U.S. vs Europe Equities: Is the Relative Strength Ratio Poised for a Turn?
The S&P 500/Euro Stoxx ratio stands at 11.077, a level close to its one-year historical average (z-score: -0.04) but positioned in the 82nd percentile of its long-term distribution. From a technical perspective, one element stands out: the RSI has fallen into oversold territory (22.2), a condition that has historically tended to precede rebounds in the ratio in favor of U.S. equities.
At present, the U.S. equity market shows weaker signals in terms of both market health (49.7/100) and trend strength (53.2/100) compared with its European counterpart. By contrast, the Euro Stoxx appears more resilient, with a health score of 59.7 and a trend score of 68.4, pointing to a phase of relative outperformance by European equities in recent weeks (data as of 22 January 2026).
Recent Dynamics
The latest move in the ratio tells a clear story of relative weakness in U.S. equities:
- 20-day momentum: -2.52%
- 60-day momentum: -1.54%
- Positioning below all major moving averages
The ratio is currently trading 2.85% below its 50-day SMA and 0.69% below its 200-day SMA, shaping a short-term technical setup that favors European equities.
Technical Analysis
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Disclaimer
This analysis is based on historical data and statistical patterns, which do not guarantee future results. Market conditions may change rapidly and invalidate the conclusions presented here. Investors are encouraged to complement this analysis with a thorough assessment of their risk profile and investment objectives.
