Yoku Yatta Abe san! Japan is Top performer on the month again as I expected!

What a month again: Japan led global markets, S&P500 confirmed the break, DAX is still testing the historical highs, Gold collapsed against all odds...But Two warnings signs for a coming reversal are to note: 1) Japan jumped -too?- quickly to my first target ...remember: what goes up fast tends to fall fast(er).... 2) I was concerned that a disappointing Q1 reporting would trigger a correction...Well reporting were not great but Markets stubbornly ignored them...Eventually, fundamental catches up and market will go where it should...

=> Japan is still the best Long to have, then far after Europe, & US...I also keep an eye on gold which despite the correction has further downside... Not yet a buy...


Nikkei Monthly Chart:

Nikkei continues its rally and is now at the last Fibonacci  retracement 14,000, that's 30% since my long recommendation in Feb...It is overbought with still upward momemtum...Next target is the 17-18000 area.
Keep the long








S&P500 Quarterly chart:

 Last month, S&P broke an historical high, the recommendation was to buy for the agressive investors, and for the other to wait for a month... Well we have it...Buy Signal for the less aggressive punters...
The index is overbought with upward momemtum as well.... Targets are 1750 then 1850






Eurostoxx Monthly Chart:

Heading slowly towards 3000...Same as above...Overbought, up momemtum....












CRB Commodity index Monthly:

Commodities are falling slowly, and still has some (10%) downside...At the same time the USD index is moving upward slowly...














Conclusion: Long Japan for a further 30% upside.. Cautious long in Europe, and US

Banzaiiiiii, Shoow me the Money....Japan broke! US breaking...Europe is Europe...

Nikkei broke a 4 year range and fled two months in a row, at one point it was up 15%...Justified or not from a fundamental point of view, it has further to go...Super Abe will support it whatever it takes..
S&P500 broke a historical high, DAX is close to it and the rest of Europe is timid. 
With the tragedy in Cyprus, the Bozo's of Spain, Italy and France (Have they ever learnt Economy 101?), it is amazing that European indeces have not collapsed. I digress but People deserve the leaders they have chosen...The truth is that Courage is what is lacking to our leaders (should I call them annuitants) ... Sorry, back to $$$$:
No change of view since my previous blog in early Feb: Japan is still my top favorite, Europe is still a Buy, but I am cautious on this one, and US, well if Ithe S&P stays above the current level in April, I'd Buy. Please note again, that I have a 6-12 months investment time frame.

Nikkei Monthly Chart: The best Long in global equities

The index, as expected, continued to rise and jumped to the next resistance (the 50% Fibo retracement ..again Fibonacci, do you start to believe in this?)
The momentum on 2-3 months is still upward. In the short term, the market is to correct a bit as overbought.Which means Buy on weakness
The trouble is that many are recommending buy on weakness, so we may not see a correction...

The next target is still the same: 14000 and then 17000. 
Japan is the best country to be invested in, it was the top performer of the  indeces I follow (the best ones were in Africa, difficult ones to invest in). 


 S&P quarterly: Breaking historical high... Beware of the bull trap though

The index has closed above historical high (tested twice, in 2000, and 2007). I would wait and see if this level is confirmed, if confirmed, the next target is 1750's....

There is one thing I do not like to do, it is to bet on break! especially when it is historical highs ( or lows)

The upward momentum is not strong, and S&P 500 is pretty overbought, so I would wait a month to buy. But that is my style, agressive punters can Buy now, and close the long if market corrects...

 


DAX quarterly chart: Testing historical high...

 The mighty German index tested an historical high, but it closed in March near March low, not very bullish, which makes me doubt that DAX will break up...

The index is overbought, and momentum is waning. And we have a negative divergence in weekly chart. In plain English it means DAX will correct.

The Eurostoxx, and CAC indeces, which I recommended as a cautious BUY, are so boring that I did not feel like attaching a chart: They tried to move up to later close back to Feb level. Still a long though...



Conclusion: Keep Long position in Japan, Buy further on correction, with 30% upside for the next 6 months. 
Keep the longs in Europe, but like the previous update, be ready to exit on correction. 
US is a Buy now for agressive investors, and for the others, wait for a confirmation of current the level.
We are entering into the 1Q earnings release period...I doubt that European companies will surprise positively...
I am still long Japan, Europe
Happy investing!

After a shy bear in 2012, a timid bull in 2013...

