World Markets Weekend Review: Deeper In The Red

 |  Includes: DIA, QQQ, SPY
by: Doug Short

All eight of our world indexes in this series fell deeper into negative territory. The Nikkei suffered the least, with a decline of 1.64%. France's CAC 40 was the biggest loser, off 4.84%, with the SENSEX faring only fractionally better. The S&P 500 finished in the middle of the pack with a loss of 3.81%, but that was below the -3.57% average decline of our international mix.

The eurozone has again been the primary focus over that past week, but next week it will share the spotlight with the US Congressional Super Committee, which faces a November 23rd deadline to present a bipartisan strategy to save $1.2 trillion over the next decade. According to the mainstream media, the prognosis for committee success is about nil. The market situation in the US will be further complicated by the thin trading of a holiday-shortened week.

As I pointed out last week, we're nearing the time of year when investment companies are pondering the odds of a year-end rally. After all, there are only six weeks left in 2011. Of our International gang of eight, none is showing a year-to-date gain. The S&P 500, which was fractionally positive YTD last week, is still best YTD performer, off 3.34%, with the FTSE a distant second, down 9.1%. All the other markets are sporting double-digit losses thus far in 2011.

The tables below provide a concise overview of performance comparisons over the past four weeks for these eight major indexes. I've also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colors for each index name help us visualize the comparative performance over time.

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The chart below illustrates the comparative performance of World Markets since March 9, 2009. The start date is arbitrary: The S&P 500, CAC 40 and BSE SENSEX hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE on March 3rd, the Shanghai Composite on November 4, 2008, and the Hang Seng even earlier on October 27, 2008. However, by aligning on the same day and measuring the percent change, we get a better sense of the relative performance than if we align the lows.

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A Longer Look Back

Here is the same chart starting from the turn of 21st century. The relative over-performance of the emerging markets (Shanghai, Mumbai, Hang Seng) is readily apparent.

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Check back next weekend for a new update.