard to argue the global economy is getting worse. If that were there the case, these stocks and commodities would be heading lower, not moving higher. If the economic outlook stabilizes and continues to improve then, that would at least suggests that earnings growth has likely bottomed and is likely to rebound in the coming months. That is very much a bullish indicator for stock.
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