One of my previous messages showed a rotation out of small cap stocks into mega-caps in the middle of 2011 which continues to this day. That suggests that investors have been growing increasingly defensive over the last year.  The chart below provides graphic evidence that global stocks may have actually peaked last year as well. It shows the Vanguard Total World Index (VT) since 2009. [The VT includes stocks from all over the world in both developed and emerging markets. It has a surprisingly large weight to North America (51%). Europe accounts for 22%, emerging markets 13%, and the Pacific region 12%. The chart shows a major uptrend line being broken last summer (red circle). The VT has since formed a pattern of lower peaks (red trendline). Although the U.S. stock market has held up better than other global stocks, it too is influenced by global trends. This chart isn't encouraging.


John Murphy
About the author: is the Chief Technical Analyst at, a renowned author in the investment field and a former technical analyst for CNBC, and is considered the father of inter-market technical analysis. With over 40 years of market experience, he is the author of numerous popular works including “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Before joining StockCharts, John was the technical analyst for CNBC-TV for seven years on the popular show Tech Talk, and has authored three best-selling books on the subject: Technical Analysis of the Financial Markets, Trading with Intermarket Analysis and The Visual Investor. Learn More
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