US: Exposure to US Equity markets 100% / Cash 0% (unchanged)
Europe: Exposure to European Equity markets 100% / Cash 0% (unchanged)
The bullish view and Phiadvisor's full exposure to Equities in both the US and Europe was conforted by the strong rise in large indices (+2.1% for the Stoxx600 and +3.8% for the S&P500 last week) with broad participation led at the same time by Technology, Industrials and Financials.
Our Market Pressure Index receeded at 40/100, well into the "risk on" zone reflecting an easing in the volatility velocity (Vix spot and November futures) and more consistency within assets classes correlation.
There was no real rotation, but a point to notice is the outperformance of the weakest sectors in Europe (Oil & Gas, Telecoms and Banks) that led to a bunch of exit shorts in the Phiadvisor system, while Medias confirmed their bullish breakout in both the US and Europe. European Travels & Leisure sector (ETF TRV: +8%) was also a strong spot last week, as hopes for a new relief package boosted Airlines and Hotels such as Lufthansa, IAG or IHG in a similar way than the US segment (Hilton, Delta Airlines).
The number of shorts signals now only represents 2.9% of our universe (2100 stocks) while there is 43% of Enter Long, and performances are increasing on the long side and fading on the short side, as it is usually the case in bullish markets.
The undeperformance of the Swiss Index (we have now a Minor Bearish Relative signal on the SMI) points also for a "risk on mood" on markets.
In the US we have also a positive convergence between some "usual suspects" such a the Dow Jones Transportation which is on ultimate highs, US 10Y rates at a 4 months highs, and the Russell2000 outperformance (+6.9% last week).
This is pointing for an uptrend acceleration. We continue to favor stocks with Enter Long signals parts of sectors in Major Bullish Trends or Minor Bullish Reversal configuration (therefore including if any, Enter Long Signals on Medias and Travels & Leisure but no Banks neither Oil and gas), and looking again for more diversification when it is possible.
We remain cautious on shorts, as in the current context, false signals are likely.
Our Market Pressure Index now stands at 40/100 (-3), into the "risk-on" zone (below 50).
The market participation/density is neutral/positive. There is 46% (+1) of major bullish configurations for the Stoxx600 and 58% (=) for the S&P500, while major bearish trend configurations are 35% (=) for the Stoxx600 and 21% (-1) for the S&P500.
Therefore the density analysis reflects a neutral momentum in Europe and a positive momentum in the US (spread now at +11 in Europe and +37 in the US).
During risk-on/bullish market phases, the spread is expected to be > 30.