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European Weekly Review
3 February 2015
             By S Gale, Analyst

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Europe Weekly Index Summary
 CloseWeekly
Volume
Weekly ChangeP&F TrendStop
Euro Stoxx 343.4812,421.7m-4.29-1.2% Bull 16 Jan 2015 305.00
Euro Stoxx 50 3370.113,892.1m-44.17-1.3% Bull 15 Jan 2015 3000.00
France CAC40 Index 4627.67679.5m-47.46-1.0% Bull 16 Jan 2015 4100.00
Germany DAX Index 10828543.1m+29.67+0.3% Bull 18 Nov 2014 10550.00
Netherlands AEX Index 450.76538.4m-8.38-1.8% Bull 4 Dec 2014 405.00
Spain IBEX 35 Index 10328.12,454.1m-368.00-3.4% Bull 19 Jan 2015 9600.00
Sweden OMX Index 1575.94653.8m+21.24+1.4% Bull 18 Nov 2014 1420.00
Switzerland SMI Index 8429.2300.8m+132.75+1.6% Bull 26 Jan 2015 7850.00
Closing prices last 5 days
European Macro Outlook
The European Indices now test their recent highs following brief consolidations, with Germany outperforming and the SMI underperforming, despite rallying after its sharp selloff.

We note a possible sector rotation in favour of Banks as it reaches the bottom of the relative range. We highlight a slight slowing of momentum in the Telecoms Sector.

We watch to take profits in overextended longs encountering resistance and add long positions developing price and relative base formations.

Stock Index
The SX5E tests recent highs having consolidated into 3,330; we anticipate a trading range from 3,300 to 3,500.

The DAX extends to new price and relative highs.

The SMI rallies from support and now encounters resistance at 8,500.

Index Breadth
Our Europe (SXXE) % 10 Week MA Breadth Indicator tests the top of the range at 80% and is not yet overbought.

Sector Bulls & Bears
The Travel & Leisure (SXTE) Sector forms a possible short term relative top.

The Telecoms (SXKE) Sector approaches medium term price and relative resistance.

The Banks (SX7E) Sector tests the bottom of the medium term price and relative ranges.

The Telecoms/Banks (SXKE/SX7E) Ratio becomes oversold into potential support at 0.35.

Stock Action
We open a short position in Vinci as it encounters resistance at 50 and reasserts its medium term relative downtrend. We target 42 and place our stop at 52. (27th Jan)

We open a short position in Deutsche Bank as it encounters resistance at 27 and makes a new relative low. We target 20 and place our stop at 28.5. (27th Jan)

We open a short position in Fortum as it encounters the top of the range and reasserts its relative downtrend. We target 17 and place our stop at 19.7. (2nd Feb)

Model Portfolio
Longs
Date Stock Code Type Open Price Current Price % P&L Stop Comment
14 May 2014 Roche Holding AGROG Long 269.3 248 -7.91%244
11 Aug 2014 Deutsche Post AGDPW Long 23.905 29.175 +22.05%22.4
8 Oct 2014 Sampo Insurance ASAMAS Long 38 42.95 +13.03%36.2
17 Oct 2014 Novo Nordisk -BNOVOB Long 258.2 292 +13.09%240
17 Oct 2014 BMW AGBMW Long 80.57 104.25 +29.39%73
17 Oct 2014 Den Danske BankDANSKE Long 150.8 172.2 +14.19%139
21 Oct 2014 PostNL NVPNL Long 3.264 3.228 -1.10%3
2 Jan 2015 Yara InternationalYAR Long 337.9 398.8 +18.02%320
6 Jan 2015 LagardereMMB Long 21.42 24.11 +12.56%20
7 Jan 2015 Allianz AGALV Long 134.75 148.95 +10.54%124
8 Jan 2015 Bayer AGBAYN Long 116.45 129.05 +10.82%108
12 Jan 2015 BouyguesEN Long 30.58 32.025 +4.73%28.75
14 Jan 2015 Casino GuichardCO Long 76.5 81.15 +6.08%71
15 Jan 2015 LVMHMC Long 135.05 143.3 +6.11%125
19 Jan 2015 Novartis AGNOVN Long 88.05 90 +2.21%79
19 Jan 2015 Adidas-Salomon AGADS Long 58.81 61.79 +5.07%53
21 Jan 2015 Telecom ItaliaTIT Long 0.9635 1.009 +4.72%0.9

Shorts
Date Stock Code Type Open Price Current Price % P&L Stop Comment
6 Jan 2015 DSM NVDSM Short 48.285 47.24 +2.16%52.5
7 Jan 2015 Air FranceAF Short 7.728 7.6 +1.66%8.6
8 Jan 2015 Credit Suisse GroupCSGN Short 24.23 19.72 +18.61%25.5
9 Jan 2015 RWERWE Short 23.72 25.045 -5.59%26
14 Jan 2015 Kinnevik InvestmentKINVB Short 237.9 245 -2.98%255
21 Jan 2015 Airbus GroupAIR Short 46.82 46.87 -0.11%51
23 Jan 2015 Banco Popular Espanol SAPOP Short 3.919 3.754 +4.21%4.2
23 Jan 2015 ArcelorMittalMT Short 8.304 8.54 -2.84%9
26 Jan 2015 Lafarge SALG Short 61.43 61.9 -0.77%65
27 Jan 2015 Vinci SADG Short 47.775 47.305 +0.98%52
27 Jan 2015 Deutsche Bank AGDBK Short 25.365 26.365 -3.94%28.5
2 Feb 2015 FortumFUM1V Short 18.64 18.64 0.00%19.7
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