These Five Countries Are Next in Line to Beat the U.S. VIEW IN BROWSER By Michael Salvatore, Editor, TradeSmith Daily In This Digest: - The S&P 500 is the world’s biggest laggard
- These key regions are flashing powerful new buy signals
- The top-ranked Quantum Score stocks reveal a “stealth AI” trend
U.S. stocks are climbing back toward all-time highs… Yesterday, the S&P 500 closed just 1.9% below its record finish in January. And that’s saying something, given the wipeout in software-as-a-service (SaaS) shares that we covered in these pages earlier this month… Not to mention the general anxiety that AI could disrupt other industries, from manufacturing to media to financial advice. But some of the biggest gains are coming from bets outside the U.S. stock market. Take Stanley Druckenmiller. He earned his stripes as a trader under George Soros, went on to mentor Treasury Secretary Scott Bessent, and worked with Fed Chair nominee Kevin Warsh. And according to regulatory filings released yesterday that covered the fourth quarter of 2025, he bought the iShares MSCI Brazil ETF (EWZ), directly and via a call option. If he has held on to the position, then it’s delivered for him. So far this year, EWZ is up 19% in the first six weeks of 2026 versus a mere 0.6% gain for the S&P 500. Druckenmiller was even late to the party. EWZ was up nearly 50% last year versus a 12.5% gain for the S&P 500. And it’s not just Brazilian stocks that have outpaced the U.S. market. As we’ll get into today, the U.S. market is lagging behind just about everywhere. And fresh opportunities are springing up right now… Why do so many investors ignore overseas markets? No matter where you are in the world, chances are good you prefer to invest in your home country’s stocks. And nowhere is that bias more powerful than in the U.S., the world’s biggest stock market. The NYSE and Nasdaq have a total market cap of more than $34 trillion. That’s more than five times the size of the next-largest overseas market, Japan. For the past five years, the S&P 500 has outrun virtually every major developed market – including Germany, Japan, Canada, Australia, South Korea, China, Brazil, and the U.K. Stretch that window to 10 years, and the dominance only deepens. The S&P is up 240%, while even the best international performers – Canada and South Korea – trail at 178%. But lately, that story has flipped. Over the past 12 months, the S&P 500 is now the worst performer among this group. Every other country’s ETF in this group is higher: 
Maybe it’s due to a quick trip to Rio de Janeiro this past weekend – it was packed with tourists ready to empty their pockets at the annual Carnaval event (yours truly among them). But we can’t help but focus on this continuing “ex-U.S.” trend… and look for opportunities to profit using our favorite TradeSmith tools. Why is this happening? Pick your favorite reason… Maybe it’s because tariffs are causing investors to flee the dollar and diversify outside the U.S. Maybe it’s because U.S. stocks got so expensive that even loyal investors had to look elsewhere for value. Maybe it’s because such a long stretch of underperformance simply meant it’s time for the rest of the world to play catch-up. Or maybe it doesn’t make one lick of difference why this is happening. Here at TradeSmith, we don’t put much stock in the narratives behind a trend – we follow the data. So let’s take a closer look at what our data is showing about this ex-U.S. trend… and how TradeSmith’s indicators are flagging the next big trade. Brazil and South Korea are the biggest foreign-country winners… Over the past 12 months, the iShares MSCI Brazil ETF (EWZ) is up 43% against a return of just 11.7% for the S&P 500. And our new Short-Term Health indicator picked up on the trend early. Short-Term Health is a new version of our classic Long-Term Health indicator. Just like the original, it uses a stock’s historical volatility to determine whether it’s in an uptrend (the Green Zone), a downtrend (the Red Zone), or potentially transitioning between the two (the Yellow Zone). On the chart below, you’ll note that Short-Term Health flashed green on Aug. 26 when the iShares MSCI Brazil ETF (EWZ) was trading just under $28 per share. It’s up 39% in the six months since that buy signal. 
Brazil’s gains are impressive, especially considering its status as an emerging market. But they have nothing on South Korea. Since the Short-Term Health Green signal in the iShares MSCI South Korea ETF (EWY) on May 8, it’s up 136%. 
South Korea might be an anomaly due to its biggest company, Samsung (SSNLF), which serves more than one-third of the digital memory market – currently in huge demand for the AI datacenter boom. But these are the countries that have already moved and have been on these strong momentum signals for months. The question for us today: Which ones are flashing green now? Looking at the most recent Short-Term Health signals in TradeSmith’s Country ETFs basket, we see new buys for Saudi Arabia (KSA), Qatar (QAT), the Philippines (EPHE), Singapore (EWS), and Australia (EWA), all over the last month. 
If you’re looking for strong momentum in the ex-U.S. trend, these are the places to find it. If you’ve followed TradeSmith for any length of time, odds are good you’re familiar with Jason Bodner’s Quantum Score. Working as the head of equity derivatives for Cantor Fitzgerald, Jason’s main job was to fill huge orders for the wealthiest institutions on Wall Street. And he saw firsthand how this big money consistently moves stocks well ahead of the crowd. To decode these moves, Jason developed the Quantum Score. It’s composed of two parts: - A Fundamental Score that measures things like earnings, revenue, and profit margin growth.
- A Technical Score that measures price momentum and unusually strong buying volumes – the kind that likely come from the big money Jason follows.
One of the best things about the Quantum Score is how it helps you uncover big tech stories ahead of the masses. Not because of some hidden narrative – but because of the story the money flows tell. When hundreds of millions – and even billions – of dollars start to move into a stock in short order, it can be a clue that there’s something bigger going on that only Wall Street insiders are seeing. And as I was scanning some of the top Quantum Score stocks recently, one caught my eye in industrial and agriculture machinery maker Deere & Co. (DE): 
Deere’s Technical Score has sharply risen over the past three months, from 47 in November to more than 93 today. That suggests a huge, sudden flow of Big Money. Why would so much capital flow so suddenly into a company best known for its tractors? If you ask Jason Bodner, flows like these into stocks like this one, especially right now, are part of a trend he calls “secret AI”… According to Jason, the biggest AI gains won’t come from obvious names like Nvidia (NVDA) or any other Magnificent Seven stock. Instead, they’ll come from under-the-radar companies that are quietly essential to AI’s infrastructure. Think energy, chips, data centers, specialty metals, and manufacturing. Every trillion-dollar AI winner – Nvidia, Tesla (TSLA), Advanced Micro Devices (AMD), Palantir (PLTR), AppLovin (APP) – started in this exact “hidden” position before exploding higher. And a new batch is in that position right now. These “Secret AI Stocks” are quietly critical to AI’s future… even though the market still thinks of them as something else entirely. That’s why Jason is teaming up with technologist and angel investor Jeff Brown of Brownstone Research. Together, they’re showing investors a brand-new system that targets stocks in early upswings. And the timing is critical: Their data shows waiting even a few weeks can reduce potential gains by a third or more. That’s why you should make a point to join Jeff and Jason for the Secret AI Stocks Summit on Wednesday, Feb. 25, at 8 p.m. ET. They’ll not only reveal a system for spotting these plays, but they’ll each also reveal one pick live during the webinar. The system has already pinpointed moves as high as 601%, 1,921%, 1,940%, and more during testing. So reserve your seat now – it’s completely free. To building wealth beyond measure, 
Michael Salvatore
Editor, TradeSmith Daily | 
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