Looking to Beat the Dow? Top 3 Index Alternatives
While volatility hits the U.S., stocks are roaring higher overseas and these three indexes are seeing major gains.
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U.S. stocks finally caught a break on Wednesday, as inflation cooled in February. According to the CPI report, consumer prices climbed at just 0.2% last month, down from 0.5% in January. Annually, consumer prices are rising at a 2.8% pace, down from 3% last month.
Despite the volatility of the past few weeks, the performance of the Dow Jones Industrial Average has been notable for its strength, relative to the other major U.S. averages. The storied index has lost just 2.3% since the start of the year.
The Dow has fallen beneath its 200-day moving average, but so has every other major U.S. stock index. The large-cap S&P 500, perhaps the most widely-watched of the indexes, has lost 4.5% year to date.
Meanwhile, the tech-heavy Nasdaq 100 index has lost 8.5% this year. The index’s 50-day moving average (blue) is turning lower, just like that of the S&P 500.
The Russell 2000, down 9% year to date, remains the weakest of the group. The small-cap index could soon experience a death cross (shaded circle) — a falling 50-day moving average (blue) crossing below a falling 200-day moving average (red). While this bearish indicator sounds ominous, it often occurs after the bulk of the damage is done.
What if I told you there is a stock index that has already gained 13.24% this year?
Germany's Dax Index has done exactly that, climbing another 1.5% on Wednesday. The Dax is rising on strong volume (shaded area), an indication that capital flowing out of U.S. stocks may be finding a new home overseas.
The strength of the Dax might come as a surprise. After last month’s federal elections, investors are hopeful that the new ruling coalition of the center-right CDU/CSU and the Social Democrat Party will boost the German economy.
The Hang Seng Index has been even stronger than the Dax, gaining 20% year to date. The Hong Kong-based index has formed a pennant pattern (black dotted lines). This bullish consolidation pattern suggests the index is likely to continue its ascent.
The Hang Seng Index received a tail wind last week when China’s National People’s Congress pledged fresh economic stimulus to help deal with potential U.S. tariffs.
On Poland’s Warsaw Stock Exchange, the WIG30 Index recently reached a multi-year high. This index has gained nearly 18% year to date.
The WIG30 has formed an A-B-C-D pattern, which suggests a potential rise to 3,600. The index formed a golden cross in late February (arrow) when its rising 50-day moving average (blue) climbed above its rising 200-day moving average (red).
At the time of publication, Ponsi had no positions in any securities mentioned.
