Global Stocks Look Strong Relative

Igor Manukhov - Mar 01, 2024
Aside from US stocks, EAFE (Europe, Australia, and Far East) offers a good alternative to Canadian stocks.

US large stocks continue to dominate, but it appears that global stocks (EAFE specifically) deserve a spot in portfolio as well. The chart below demonstrates the current state of the EAFE market and its relative strength against Canada and the US.

The black line on the third panel shows the current price of the EAFE ETF. It is clearly in an uptrend, as the price is trading above the 30-week moving average (the black line is above the rising purple line).
On the relative strength basis, EAFE is outperforming Canadian stocks (indicated by the rising green line), but it is trailing behind US stocks (as shown by the falling red line).

As a result of this relative strength analysis, I would recommend continuing to overweight US stocks. I would also overweight EAFE stocks compared to Canadian stocks if green line continues to rise.