US: Exposure to US Equity markets 100% / Cash 0% (unchanged)
Europe: Exposure to European Equity markets 100% / Cash 0% (unchanged)
The "value" compartment remains strong in both the US and Europe, with limited volatility on Banks and Oils & Gas -the strongest spots- despite the huge November performance while high betas growth stocks experienced bumpy course especially within the Hydrogen, Renewables or Battery segments (eg. NIO, Plug Power, Solaredge...). This points for another leg of rising of the "value" compartment, rather sooner than later as the catching up potential remains high in sectors such as Banks, Steel producers or Oil & Gas and may be favored by increasing 10Y rates and WTI prices and especially as the growing consensus is calling for a profit taking phase before another step of rerating. The Euro/USD reached another peak at 1.212, a positive for emerging markets such as Brazil, but a negative for Europe Industrials that is weighting negatively on the DAX30 while southern European indices which have a large banking components such as the IBEX35 are outperforming. We also notice the WTI bullish breaking out in process (45$ threshold), that if confirmed , should trigger a boost to Oil & Gas stocks, that is already the case for shale oil and services stocks. This may also have an impact on US long term rates (0.95%) that are getting closer to the 1% psychological level. We have a string of "Enter long" signals on Deep Cyclicals and Financials stocks for a few days, that also confirm the structural turnaround in the "value" theme.
Our Market Pressure Index now stands at 41/100 (=), into the "bullish" zone.
The market participation/density is positive. There is 53% (=) of major bullish configurations for the Stoxx600 and 70% (=) for the S&P500, while major bearish trend configurations are 11% (=) for the Stoxx600 and 5% (=) for the S&P500. Therefore the density analysis reflects a positive momentum in Europe and in the US (spread now at +42 in Europe and +65 in the US). During risk-on/bullish market phases, the spread is expected to be > 30.