DIFFERENCES, SIMILARITIES & EVOLUTIONS
This point-to-point comparison of the short-term switch oscillators reveals parallel tracks. The obvious difference is in the larger magnitude of Worldwide's volatility over USA's. From start to finish, this has been a factor in WW's superior out-performance overall.
Since 2008, its volatility has widened dramatically, but it is no longer producing continuing widening performance over USA. To the contrary, WW's performance has started lagging USA's.
If you look closely at the two equity curves during the period following the vertical bar, you can see the blue equity curve (USA) has been accelerating more rapidly than red (WW).
The numbers underlying this surprising development, after four years of USA lagging WW, provide precise measures of difference. The gray bar runs through to same date for each at the bottom price of its final decline before breaking out to new highs and reaching recent peaks.
Over this period, USA has gained 476% vs 432% for Worldwide. These cumulative gains work out to compound annual returns of 90% vs 85% respectively.
What's going on? It's good to know that it really doesn't matter. Just follow the numbers and act accordingly. But it's an abiding challenge to take a guess at what may be happening. The market has very sensitive antennae. It picks up on the slightest of signals and reports them to those who have gained the skills to read them--which is nobody, eh? I have forever maintained you can't forecast the future, but it may be ego satisfying to try and entertaining to audiences to be enthralled by such boldness. Guesses won't make you bucks Monday morning.
My thought is that market antennae started early in 2007 to pick up on the emergence of a forthcoming top in the fall of that year. Why?
The USA price curve is heavily weighted toward U.S. blue chips. While Worldwide also rose apace, the USA's gains represented the beginnings of a flight to safety against the forthcoming crash and panic.
After the crash in October, the flight to blue-chip safety accelerated and continues to this day. Until leadership returns to the emerging markets or at least to the Nasdaq indexes, there may be more equity troubles ahead before the ongoing, rolling crisis in public and investor confidence meets exhaustion.
Meantime, the next chart will give you insights into markets and systems behavior that most people don't think about much or even know about. Next
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