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European Weekly Review
8 September 2014
             By S Gale, Analyst

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Europe Weekly Index Summary
 CloseWeekly
Volume
Weekly ChangeP&F TrendStop
Euro Stoxx 328.767,349.6m+9.11+2.8% Bull 4 Sep 2014 297.50
Euro Stoxx 50 3275.252,799.4m+102.62+3.2% Bear 1 Aug 2014 3350.00
France CAC40 Index 4486.49534.5m+105.45+2.4% Bear 7 Aug 2014 4600.00
Germany DAX Index 9747.02363.5m+276.85+2.9% Bull 3 Sep 2014 9350.00
Netherlands AEX Index 421.11363.7m+7.98+1.9% Bull 9 Aug 2013 385.00
Spain IBEX 35 Index 11148.91,396.3m+420.10+3.9% Bull 4 Sep 2014 9900.00
Sweden OMX Index 1388.39336.3m-0.50-0.0% Bear 10 Jul 2014 1410.00
Switzerland SMI Index 8788.77187.6m+129.80+1.5% Bull 1 Sep 2014 8150.00
Closing prices last 5 days
European Macro Outlook

Given that breadth maintains its bearish divergence and encounters resistance levels against the market, we anticipate a consolidation from here. We also look to overweight mega-caps which have a stromger trend profile than the broader market.

 

Stock Index

The Euro Stoxx 50 Index (SX5E) broke up resistance at 3,225, but now trades into a resistance zone between 3,290 and 3,325.

 

The Euro Stoxx 600 Index (SXXP) re-tests major resistance at 350.

Index Breadth

Our Europe (SXXE) P&F Bull Trend Breadth Indicator rallies from oversold but remains in a large bearish divergence to the index.

 

Our Europe (SXXE) % 30 Week MA Breadth Indicator rallies sharply from oversold, but now becomes overbought whilst testing strong resistance at 60%.

 

Our Europe (SXXE) % 10 Week MA Breadth Indicator becomes overbought into resistance at 80%.

Sector Bulls & Bears

The Banks (SX7E) Index approaches major resistance at 160 but maintains long term price and relative base patterns.


The Food & Beverages (SX3E) Index broke above price resistance at 480.


The Healthcare (SXDE) Index further extends to new highs whilst confirming its break above relative resistance.


The Chemicals (SX4E) Index is into (potential top formation) resistance whilst failing to rally on relative.


The Construction (SXOE) Index is into (potential top formation) resistance whilst just starting to break medium term relative support.

Stock Action

We kept our long positions unchanged this week.

We closed short positions in Ryanair and ABB flat as they began to rally and Bayer and Merck as they reached their respective stoplosses.

We moved to a net short position in the Autos Sector as we opened shorts in Fiat and Michelin (1st Sep). However, the sector has reversed out into further resistance at 475.

We opened a short position in Seadrill as it deveops price and relative tops. (5th Sep)

We opened a short position in Vinci as it reasserted its price and relative downtrends on bearish VAD with a new relative low. (5th Sep)

We also opened a short position in Swedish Match as it develops top formations and fails at relative resistance. (5th Sep)

Finally, we opened a short position in DSM as it forms a short term price top and tests its recent relative lows. (8th Sep)

Model Portfolio
Longs
Date Stock Code Type Open Price Current Price % P&L Stop Comment
25 Feb 2014 GeberitGEBN Long 274.3 314.5 +14.66%280
21 Mar 2014 Norsk HydroNHY Long 29.01 38.07 +31.23%31
28 Apr 2014 Unilever NVUNA Long 30.53 32.495 +6.44%29.5
14 May 2014 Roche Holding AGROG Long 269.3 269.3 0.00%244
30 May 2014 Heineken NVHEIA Long 51.71 58.67 +13.46%48.5
25 Jul 2014 OpapOPAP Long 12.53 12.34 -1.52%11
29 Jul 2014 Linde AGLIN Long 156.2 152.85 -2.14%145
5 Aug 2014 TelenorTEL Long 144.9 143.8 -0.76%137
6 Aug 2014 KPNKPN Long 2.488 2.557 +2.77%2.34
6 Aug 2014 Hermes Int.RMS Long 260.4 243.2 -6.61%245
8 Aug 2014 Infineon Technologies AGIFX Long 8.222 9.047 +10.03%7.8
11 Aug 2014 Deutsche Post AGDPW Long 23.905 25.675 +7.40%22.4
14 Aug 2014 ENIENI Long 18.38 19.45 +5.82%17.5
18 Aug 2014 Sanofi SASAN Long 79.61 85.43 +7.31%74.5
19 Aug 2014 Airbus GroupAIR Long 44.655 49.19 +10.16%42
25 Aug 2014 Thales SAHO Long 43.16 43.02 -0.32%41
26 Aug 2014 BBVABBVA Long 9.347 9.752 +4.33%8.9

Shorts
Date Stock Code Type Open Price Current Price % P&L Stop Comment
13 Jun 2014 Delhaize GroupDELB Short 50.98 52.68 -3.33%54
24 Jun 2014 Akzo NobelAKZA Short 53.79 54.09 -0.56%56
28 Jul 2014 SkanskaSKAB Short 147.6 145.6 +1.36%156
30 Jul 2014 Zurich Financial Services AGZURN Short 266.8 279.9 -4.91%280
12 Aug 2014 ThyssenKrupp AGTKA Short 20.61 22.07 -7.08%22.5
27 Aug 2014 Metro AGMEO Short 27.13 27.85 -2.65%28.5
28 Aug 2014 EnelENEL Short 4.008 4.23 -5.54%4.25
29 Aug 2014 BouyguesEN Short 27.935 28.055 -0.43%29.2
1 Sep 2014 FiatF Short 7.355 7.665 -4.21%7.9
1 Sep 2014 MichelinML Short 83.59 84.87 -1.53%88
4 Sep 2014 Seadrill LtdSDRL Short 222.2 216 +2.79%235
4 Sep 2014 Vinci SADG Short 48.79 47.88 +1.87%52.5
4 Sep 2014 Swedish MatchSWMA Short 235.3 235 +0.13%245
5 Sep 2014 DSM NVDSM Short 50.4 50.4 0.00%52
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