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Sentiment 6/2017

June did not reserve any significant news compared to our  previous article, apart  the drop of  European indexes.

Continuing  disappoint macro data in the US and in the Euro area, and the target of 2% inflation as a target for recovery is far away.

It is our modest opinion  that central banks are now in trouble for  the weak signs of the economy, pushing new QEs would increase the flow of liquidity in the markets by fueling even more the bubble, raising rates would mean blocking the modest economic growth.

Operators perceive this stalemate and coherently  do not increase positions on equity but increase coverage positions. Obviously, the performance of the indexes in June suffered from this uncertainty by not providing significant insights with the exception of the euro / usd cross that aimed at 1.14 more for technical reasons that were fundamental.

We accompany  this article with the monthly charts of  SP500 and  STOXX600 and two proprietary indicators already published with  some  clarifications.

- SP500: the margin  up to the next resistance is 5% but with a potential draw down  until the first support of almost 8% with extension  in case of exceeding the level 2220;

- STOXX 600: also for this  the appreciation and draw down margins are the same as the SP500;

- Sentiment Indicator:  the excesses on equity markets are evident;

- Sentiment indicator 2: this index has always marked the turning point’s market,  even though with delay due to the monthly processing. The indicator slid down without pierce  its moving average;  the moving average for  12 periods is close to 21 periods. The conditions that must be met to confirm the change in the trend are the drop in the index under the two moving averages and that of the 12 below the one at 21.

Of course we will have to go back to the end of next month.

As for our portfolio strategy, refer to Report 6/2017.



Giorgio Giovannoni

Download this file (Indicatore macro USA - 2.pdf)Indicatore macro USA - 2.pdf[ ]111 kB
Download this file (Indicatore macro USA.pdf)Indicatore macro USA.pdf[ ]205 kB
Download this file (SP500.png)SP500.png[ ]198 kB
Download this file (STOXX600.png)STOXX600.png[ ]81 kB