Forget America — global stocks are about to stage a massive rebound: Technical analyst

After seven years of the S&P 500 crushing non-U.S. stocks, international equities are about to stage a big comeback. At least, that's what technical analyst Jonathan Krinsky predicts.

The MSCI All-World Ex-U.S. index has lagged the S&P 500 in each year since 2010, for the longest streak of underperformance since the former index was created in 1988. Even more dramatically, the S&P has nearly doubled the rest of the world's performance since 2010.

At this point, "we think it's time to look for a reversion to the mean in favor of global equities," Krinsky, chief market technician at MKM Partners, wrote in a recent research note.


Examining the charts, he observes that the global index "is approaching a key breakout out of an 18-month base"; if it manages to close above a level slightly higher than current prices, that would be "very bullish for global equities."

While acknowledging that "bears will argue this poor action is indicative that the U.S. markets have gone too far," Krinsky said Wednesday on CNBC's "Trading Nation" that "we remain constructive on U.S. equities, but we think there's some catch-up to be done by the rest of the world."

There would be a few ways to play this thesis. One could buy the stocks of Japan or Germany, two countries with a heavy weighting in the index of which Krinsky is especially bullish. Or one could simply add exposure to the whole group by buying Vanguard's FTSE All-World ex-U.S. ETF (VEU).

To be sure, not everyone is on board with the trade.

"The U.S. has been driving growth globally, and will continue to do so," Dennis Davitt, portfolio manager at Harvest Volatility Management, predicted on "Trading Nation."

"I think you're going to continue to see that spread stay where it is, and it may even increase."


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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