“Market’s continue higher” – a common headline these days on all fronts. This week in the Equity Leaders Weekly we will look at two of our top Asset Classes: International Equity and U.S. Equity. For our examination of the number one spot, International Equity, we will utilize the iShares MSCI ACWI EX US ETF (ACWX) as our proxy. Looking at our number two spot in the asset class ranking, U.S. Equity, we will examine the chart of the SIA Dow Jones Industrial Average Index (DJI.I) which is now setting record all time highs.
iShares MSCI ACWI EX US ETF (ACWX)
Sitting in the number one spot of the SIA Asset Class Ranking since August 22, 2017, International Equity has continued to exhibit strength. To examine this strength, we will utilize the iShares MSCI ACWI EX USA ETF (ACWX). This ETF seeks to track the investment results of an index of large and mid capitalization non-U.S. equities, having a range of International Developed and Emerging Market exposure. ACWX set new all-time highs this June, and is up ~5% since August 22, after becoming the number one asset class. We believe this exemplifies the importance of adding and maintaining broad Equity exposure in client portfolios. Maintaining and overweighting with a home bias mentality can at times come as second nature – but utilizing the SIA Asset Class ranking can help shine a light on alternative Equity asset classes that may be an added benefit in maintaining proper diversification.
Looking at the ACWX, we see that after pushing through past high’s in the mid $40’s, a psychological resistance level at $50 will be the next hurdle. If that level is broken watch for resistance to enter again at $53.09. However, if the strength investors continue to enjoy were to turn and weakness were to set in, watch for a few key support levels to come into play. First, $47.11, then watch for support between $44.38 and $44.83. Next watch for a rather material support level at $42.23. With a positive SMAX Score of 9, ACWI is continuing to exhibit strength across the asset classes, and with the International Equity continues to hold onto the number one spot in the Asset class ranking.
SIA Dow Jones Industrial Average Index (DJI.I)
Moving onto the U.S. Equity class which currently holds the number two spot in the SIA Asset Class Ranking, we are confronted with similar and continued exhibited strength as the International Equity asset class. Breaking above 23,000 for the first time on Tuesday, to only subsequently close just 3 points shy of that level, the DJI.I closed at 23,158, a fresh new all-time close for the index. It was only a short 78 days ago that the DJI.I broke 22,000 for the first time. Names such as Boeing, Caterpillar, Home Depot and Goldman Sachs have all been stellar contributors to this move and the strength we are seeing in the Dow, with a lot of market pundits questions whether this move through 23,000 is a break-out or a fake-out? One thing is sure, as markets continue to make these highs and set these milestones, investors appear to be paying more attention, not wanting to miss the possibility of continued strength.
Analyzing the chart for the SIA Dow Jones Industrial Average is anything but simple. Not stopping since moving through prior resistance of 18,664, the DJI.I could meet resistance next at 24,000, with 25,000 being the next big “milestone” or psychological resistance barrier. In the event of market weakness, support could be found at the 21,000 level. Then again at 19,000 and next at 18,298. Meeting either of these two levels of support would be met with a rather significant market correction. With an SMAX Score of 8, the DJI.I is exhibiting strength across the asset classes.
For a more in-depth analysis on the relative strength of the equity markets, fixed income, commodities, currencies, etc. or for more information on SIACharts.com, you can contact our sales and customer support at 1-877-668-1332 or at siateam@siacharts.com.
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