Raging Bulls Take Over the World

The major averages are barreling into the fourth quarter perched near all-time highs.

The S&P 500 is now up more than 20% year-to-date, and more than 60% off its bear market lows posted in late 2022.

US stocks are strong — no doubt about that!

I spend most of my time analyzing and trading US stocks. It’s called home bias – the tendency for investors to favor domestic stocks over foreign investments. Here in the US, home bias has been incredibly effective. American names have been outperformers for some time now…

But I have to warn you…

The bulls are beginning to run wild across the world.

If you’re like me and mostly focus on US names, it’s time to broaden your horizons to profit from a growing global bull. Today, I will show you what countries are exploding higher — and how you can take advantage of these unprecedented rallies.

But first, you have to toss out any preconceived notions you might have about these former laggards.

Once you have a few years of trading under your belt, you probably curate your own list of “untouchable stocks” tucked away on a scrap of paper somewhere near your computer.

For me, these are a list of individual names that always find a way to work against men or stocks that tend to produce wild, whipsaw moves that make timing entries and exits next to impossible.

I’ll also add entire sectors (or even countries) to my untradeable bucket. The trend usually dictates these entrants. As a general rule, I don’t want to own names that are stuck in long-term downtrends — especially ones that have failed to demonstrate any desire to build a constructive base or challenge resistance levels.

As you can probably guess, China has been on my untouchable list for a long, long time. Frankly, most of these stocks weren’t worth trading. Every time it looked like some of the more popular Chinese names would go on a run, bad news would hit and the entire group would reverse and trend lower again.

Sure, we’ve seen some decent rallies here and there. Most recently, some of the more popular China names enjoyed extended rallies during the 2020 Covid trading bubble.

But the pandemic hangover was especially rough on China. The iShares China Large-Cap ETF (FXI) peaked in early 2021, almost a full year before the US averages. And the bear market hit China’s large-caps especially hard. They logged a peak-to-trough drop of approximately 60% before bottoming out in late 2022 in a move that deeply undercut the Covid crash lows of 2020.

In fact, this group was slumping to prices not seen since 2009. I don’t know about you, but I don’t get too excited about stocks that are crashing to 13-year lows.

Until they stop crashing…

The Bounce Heard Around the World

Up until a couple of weeks ago, Chinese stocks were a total dumpster fire.

Dead money walking.

But that’s all changing as we witness a dramatic upside reversal. The Shanghai Composite didn’t just stop going down — it kicked off the new trading week by posting its biggest one-day rally since 2008. It has now ripped more than 20% over the past 5 days.

What triggered this insane move?

For starters, the Chinese government came out of nowhere last week, announcing massive easing plans and stimulus in what the Wall Street Journal is calling a “torrent of policy moves aimed at supporting the struggling economy and stock market.”

The result: China shares exploding higher off multi-year lows as investors flock back into these forgotten stocks. There are even rumors circulating about investors pouring back into stocks as Chinese brokers struggle to meet the demand of new investors opening accounts.

I think there’s still a lot of money that could be deployed in China in Q4 — just look at that broken downtrend. The Shanghai hasn’t booked monthly returns like this since the heart of the 2006-2007 and 2014-2015 rallies.

This huge rally is just getting started… and it’s not the only country finding its footing right now.

The World Wakes Up

China’s getting more than its fair share of attention as these forgotten stocks spring back to life. But it’s not the only country experiencing some positive momentum right now.

Emerging markets across the globe are heating up, from Asia to Latin America.

Here’s a brief list of the best performers:

• Egypt and India’s Nifty 50 each logged new all-time highs last week.
• Indonesia posted new highs in mid-September.
• Brazil notched new all-time highs in August.
• Peru just posted its highest weekly close in history.

Developed markets are also enjoying more than their fair share of bullish action. Just look at what’s unfolding in Europe:

• The German DAX, Swedish OMX 30, and Irish Stock Exchanges all closed at all-time highs.
• Hungary, Estonia and Czech stocks are strong.
• With so many individual country indexes hitting new highs, the Euro STOXX 600 is also posting new all-time highs.
• Italy is challenging its year-to-date peak.
• Spain and Greece have a little more work to do, but they’re both within striking distance of new 10-year highs.
• Plus, the European Bank Index added 4.00% to its rally last month. How bad can it be when European Banks are catching a bid?

It’s nearly impossible to be bearish with so many markets across the world firming up and running to new highs.

It’s time to remove your US bias to take advantage of a bull market that is quickly spreading across the globe.

I’ve already removed Chinese stocks from my untouchable list. I expect many of these names to remain in play through the fourth quarter. In fact, this could be where you find the biggest momentum moves heading into 2025.