Global Equity Technicals Point To More Downside Risk

 | Mar 15, 2022 01:40AM ET

This post was originally published at TopDown Charts

  • Global equities endured another tough week as geopolitical tensions rage

  • Is the current drawdown like March 2020? We take a look at key gauges.

  • We see more shaky periods ahead as downside participation increases

Global stocks are down more than 10% for the year. Damage-trackers we monitor still suggest the correction, bear market, (or whatever you want to call it), is still in the early innings. Previous points of strength are turning into points of weakness today. It’s also a mid-term election year which is often challenging for the bulls through the third quarter.

Another Rough Week/h2

Last week, US stocks fell nearly 3% while foreign equities actually managed to outperform a smidgen. Value niches were also ‘less bad.’ Bonds, however, suffered significant losses as interest rates rose and credit fears mounted. Investment grade fixed income fell about 3% while junk bonds were down 2%. The selling expanse is vast in 2022.

From a Range to a Downturn/h2

For ex-US stocks, last year’s pause in the uptrend has turned into a decided roll-over. Our featured chart below illustrates how the broad international equity market found resistance at the 2007 peak. It also failed to find support at the January 2018 zenith.

Investors are left wondering where things will bottom out. Meanwhile, the 200dma moving average breadth indicators proves that downside participation is strong. The bears are clearly in control. The percent of countries in long-term stock market downtrends is more than 70%.