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European Weekly Review
22 October 2014
             By S Gale, Analyst

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Europe Weekly Index Summary
 CloseWeekly
Volume
Weekly ChangeP&F TrendStop
Euro Stoxx 301.3513,447.6m+1.06+0.4% Bear 13 Oct 2014 332.50
Euro Stoxx 50 2991.465,853.5m-9.53-0.3% Bear 1 Aug 2014 3325.00
France CAC40 Index 4081.241,060.9m-7.01-0.2% Bear 7 Aug 2014 4550.00
Germany DAX Index 8886.96779.1m+61.75+0.7% Bear 24 Sep 2014 8900.00
Netherlands AEX Index 394.49750.5m+1.19+0.3% Bear 15 Oct 2014 430.00
Spain IBEX 35 Index 10152.13,182.5m-52.80-0.5% Bear 24 Sep 2014 11200.00
Sweden OMX Index 1338.12673.3m+30.26+2.3% Bear 9 Oct 2014 1430.00
Switzerland SMI Index 8404.81392.9m+66.80+0.8% Bear 15 Oct 2014 8900.00
Closing prices last 5 days
Stock Index
The SX5E found support at 2900; we anticipate a 2900-3100 range.

 

The SXXE found support at 290; we anticipate a 290-330 range.

 

The DAX found support at 8400; we anticipate a 8,400-9,000 range.

Index Breadth
Our Europe (SXXE) P&F Bull Trend breadth indicator remains oversold with next support at 20%.

Our Euro STOXX 50 Weekly Climax indicator shows a very large number of sell climaxes (a strong bullish signal).

Sector Bulls & Bears
The Health (SXDE) sector corrected to support at 660 and maintains its relative uptrend.

The Autos (SXAE) sector finds medium term price and relative support.

 

The SCYC/SDEFN (European Cyclical / Defensive ratio) is oversold and finds the bottom of its range.

Stock Action
The end of the recent down move in Europe has signalled a rotation from defensives to cyclicals (as highlighted in sector chart above). We have taken profits in short positions that find support and opened long positions in stocks that found uptrends and have become overextended into support.

We closed selected longs this past week, Svenska Handelsbanken (-5.37%) and Nordea Bank (-5.08%), and reversed our long position in Unilever (-0.93%); we target 27.5 and place our stop at 31.

We opened long positions in Commerzbank (target 12.5, stop 10) and in Maersk B (target 14,000, stop 11,750).

We also opened long positions in Novo Nordisk B (target 280, stop 240), BMW (target 90 stop 73) and Den Dankse Bank (target 165, stop 139).

We opened a long position in PostNL (target 3.8, stop 3).

We closed and took profits in selected short positions: Tenaris (11.72%), Swedish Match (8.63%), Seadrill (30.96%), Enel (6.59%) and Vinci (12.07%).

We opened short positions in Siemens (target 75, stop 91) and Swiss Re (target 58, stop 76).

Model Portfolio
Longs
Date Stock Code Type Open Price Current Price % P&L Stop Comment
14 May 2014 Roche Holding AGROG Long 269.3 274.7 +2.01%244
11 Aug 2014 Deutsche Post AGDPW Long 23.905 23.4 -2.11%22.4
26 Aug 2014 BBVABBVA Long 9.347 9.022 -3.48%8.9
8 Oct 2014 Sampo Insurance ASAMAS Long 38 36.68 -3.47%36.2
8 Oct 2014 HenkelHEN3 Long 78.22 75.8 -3.09%75
13 Oct 2014 Commerzbank AGCBK Long 10.93 11.325 +3.61%10
14 Oct 2014 Maersk BMAERSKB Long 12780 12950 +1.33%11750
17 Oct 2014 Novo Nordisk -BNOVOB Long 258.2 263.7 +2.13%240
17 Oct 2014 BMW AGBMW Long 80.57 81.35 +0.97%73
17 Oct 2014 Den Danske BankDANSKE Long 150.8 153.6 +1.86%139
21 Oct 2014 PostNL NVPNL Long 3.264 3.264 0.00%3

Shorts
Date Stock Code Type Open Price Current Price % P&L Stop Comment
22 Sep 2014 LVMHMC Short 132.45 126.55 +4.45%143
1 Oct 2014 KeringKER Short 154.6 149.95 +3.01%161
10 Oct 2014 Siemens AGSIE Short 83.6 85.43 -2.19%91
15 Oct 2014 Unilever NVUNA Short 29.58 30.225 -2.18%31
21 Oct 2014 Swiss Re LtdSREN Short 72.3 72.3 0.00%76
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