It's Hard To Be Too Bearish With The NYSE And The Stoxx 50 Hitting Highs.

1.) VALUATIONS – There are still a lot of fundamental analysts in today’s world of systematic strategies (i.e., Volatility Control Funds, CTAs, etc.) that create a framework for how a company is valued. As earnings go up and prices either trend sideways or correct, their values become cheaper. As you can see, US stock valuations have dropped drastically against the rest of the world, with their premium dwindling to only about 22%. That's the lowest in more than six years and well below the 10-year average of 31%.

2.) NYSE – It’s often strange to me how little attention the NYSE Composite gets. It's literally the index of stocks trading on the world's most important stock exchange, and it just closed the month at another new all-time high. Not bad for a difficult July for most of the “popular” indexes. The Nasdaq was down -2.59% for the month, and the Russell 2000 (small caps) was down -2.89% for the month, with the S&P 500 up just +0.15%. A bullish NYSE is not a sign of weakness.

3.) EUROPE – Europe made a new all-time high last night while most of us were asleep. Who cares, right?! I’m sure few of you wake up wondering what European stocks are doing. In fact, I suspect that most Americans couldn’t name Europe’s largest stock index. The STOXX Europe 50 Index is basically Europe’s version of the Dow Jones Industrial Average. It tracks many of the continent’s biggest and most important companies, and last night it finally closed at a new all-time high. That takes out the peak made all the way back in the dot-com bubble over 25 years ago! Let that sink in… for more than 25 years Europe’s largest companies never made a new high. They survived the Great Financial Crisis, the European debt crisis, Brexit, COVID, inflation, wars, and everything else the market threw at them. And now they’ve moved into clear blue sky. So, maybe instead of wondering how old this bull market is, we should be asking how many parts of the world are only now getting started. For clarity, most of the STOXX 50 is concentrated in just five countries: France, Germany, the Netherlands, Spain, and Italy. Financials are the largest sector, followed by industrials and technology. And the biggest positions are companies like ASML, Siemens, Santander, Allianz, and SAP. These aren’t speculative startups chasing the next big thing. They’re some of Europe’s biggest, most established businesses. This is why this breakout is something to pay attention to.