Commodities bubble?

The first chart is a long term relative chart of the CRB index versus the SP500.
The second one compares the materials sector weight as a percent of the SP 500.Looking at these two charts I do not see a bubble.
On the contrary I'm still long term bull.
The last chart compares the financials sector weight as a percent of the SP 500 : this is not a great chart!

Sector relative strength

Each chart, rising (falling) lines indicate periods where the sector is outperforming (underperforming) the Stoxx 600.
While the economy remains weak, sectors that typically benefit from a weak economy have not been acting particularly well.
Recent action in the Food&beverage, Health Care and Telecoms sectors has been very poor.
I have started to see renewed interest for defensive sectors since last week and it may be time to favoring Food&beverage and Telecoms sectors after their strong decline.
It's not just defensive sectors that have been presting badly .
Financials and Technos remain in a pronounced downtrend.
Utilities continue to run into resistance at current levels.
Finally, Materials and Oil&Gas continue to trade in nice uptrends.
Although both of these sectors are trading at the upper end of the range, any weakness in them as they approach resistance is likely to be temporary.

Scoring Stoxx sectors

A lot of downgrades in the technical scoring, especially for AUTOS BASIC RESOURCES and INDUSTRIALS.

Secteurs et signaux

Les marchés d’actions font de nouveau l’objet de prises de bénéfices mais pour l’instant je n’observe pas (encore) de signaux négatifs de retournement majeur.
Il y a donc lieu d’être très sélectif.
Un ranking des différents secteurs Stoxx basé sur la force relative me permet de savoir quels sont ceux qui sont bien (mal) orientés.
En voici le résultat.

A noter la bonne prestation des secteurs défensifs des Télécoms et de l’alimentaire ( food&beverage) et des biens d’utilités publiques (utilities)
La construction, l’immobilier et les banques restent toujours et encore à éviter.
Si nous examinons plus en détails les différents membres du DJ Euro Stoxx 50 en se basant sur les principaux indicateurs de tendance ont peut constater : que 6 banques se retrouvent dans la liste ou tous les indicateurs sont en mode vente et que 3 actions télécoms et 3 actions utilities se retrouvent dans la liste ou tous les indicateurs sont en mode achat.

Trends rotations

The chart below shows some sectors and trends in realtive versus the Stoxx index. (this a great tool for spoting trends rotations!)
As you can see since 2002 emerging markets (mxef) and basic resources stocks (sxpp) strongly outperformed (bubble?).
Construction (sxop) and small caps (scxe) are looking toppish and real estate is still falling (epra).
Telecom is improving (sxkp) while oil&gas (sxep) and especially health care (sxdp) are still underperforming the Stoxx index.(base line)

Banks

A lot of breakouts on banks.(short term bull).

But the technical scoring remains weak.(mid-term picture)

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

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.

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!

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

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.

Technical scoring Stoxx sectors

This is a technical scoring based on the 20 day (short), 50 day (mid), 100 day (long) and 200 day (very long) moving averages.From zero to ten points, scoring is green when improving red when deteriorating and blue when unchanged.

TELECOM

There is a lot of interest for telcos stocks.On the chart below, you can see that the DJ Stoxx Telecom index rises above a symmetrical triangle on strong volumes.

There is 8-10% upside potential left for the coming weeks.

Sectors and relative strength

In attachment you will find 3 Stoxx sectors.

The colour coding on the charts is based on the position of the relative chart.
Red below 20 and 50 days moving averages = bearish
Blue in between = neutral
Green above 20 and 50 days moving averages = bullish.
This give me a clear view of the changing sector rotation.
As you can see the industrials(chart1) are bullish and the telcos(chart3) are still bearish.(chart2)
The banks have just turn bullish.

Ranking secteurs Stoxx

Les secteurs à sur-pondérer sont en vert, ceux à sous-pondérer en rouge.

A suivre particulièrement, le secteur des média qui monte de la 17ieme à la 11ième place.

La courbe en rouge est le secteur des média en absolu, celle en noir représente le ratio du secteur par rapport au Stoxx600.

TELECOM

The performance of the Telecom sector has improved dramatically over the last couple of months. Technically the picture has clearly turned more positive.
On the chart below you can see, the breakout in absolute (in red) and relative basis. (Black line)

The Telecom sector is ranked 2nd out of the 18 Stoxx sectors rankings. (Just below Financial Services).

It seems that the investment community is finally warming up to the positives this sector has to offer: strong (free) cash flow generation cleaned up balance sheets and a high dividend yield.

TELENET: The upward trend for TNET remains intact but after a strong rise, the stock is correcting from an overbought level.Buy the dips.