US: Exposure to US Equity markets 100% / Cash 0% (unchanged)
Europe: Exposure to European Equity markets 100% / Cash 0% (unchanged)
A second wave of covid-19 is now gaining momentum in the US while apparently peaking in Europe, leading to profit taking in the US broad indices and European equities outperformance led by financials (including Insurance) and cyclicals such as Automotive and Small caps while the healthcare sector is the lagger. In the US the Technology sector is flat, with the Nasdaq100 moving sideways around the 12.000 pts level since August while the Russell 2000 (Small caps) is the strongest spot short term. Therefore investors are tug between short term worsening situation in the US, and a likely brighter mid term situation led by vaccine delivery within 6 months and a likely huge stimulus package delivered at the beginning of 2021. Then, while profit taking is not excluded driven by short term negative newsflow, there is clearly a floor as the market is already looking beyond the health crisis and a likely sustained recovery from H2-2021. This situation may lead to a more lasting than expected catching up of Europe by year end driven by financials and the cyclical/value components coupled with the outbreak cycle, as restrictions should begin to ease in few weeks in major European countries. To be noted : the strong momentum in the energy storage technology segment including stocks such as NIO, Tesla and Nikolas. We continue to favor a broad diversification in themes and sectors, with the risk/Beta couple at the core of stock selection.
Our Market Pressure Index now stands at 46/100 (+1), into the "bullish" zone.
The market participation/density is positive. There is 51% (=) of major bullish configurations for the Stoxx600 and 64% (-1) for the S&P500, while major bearish trend configurations are 8% (-1) for the Stoxx600 and 6% (=) for the S&P500. Therefore the density analysis reflects a positive momentum in Europe and in the US (spread now at +43 in Europe and +58 in the US). During risk-on/bullish market phases, the spread is expected to be > 30.