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The second aspect is the current anti-globalisation trends all around the world, which at this point is much more uncertain and farsighted, but could have a dramatic impact to global growth and the markets.
We can see that not all participated equally in the crazy post-election rally. Despite a new all-time high on the Dow Jones 30, only 23% of the index constituents printed fresh 52 week highs. For the SP500, it’s even less and the number of shares trading above their 200 day moving averages has steadily dropped since the index hit a record in August. Most notably we could see small caps strongly outperforming large caps. To see a sustained bullish market, we would need a broader market participation.
More specifically, companies that source the majority of their revenue within the US outperformed multinationals. The Brexit and Trump’s election may just be a commencement of a general anti-globalisation movement, Italy and France being next in line. Until we get more clarity on that front which will take some time, investors may continue to favour domestic stories over large cap multinationals.