The World is Breaking Out All Over
The US stock market, in the form of the S&P Composite, has been consistently recording new all-time highs since 2012. That has not been the case for the vast majority of non-US markets, when expressed in dollar terms as non-US ETFs. That’s because most of them reached their best levels in 2000 or 2007. However, many markets surpassed those high-water benchmarks in 2024 and more recently 2025. The result is that many of these ETFs have only recently surpassed 20-year-plus resistance trendlines and mega consolidation patterns. Consequently, the plethora of breakouts offer one piece of evidence that international markets have much further to run on the upside. What follows, therefore, is a quick review of the world’s principal regions and where they currently stand.
The Rest of the World
There are two non-US macro ETFs that I follow, the Europe Australia Far East (EFA) and the Vanguard FTSE All-World Ex US (VEU).
Chart 1 features the EFA and shows that the price broke above a resistance trendline emanating in 2009. Note also that the long-term KST has begun to re-accelerate from a relatively overstretched reading, as it did in 2006. Such signals are usually high-risk but reliable for a limited period. If the breakout holds, the EFA is likely to move higher.
Chart 2 features the VEU. In this instance, the breakout comes from a horizontal trendline intersecting with the 2000 and 2021 peaks. This one is more decisive and, therefore, more credible than that for the EFA. The lower window compares the VEU to the Dow Jones World Index ($DJW). It’s been in a secular downtrend against the world since 2011, and the RS line is slightly shy of the down trendline. Needless to say, a break above it swould strongly indicate a secular reversal.
Chart 3 focuses on relative price action over the course of the last few years. It looks as though the relative line could be in the process of forming a reverse head -and-shoulders pattern. The short-term KST has just gone bullish and, since its long-term counterpart is also trading positively above its EMA, there is a good chance that the pattern will be completed. More importantly, such a break would also result in a move above the secular downtrend for relative strength featured in the previous chart. Interestingly, the neckline is positioned at .100.
Europe Against the World
The Eurozone ETF (EZU) has broken out in a similar way to the EFA in Chart 1, but the move has been more decisive. The RS line against the $DJW has also broken out, first against the dashed secular down trendline and then above the solid one. That certainly suggests downside momentum for the secular trend has begun to dissipate. However, a credible signal for an actual reversal requires a break above the previous high at .09.
Asia Against the World
Asia is more equally divided between emerging and developed countries than Europe. It offers two principal ETFs. First, the Vanguard Pacific (VPL) is heavily weighted toward Japan, along with South Korea, Australia, Hong Kong, and Singapore. Chart 5 shows that it has recently broken above a resistance trendline of secular proportions. It is currently overstretched, so don’t be surprised if it experiences a correction prior to moving much higher. Its RS line is still in a downtrend, but is very close to an upside break.
The iShares MSCI Asia ex Japan (AAXJ) focuses on emerging and developed Asian markets like China, India, South Korea, Taiwan, and Southeast Asia—but excludes Japan. It has only been listed since 2011 but is looking promising, since the long-term KST, in the second window, is re-accelerating to the upside, while its RS line has just violated an important down trendline, as well as its 12-month MA.
Finally in Asia, the Shanghai Composite has decisively cleared its secular down trendline. The RS line is still in a downtrend, but is very close to a significant upside breakout.
The absolute prices of Europe and Asian ETFs have been in a sideways or upward trend since the financial crisis. In contrast, South America, in the form of the iShares Latin America 40 (ILF), has been struck in a downtrend. September, though, saw the ILF very slightly edge through its secular down trendline. If it can build on that strength, the odds of a secular reversal to the upside will be greatly enhanced.
Good luck and good charting,
Martin J. Pring
The views expressed in this article are those of the author and do not necessarily reflect the position or opinion of Pring Turner Capital Group of Walnut Creek or its affiliates.
