Europe made a new all-time high last night while most of us were asleep.
If that doesn’t sound particularly exciting, that’s exactly why I wanted to write about it.
Nobody wakes up wondering what European stocks are doing. Most Americans couldn’t name Europe’s largest stock index if you offered them a million bucks.
But maybe they should.
The STOXX Europe 50 Index is basically Europe’s version of the Dow Jones Industrial Average. It tracks many of the continent’s biggest and most important companies.
Last night, it finally closed at a new all-time high, taking out the peak it made during the dot-com bubble more than 25 years ago:
Think about that for a second.
For more than 25 years, Europe’s largest companies never made a new high.
They survived the Great Financial Crisis, the European debt crisis, Brexit, COVID, inflation, wars, and everything else the market threw at them.
Through all of it, they couldn’t get above the highs they made back when people were buying Pets.com.
Now they have.
Maybe we’ve all been asking the wrong question.
Instead of wondering how old this bull market is, maybe we should be asking how many parts of the world are only now getting started.
25 Years Is a Long Time
Twenty-five years is a very long time.
A kid born the last time Europe made a new high is old enough to have a career today.
Someone who bought the index at the peak of the dot-com bubble had to wait an entire generation just to see new highs again.
That’s exactly why this breakout matters.
One of my favorite expressions is, “The bigger the base, the higher in space.”
Markets spend years, sometimes decades, digesting their prior gains. They wear investors out. They convince everyone nothing will ever change.
Then one day, it does.
Just a few days ago we wrote about the S&P Bank Index finally breaking above their Great Financial Crisis highs.
That was a big deal because banks need to participate during healthy bull markets.
But this might be even bigger.
Now it’s not just the banks. Europe’s biggest companies are joining the party too.
Maybe Everybody’s Wrong
One thing I love about this index is how simple it is.
If you want to know what drives Europe’s stock market, you don’t have to look very far.
Nearly all of the index is concentrated in just five countries: France, Germany, the Netherlands, Spain, and Italy.
Financials are the largest sector, followed by industrials and technology. And the biggest positions are companies like ASML, Siemens, Santander, Allianz, and SAP.
These aren’t speculative startups chasing the next big thing. They’re some of Europe’s biggest, most established businesses.
That’s why this breakout deserves our attention.
Everybody seems convinced this bull market is getting old.
Europe isn’t acting like it’s old. It’s acting like it just finished a 25-year repair.
Those are two very different things.
Prices don’t tell us what should happen next. But they do tell us what’s happening right now.
And, right now, one of the world’s largest collections of blue-chip companies just did something it hadn’t done since the dot-com bubble.
I’d pay attention to that.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs