Trading portfolio

From time to time I will publish my trading portfolio :

10 stocks only big caps or trackers, no cash, no intraday transactions (only close), fees 0.35%.
High turnover and long only.(I recently sold GEOPHYSIQUE and SOLARWORLD and bought URANIUM and VALLOUREC)

Base metals&oil and gas

As the price of the industrial metals continue to fall (-2.78% YTD in €), the DJ Stoxx basic resources continues to rise.(+37.12% YTD in €)
May be there is a buying climax on metal&mining stocks but for now the trend remains strong.

Another interesting intermarket relationship is the recent decoupling between oil price and natural gas price.

Technical weekly 21092007

Equities
This week the SP 500 and the DJ Euro Stoxx 50 exceeded significant resistance zone in strong volumes.
As I said last week they are likely to extend their long-term uptrends and rise to another new all time high.
Very oversold sectors like banks and construction rebounded sharply but technically speaking we do not think it is time to overweight those sectors.
My favorite sectors remain food&beverage, telecom, Oil&gas and technology.
The rally in the basic resources sector is impressive but this sector is now very overbought.
The monthly chart below is the DJ Europe Stoxx technology.(chart1)

The index fell 86% from the peak to which it accelerated in the late 1990s before finding support near 143 in 2002.
Since then it has maintained a progression of rising major reaction lows in what has been a relatively gradual uptrend.

Since May of this year it has outperformed the Stoxx (chart2-black line) and is breaking above new high wich is a very positive event. (red line)

Bonds
The breakdown below the 4.2% support level was a bull trap for bonds holders and yields rebound strongly after they completed a TD Sequential low risk buy signal.(green arrow on chart).This event cancel my downside target of 3.7% and I have now an upside target of 4.6% for the coming weeks.

Brent

No change, long term very bullish. In the short term prices continue to trade sideways close to resistance zone.

Euro
The euro broke its long term rising resistance line at 1.4000.The rate is now overbougt but I think a target of 1.43-1.44 is likely for the coming weeks.

Long term sectors charts (Stoxx)

Sometimes looking at long term monthly charts
can give you a good perspective where the money is flowing.

Bullish charts (trend and momentum up):

Telecom-Technology-Food&beverage-Oil&gas

Bullish but overextended : basic resources

Bearish charts (trend and momentum down)
The last MACD signal was given in 2002.
Those signals doesn't came so often but when they occur it is prudent to not "fight the trend".

Health care-Real Estate-Banks-Construction

€/$

The euro broke its long term rising resistance line at 1.4000.
Elliotticians often calculate Fibonacci extensions to project the length of Elliott waves.
In this case, the fifth and the first wave patterns are often equal which means a minimun target between 1.43 and 1.44 for the coming weeks.
If we report the width of the long term bullish channel to the breakout, we arrived at the same target

SP 500 bullish breakout

Yesterday the SP 500 validates a bullish pattern on high volumes.(some analysts see a triangle others an inverse head and shoulders)
Moreover the index was able to break above 2 important resistances and reintegrates the long term bullish channel.
The target of the pattern is around 1600 and possibily higher (top end of the channel)

Technical weekly 14092007

Equities

No change, the short-term recovery remains in place.
If the big indices are able to break above key resistances it are likely to extend their long-term uptrends and rise to another new all time high.
Volumes are still very low and in this difficult market stocks and sectors picking are key.
Strong sectors are unchanged, Food&beverage, Oil&gas, Telecom and Technology.Financials and banks continue to underperform and I also see weakness in the Construction sector.

Implied volatility should stay at a high level in the coming weeks, this is why I don’t see a quick end to this market turmoil.

Bonds
Yields are breaking down below a very important support level what implies that I change my view on bonds.
Technicaly speaking the picture is now more neutral for the bond market.
The downside risk and the target of the pattern could be around 3.7-3.65% for the coming weeks/months.On the other hand yields are very oversold (green arrow on chart) which means a rebound is now developping.

Brent
Last week I said that : further good progress is expected towards the 80 $ resistance zone. So here we are, and this week we want to show you a long term weekly chart.
As you can see according to the Elliott wave theory, we are now in the beginning of wave 3, which is usually the largest and most powerful wave.
If we copy exactly (amplitude and rate of ascent) the last upward movement of the preceding wave 3, we arrive at a target of 150$ for February 2009!
This corresponds to the higher uptrend-line of the long term rising bull channel.

Euro
The uptrend remains intact, but the target which is the upper rising trendline is now reached.
Moreover, TD Combo&Sequential indicators are now flashing a low risk overbought sell signals.(red arrows on the chart).

Ranking Stoxx sectors

Sector rotation model for the Stoxx sectors.
Overweight Telecom, techno, basic, food and oil.
Underweight Real Estate, Financials, banks,Construction and Travel&leisure.

Buy&sell signals

Technical scoring from 0 to 10 points (based on moving averages) for the Stoxx sectors.

Recent breakout (a good event) for the members of the DJ Euro Stoxx 50.

Recent breakdown (a bad event) for the members of the DJ Euro Stoxx 50.

Banks are oversold

TD Sequential 13 low risk buy signal on banks.(green arrow)
The DJ Europe Stoxx banks and the US KBW index are very oversold.

Still a downtrend but even a dead cat will bounce if you throw it off a high enough building!

Long-term yields are falling

Changing my opinion for bonds as the bund in yield is breaking down below
the 200 day MA and below important supports.
Mid-term target now around the 3.65-3.7%.

Agriculture

The DJAIG Agriculture index recently made a bullish breakout exceeding new highs.
According to Bloomberg, here are the performance YTD for the best performer commodities
AGRICULTURE : +9.26%











WHEAT : +58.68%
GRAINS : +18.92%
SOYBEAN : +22.38%
SOYBEAN Oil : + 18.99%
COCOA : + 7.03%

According to an US newspaper, over the past year :

milk up 21%
chicken breast up 12%
coffee up 12%
ground beef up 11%

The last US CPI (YOY) was 2.4%
So, Inflation is dead! (unless you eat)

Gold

Bullish breakout on gold today.The upside potential is above the May 2006 high around 750$.

Technical Weekly 07092007

The short-term recovery remains in place. If the SP 500 can break above key resistance at 1490 it is likely to extend its long-term uptrend and rise to another new all time high.
The pattern looks like an inverse head and shoulder pattern but needs to be confirmed because the neckline has not been broken yet.(chart 1)

On the negative side volume has been very low, this suggest that this technical recovery could end soon.
The downside risk is a move below the 1460 level that could imply a retest of the recent low around 1370.
Note that the Banks sector markedly underperformed the broad indices, the sector’s largest component in the US, Citicorp, in fact, making new lows in relative terms this week.
On the contrary the DJ Europe Stoxx Technology made a new high in relative terms.
An absolute break above the 345 resistance level would be technically very bullish.
In Europe Nokia and SAP have great charts.
We think that equity markets will remain volatile in the coming months.
Sector and stocks picking will be very important and as you can see in the tables below there are huge differences between sectors returns since the beginning of the year.(SP 500 table 1 and STOXX table 2)

Bonds
Bonds yields are testing support around the 4.2% level.
This is a very important technical level which includes the 200 day moving average.(in green) I suspect that the correction is over and that renewed strenght may follow soon.

Brent
After a rebound on the 68 $ support, further good progress is expected towards the 80 $ resistance zone.(rectangle on the chart)A break above this year’s high would be very bullish.

Euro
After having validated a minor double top pattern in July the rate rebounds on the 1.343 support level.
The uptrend remains intact, with the upper rising trendline as next target/resistance levels.

STOXX sectors

Stoxx sectors to overweight (in green) and to underweight (in red) based on relative strength.



"click on the table to enlarge"







Technical scoring based on different moving averages (from to 10 points) for the Stoxx sectors

Bullbear

Interesting study coming from Bespoken (http://bespokeinvest.typepad.com/bespoke/)showing the historical bull and bear markets of the SP 500.

Conclusion : this bull market last for a long time but is relatively weak in terms of performance.

Classement recherche AQR

Voici selon AQ Research le classement de la meilleure recherche européenne en actions.
C'est un classement qui compare tout type d'analyses techniques ou fondamentales.

1- DZ bank
2- ESN
3- DayByDay
4- LBBW
5- Dresdner
6- Kepler
7- Citigroup
8- Oddo
9- ABN
10- UBS
11- Charles Stanley
12- Goldman Sachs

Analyse technique

L'analyse technique cela fonctionne.La preuve avec DayByDay spécialiste en finance comportementale (http://www.daybyday-pro.com/) qui est maintenant classé 3ème meilleure recherche européenne en actions au dernier classement AQ Research. (en seulement 6 mois de participation !).

Commodities

Commodity ranked return and UBS Commodity long-short.

"click on the table to enlarge"

Dexia

Aprés avoir validé plusieurs signaux de vente : le premier en avril (flêche rouge indicateur TD Combo), un double top en juillet et finalement (et le plus important) une cassure de la droite de tendance haussière qui prévalait depuis mai 2004, le titre est parvenu à rebondir sur l’objectif des 19€.
Ce signal d’achat également validé par l’indicateur TD Combo (flêche verte) est toujours valable et la reprise technique pourrait se poursuivre avec comme objectif l’oblique haussière (devenue une importante résistance) vers les 22.3€.

The return of techno?

Recently, the DJ Europe Stoxx Technology made a new high in relative terms (ratio vs STOXX index in black).An absolute break above the 345 resistance level would be technically very bullish.In Europe NOKIA and SAP have great charts.
In the US, APPLE CISCO and ORACLE are stongly trending upwards.

Arbitrage en pétrolières

Achetez de sociétés pétrolières qui profitent de la hausse des investissements dans l'exploration et la production et vendez les "majors".

Ces dernières ont de plus en plus de mal à faire face à la baisse de la productivité.

De plus, nombres de pays (Russie, Kazakhstan, Arabie Saoudite, Amérique latine) se sont "réappropriés" des champs pétroliers.

Les graphiques hebdomadaires de TOTAL ENI et BP montrent clairement une sous-performance chronique par rapport à l'indice STOXX(courbe noire).

Par contre SAIPEM TECHNIP et GEOPHYSIQUE surperforment l'indice de façon constantes et régulières.