The world markets are weak, for good reasons that we are all aware of.
So, how long can we expect SPX to remain “strong” before getting sucked into the global vortex.
I used the fibs as a measuring stick, drawn quite approximately from the ’07 highs to the ’09 lows,
and the black arrows show current relative levels.
Prior to 2007, eyeballs say that SPX led (or was “coincident” with) the world markets.
Global markets were roughly in-sync in both bull and bear runs (Japan’s “lost decades” is another story).
In early 2011 SPX and DAX hit higher highs, and finally last month, SPX recovered her 2011 highs, while the rest of the world did not (black dotted lines).
Frankly I cannot see a previous time when this happened (can you?).
I only see (roughly) global linkage on this lookback. So this is an important divergence.
Is it justified? Does SPX deserve her current valuation compared to the globals,
especially considering her past history linking with the world markets?
This suggests to me that a “realignment” should be coming: with either SPX down or world up…..
“…[R]eality is something independent of what is experimentally established…”
[Einstein, in a letter to Schrodinger about his cat, 1950]
http://www.youtube.com/watch?v=AW6NVcqc ... re=related