This is the most important chart for the market in the year ahead, a top technician says

In a year when equities across the world have rallied in synchrony, Ryan Detrick of LPL Financial has identified what could be the most important chart for the market in 2018, as it could signal that the global rally is far from done.

With the S&P 500 up 20 percent — its best year since 2013 — emerging markets up 35 percent, and Europe's STOXX 600 index up 8 percent, many market watchers have applauded 2017 as the year of global growth.

A big driver of the global markets rally has been earnings. Detrick, who is a senior market strategist, says that based on one chart, the global earnings outlook is still positive for next year.

"We've seen a resurgence of global earnings in 2017 with the S&P 500, emerging markets and developed markets all positive ... [that's the first time it's happened] since 2010," he said Thursday on CNBC's "Trading Nation."

"Fortunately we're looking at all three of them being positive again next year," added Detrick.

And even though Detrick says there could be more volatility in 2018, he also sees signs of strong fundamentals in the U.S. and abroad that he believes validates the momentum of economic growth around the world.

More specifically, he points to tax reform and the rally in industrial metals such as copper, up 31 percent this year and seen as an indicator of industrial demand, as two factors that could uphold earnings growth in 2018.

"We definitely think a lot of it could be priced in so far what we've seen this year, and we could have some more rocky volatility," said Detrick. "But all in all, we just upped our forecast for earnings from about $143 a share to just under $150."

"As we look out 12 to 18 months, there are still a lot of positives," he added. "We've got tax reform, which should continue to drive markets higher."

Within U.S. markets, Detrick says small-caps and financials are the best buys for investors, thanks to tax reform. He also encourages investors to look at emerging markets thanks to their moderate valuations, and he predicts they will continue to grow in 2018.


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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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