BANZAI! Japan bottoming up, Europe aussi, but US at the top & loosing steam, Korea reversing...Commodities are testing resistance & may break up...and 10Y  bonds are starting to fall...
The signals are pretty clear: Buy Japan, Europe...In that order
The technician - that I am - have just diligently listen to the signal and bought, but 2013 is not 2009. 
In Feb 2009, I bought with confidence (when most were panicking)...I was one month too early admittedly, but I eventually doubled faster than I expected...
This time the charts are also clear, but I am not as confident as in 2009 for fundamental reasons...So I will be extra careful to cut my positions if wrong....


Nikkei Quarterly chart

Nikkei has broken up a 4 year range, with momentum that is still upward.
The index is heading in the next 2 quarters towards the top a 10 year downtrend, ie around 14000 ... the next resistance is 17000.

Is Mr Abe going to as strong as Super Mario? 











Eurostoxx 50 monthly chart
 

Last month I highlighted the index was testing a key resistance, well the break is confirmed and momentum is still positive.
Target is  3000 in the next couple of months, then next resistance is around 3300...













S&P500 Quarterly chart

S&P is at the top of a 13 year range, and overbought. As a rule I do not bet on break.
So though momentum is still upward, it is not a buy. I 'd say a sell if you were long as we test the highs...


 













CRB Index monthly

The CRB index (composed of commodities) is trying to break a downtrend with positive momentum

















Conclusion:
Buy Nikkei for 30% upside for the next 6 months, Buy Europe (CAC, or Eurostoxx50) for 15% upside, with more confidence on the Nikkei.
I would not buy US, I think it is to underperform, and if you are long , Sell....

Happy investing!

2012, a shy Bear vs Super Mario - 2013, critical resistance tested

Happy new year!  
We start 2013 with a potential defeat of the Bear by Super Mario. European markets did not touched the target I expected and rebounded straight to a critical level where we are now: we are at the resistance, the last retracement of the March 2011 - Sept 2011 fall. If the current level is maintained we can say that a bottom has been formed and we are heading to March 2011 highs, in the next few months, and 30% upside for the 12-18 months ahead...
For those who look at patterns, a double bottom have been confirmed last month.
In Asia Pacific, including Japan, we are already at the previous high.. 
S&P500 is close to 2007 high, is overbought, and sentiment is at his high...


Eurostoxx 50 Monthly Chart: 

The chart shows a break of the last key resistance, ie the last fibonacci retracement of the 2011 March high to 2011 Sept. Index is overbought. If level is confirmed, it is heading towards 2011 high

VIX index:Lots of complacency...

A record low level of the VIX index, ie an extremely positive sentiment on the S&P500, coupled with the (close to top) level of the S&P is a toppish sign.


Dollar Index monthly: range bound

The dollar index has been in a range and is overbought on one indicator and oversold on another, no strong move is expected

 















 CRB (Commodity) Index monthly

The index has positive momentum, close to overbought and resistance, no strong move expected, the downtrend started in 2011 is still intact, but tested...Likely to stay in a range...
















Conclusion:
US, Asia indeces are close to top and overbought, now we need
to watch the European indices, if their current levels confirmed in the next few weeks, they will lead the rally, and bottom is confirmed.
But even with a Buy signal, I am not as confident buyer as I was in Feb 2009, for fundamental (!!!) reason (Multiples are high, and did some DCF's on some major stocks in Europe and they are more than fair)...
My shorts have been stopped, I am still cash, and have little long in stocks that have been slammed (eg Peugeot...)

From Mallorca with love...after summer there is FALL Sorry..

Life is great in this marvellous island, with its fabulous landscape, beautiful beaches, lovely restaurants, and joyful people ...Things are going well, don't they? Well it depends for who: For us, as tourists, clearly Yes, as there is no queue at the places we have been going every year, restaurants, attractions...; we managed to book summer camp & tennis camp for our son the day before...And when you talk to local people, you realise how bad things are... more than 50% drop in the number of customers...So my guess: 3Q is likely to be a cold shower...and indeces are telling that already: this nice summer and some blabla from Super Mario drove markets up: well down trends (Europe, Commodity index) & tops (US/Asia mkts) are intact, and the very low level of VIX index shows very highy complacency!... 
Top of downtrend/range + overbought index + over positive sentiment = the summer rebound is over...Prepare for Fall fall....

