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European Weekly Review
12 May 2014
             By S Gale, Analyst

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Europe Weekly Index Summary
 CloseWeekly
Volume
Weekly ChangeP&F TrendStop
Euro Stoxx 323.447,803.1m-0.20-0.1% Bull 31 Mar 2014 312.50
Euro Stoxx 50 3184.092,983.0m+6.20+0.2% Bull 31 Mar 2014 3075.00
France CAC40 Index 4477.28588.3m+19.11+0.4% Bull 30 Jul 2012 4150.00
Germany DAX Index 9581.45426.8m+25.43+0.3% Bull 22 Apr 2014 9400.00
Netherlands AEX Index 401.93400.0m+2.70+0.7% Bull 9 Aug 2013 375.00
Spain IBEX 35 Index 10487.21,795.0m+12.70+0.1% Bull 31 Mar 2014 9900.00
Sweden OMX Index 1354.34416.8m-5.85-0.4% Bull 2 Apr 2014 1320.00
Switzerland SMI Index 8510.39203.7m+67.68+0.8% Bull 1 Apr 2014 8300.00
Closing prices last 5 days
European Macro Outlook

Against the back drop the continuing conflict in Ukraine, this week saw the ECB makes no changes to their monetary policy this month. However, the ECB President, Mario Draghi hinted that changes were coming in June to address the strong currency and low inflation pressures, following the quarterly meeting by the Governing Council and their staff predictions for growth and other economic indicators. Draghi's comments themselves have led to a weakening of the Euro from its intraday high on Thursday just under $1.4.

The European Indices remain range bound for the week after failing to test the early April high and encountering the 3,200 level on the SX5E. A breakout to new highs still remains on the cards as investors cautiously digest to Draghi's hints over next month's potential action.

Our portfolio remains net long and slightly bullish for the moment, but with added caution; following the lack of action by the ECB this month. We monitor the strength of the Euro as a key indicator, after its reaction to Draghi's comments as the hint of QE in June alone may see it weaken without action needed come next month. We await confirmation of CPI data and flash GDP numbers on Thursday this week which will also provide indicators as to the ECB's decision next month.

Stock Index

The Euro STOXX 50 Index continues to trade near the top of the range at 3,200 under its early April highs.

 

The Euro STOXX Index also continues to trade at the top of the range at 325 under the early April highs.

 

We note the Italian MIB Index against the Euro STOXX Index as it encounters medium term resistance from the Spring of 2012, having unwound already.

Index Breadth

Our All-Europe % P&F Bull Trend Breadth Indicator encounters its downtrends and its 50-day MA to maintain its bearish divergence.

Sector Bulls & Bears

The Insurance sector (SXIE) makes new relative lows into medium term support.

 

The Technology sector (SX8E) continues to test price support but makes new relative lows.

 

The Telecom sector (SXKE) confirms its medium term price base and encounters relative resistance having become overbought.

Stock Action

We opened a long position in Unibail as it breaks price resistance on bullish VAD and extends its relative base formation above support. We target 230 and place our stop at 190. (8th May)

 

We closed our short position and take profits (8.3%) in Deutsche Boerse as it finds short term price and relative support at 52.5. (6th May)

 

We closed our short position and took profits (7.3%) in ASML Holding as it finds price and relative support. (8th May)

 

We closed our position in STMicroelectronics after it hit our stop at 6.9.

Model Portfolio
Longs
Date Stock Code Type Open Price Current Price % P&L Stop Comment
21 Feb 2014 Total SAFP Long 45.6 52.26 +14.61%45
21 Feb 2014 Saint-GobainSGO Long 42.78 42.685 -0.22%38
25 Feb 2014 GeberitGEBN Long 274.3 300 +9.37%255
27 Feb 2014 InvestorINVEB Long 227.5 248.6 +9.27%215
4 Mar 2014 Swedish MatchSWMA Long 207.8 221.6 +6.64%195
14 Mar 2014 StatoilSTL Long 165.2 185.4 +12.23%154
17 Mar 2014 MichelinML Long 88.82 87.89 -1.05%83
21 Mar 2014 Norsk HydroNHY Long 29.01 32.21 +11.03%26.8
3 Apr 2014 Assicurazioni GeneraliG Long 16.88 16.57 -1.84%15.8
14 Apr 2014 L'Oreal SAOR Long 120.7 126.55 +4.85%115
17 Apr 2014 Wolters Kluwer NVWKL Long 20.6525 20.195 -2.22%19
17 Apr 2014 Casino GuichardCO Long 89.03 89.62 +0.66%81
22 Apr 2014 Orange SAORA Long 11.125 12.065 +8.45%10.3
24 Apr 2014 Schneider Electric SASU Long 68.38 68.41 +0.04%63
28 Apr 2014 Unilever NVUNA Long 30.53 31.1 +1.87%28.5
8 May 2014 UnibailUL Long 202.15 202.35 +0.10%190

Shorts
Date Stock Code Type Open Price Current Price % P&L Stop Comment
8 Nov 2013 VallourecVK Short 42.17 40.45 +4.08%42
11 Dec 2013 Ebro PulevaEBRO Short 16.37 16.69 -1.95%17.3
21 Jan 2014 OMV AGOMV Short 34.795 32.48 +6.65%36.8
31 Jan 2014 Deutsche Bank AGDBK Short 35.89 30.88 +13.96%37.6
13 Mar 2014 BNP ParibasBNP Short 56.44 52.98 +6.13%61
21 Mar 2014 Abertis Infraestructuras SAABE Short 16.225 16.565 -2.10%17.2
1 Apr 2014 PublicisPUB Short 64.57 60.2 +6.77%68
15 Apr 2014 ArcelorMittalMT Short 11.57 11.5 +0.61%12.7
22 Apr 2014 AholdAH Short 13.755 14.2 -3.24%14.6
25 Apr 2014 Continental AGCON Short 168.9 163.7 +3.08%182
28 Apr 2014 ENIENI Short 18.32 18.92 -3.28%19.5
5 May 2014 Swedbank ABSWEDA Short 170.5 166.6 +2.29%180
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