US: Exposure to US Equity markets 100% / Cash 0% (unchanged)
Europe: Exposure to European Equity markets 100% / Cash 0% (unchanged)
Main US indices ended the week lower, amid pressure on WTI prices (-6%) that led to profit taking on the Oil & Gas equity sector, as well as much of the « Value » compartment including Cyclical and Financial sectors while the Defensive segment was the strong spot including Consumer Staples, Healthcare services and the Media sector. The Technology sector was more or less in line with the indices, marking a pause after 5 weeks of underperformance versus cyclical and « value » sectors, and showing relative strenght in some segments such as Biotechnologies and Semiconductors. The week was marked by a 15 bp rise in long US rates (reaching 1.75%), that was played down by Powel’s FED comments that there is no tapering in sight despite the higher yields. The strenght of the Defensive sectors, and the stabilization of the Technology segment coupled with a start of profit taking on the "value " side should be monitored closely as it could correspond to early signals of another rotation towards Growth and Defensive compartments, especially as Q1 corporate earning season will start in 3 weeks, and as long rates are now close to their pre-covid level and could also mark a pause. We favor a balanced approach, with partial profit taking on some "value" segments such as Oil & Gas and Basic Resources, while adding some Defensive and Semiconductors. Overall market conditions remain favorable to equities, with a Market Pressure Index standing at 35/100.
Our Market Pressure Index now stands at 35/100 (=), into the "bullish" zone.
The market participation/density is positive. There is 76% (-1) of major bullish configurations for the Stoxx600 and 85% (=) for the S&P500, while major bearish trend configurations are 6% (=) for the Stoxx600 and 1% (-1) for the S&P500. Therefore the density analysis reflects a positive momentum in Europe and in the US (spread now at +70 in Europe and +84 in the US). During risk-on/bullish market phases, the spread is expected to be > 30.