Eurostoxx Monthly: Downtrend intact, Sell signal

The index has rebounded and is testing 20month moving average. As long as it is below previous high, we are in downtrend. As it is overbought in monthly, weekly charts ( one months to 3 months view). The downtrend is intact , and we have a Sell signal now







Commodity Index: Downtrend  intact, Sell Signal

Similar charts as the Eurostoxx, downtrend intact, overbought, at resistance level, Sell Signal














VIX: Volatility Index: Super complacent market...

The index is a its low since 2008, and as you can see it does not stay at this level very long....















Happy end of holidays!

Normal Bear Market....

While the French elected a new "normal" President, and were taking all their "ponts" (for the non Grenouille among you, May is a month with loads of bank holidays), Markets refused to have a break and continued its course...C'est normal, it is a bear market....

Last month, I was expecting Europe indices to pause as they were oversold and on support, and US and Asia were to catch up...Well, both collapsed. Now the latters are  testing support and oversold, and Europe has broken support...Commodities index as well, and the US$ broke up... I dare to say again... we are to have a pause...


MSCI Asia Pacific ex Japan weekly chart: Collapsed and on support

The index fell directly to the Fibo retracement which happens to be also the lower band of the Bollinger Band, which corresponds to 2 standard deviation. 
Momentum is still down


Next strong support is 10% down, ie last year low...






S&P 500 weekly chart: Same as Asia, collapsed as well

S&P 500, as expected, collapsed and is at the level mentioned last month..1270's... It is oversold, with downward momentun, on support.
A pause is expected..Keep the short.. Sell on rebound.
The next big support is previous year low, around 200 points lower...The target for the next few months... For the short term the support is 50 points lower





CAC Index weekly chart: Broke support..Oversold
 
CAC, like the Eurostoxx 50 analysed last month, was testing the last strong support...Broke it easily...nothing before last year low.... 10% lower...














CRB (Commodities) Index : Three times were enough...


Last month, we noted that the CRB index was testing for the 3rd time the strong support... well broke and acceleration of the move...














Conclusion: Keep the short, sell more...
The question now is...where is the bottom?  or when to buy?
I use three criteria (in that order):
1) Technical Analysis!! c'est normal...(a new trendy word sorry)
2) Sentiment.. not mine...I mean in general
3) Fundamental analysis... Yes! though the least important for me...But it gives some useful insight for the long term view



OK so Bottom is when 1) market is oversold, at a support level (like 2009 low which is alos 2003 low), 2) sentiment is extremenly negative and it could be measured with the volatility index: the higher the more panic, and you can see from the chart below that we are not there yet.. Also when the press talks about the end of the World... more on sentiment in the next blogs and finally 3) when valuations are very low.. we had all three in Feb 2009... 


VIX index monthly: No panic yet.... far from previous peak...

Happy investing!

Most indeces, oversold, and testing support, are to take a breather...Sell on any rebound...

Phew! what a month! indeces fell and are now testing supports, be there Fibonacci retracement, moving averages or the lower Bollinger band. Some are oversold, but all are still with downward momentum...We may see a pause, or even a rebound...It is a classical trending market: Just keep the short, sell on strength.. US Indeces, which have been spared so far, are the next ones to collapse...

Eurostoxx Weekly chart: Testing -Fibo- Support

  The index is testing the 62% Fibo retracement, a strong support. It is oversold (stochastic), but there are still downward momentum both on 3-4 weeks and 3-4 months time frame...On  monthly chart, the index is on downtrend...

As a general rule, on a down market, a rebound, an overbought signal are - easy- sell signals. But it is hard to make money on rebound. 
On a flat market, sell on overbought stochastic, and buy on oversold stochastic...






MSCI Asia Pacific Ex Japan weekly chart:

The index is testing moving average, slight oversold, momentum is down, with a sell signal on the MACD indicator.
More downside than Eurostoxx...















S&P500 weekly: the move just started...Dragged down by Europe...

 S&P index has started to fall, testing moving average. It is not oversold, and also has a sell signal on the MACD.

Heading toward the 1270 level within the next 3-4 weeks














CRB index weekly: on support - Fibonacci:

 The commodities index, is testing the last strong Fibo support - for the third time....
 I hope that with all the charts I have been showing, you all start to believe in Fibnacci...The fanatic rationalist that I am had analysed thousands of charts, and these retracements are almost always there... I don't know why...

The CRB index is oversold, with downward momentum. As we are testing a strong support we are to see a rebound or a pause...














Conclusion: Keep the short on European Indeces; Asia Pacific ex Japan indeces and US are going to be dragged down by Europe... Short them...
Remember, on a downward trending market, overbought signal and/or rebound are Sell signal!


Happy investing


Jean