Ucap Hong Kong Asset Management Limited Weekly Technical Review 8 th December 2015
Highlights (1) Equity Markets MSCIWorldIndex Weekly We are currently retesting the 1 715-25 resistance& a weekly break above this level would confirm a resumption of the global bull trend of equities. Be cautious on the downside given that a break below 1 650 on a daily close would most probably lead the market to revisit 1 550 to 1 600 increasing uncertainty. S&P500 Weekly&Daily The main US Equity index is currently the most robust amongst all markets. Afterbreakingthroughthe50weekmovingaverage,weareseeinga5thweek ofconsolidationwithdownsidesupportintheareaof2 030to2 045onadaily close. On the upside, a daily break above 2 100 would lead the market to test yearly highs. DJEurostoxx50-Daily European equities that have been our favored market since a few months showed extreme weakness last Thursday linked to positioning on the EUR/USD currency pair. We recommend to play a rebound in the short term as long 3 285 to 3 325 holds on the downside, otherwise we believe investors should tactically reduce exposure.
Highlights (2) Global Markets DollarIndex Daily We had been selling US dollar exposure during the upside stretch we saw over the past 2 weeks and start buying after the ECB comments of Last Thursday. We are buyers as long as 96.50 holds on a daily close (200 Day MA) since the global uptrend remains intact. EUR/USD- Monthly TheEURUSDistheleaderintheUSDollarmixandissettingthetrend.Themedium to long term trend has only started resuming and a retest of the 2015 lows is imminent. The underlying should reach 0.98 over the coming 6 months in an attempt to replicate the last 6 month range amplitude. Gold-Monthly We remain structurally bearish on Gold and have a short term target at USD 1 030. We shorted the recent bounce and believe that many investors are uninterested in the precious metal even if we are in times of increased volatility for risky assets. OnlybuyaclearbreakofUSD1 185onaWeeklyclose. CrudeOil-Weekly Crude Oil remains in a downtrend and even though we had a serious rebound last week, we believe that until 50.00 is not broken on a weekly closing level investors should take advantage of spikes to exit.
Highlights (3) Sectors and relative value EuroStoxxvs.S&P500-Daily We see more upside on the EuroStoxx than the S&P 500 given our view on the Dollar and the technical pattern of each index. The relative performance remains close to multi years lows and there is ample room for a rebound. This view can be implemented as a long/short trade using mini-futures. European Banks(iShares EStoxx Banks) Daily The sector has lagged the broader market after the recent earnings season. Momentum is looking negative in the very short term and we recommend to be cautious if ever EUR 13.00 breaksonadailyclose. USBanks(SPDRS&PBankETF) Daily Higher rates and good economic growth in the US offer a good environment for US banks. The sector should continue to outperform in 2016. A break above $37.30 could free up the way to $45. USPharma(SPDRS&PHealthCareETF) Weekly After years of a strong and regular performance, the US Health Care sector entered a corrective movement in October. The noise about price controls was a excuse for investors to take some profit and reduce their overweight positions. The sector fundamentals remain strong and this correction offers an opportunity to reenter the trade. US Consumer Discretionary(SPDR ETF) Daily ThesectorhasfailedtomakeanewhighafterThanksgiving.Ashorttermpullbackwillofferan opportunity to reenter the trade. Technicals show an upside target at USD 88.00 in the short term(3 months).
Global Equities - YTD Performance Review Equity Indices Value Local YTD % Chg USD YTD % Chg EUR YTD % Chg North America Dow Jones 17'693-0.73% -0.73% 10.73% S&P 500 2'072 0.64% 0.64% 12.25% Nasdaq 100 4'684 10.57% 10.57% 23.33% Europe EuroStoxx 50 3'360 6.79% -4.26% 6.79% FTSE 6'224-5.22% -2.07% 2.32% SMI 8'825-1.76% -2.33% 8.80% DAX 10'886 11.02% -0.47% 11.02% CAC 4'756 11.32% -0.20% 11.32% MIB 22'037 15.91% 3.92% 15.91% IBEX 10'042-2.31% -12.42% -2.31% Asia & Emergings Nikkei 19'698 12.88% 9.57% 22.10% HSCEI 9'798-18.24% -18.21% -8.73% Kospi 241-1.38% -8.34% 2.74% TAIEX 8'454-9.16% -12.68% -2.60% IBOV 45'223-9.57% -36.53% -28.96% Nifty 7'765-6.25% -11.16% -1.01% Russian RTS 11'513 23.81% 3.54% 19.32% MSCI EM 33.27-15.33% -15.33% -5.56% MSCI World 1'695-0.87% -0.87% 10.57%
EQUITY MARKETS
MSCI World Index Weekly We are currently retesting the 1 715-25 resistance & a weekly break above this level would confirm a resumption of the global bull trend of equities. Be cautious on the downside given that a break below 1 650 on a daily close would most probably lead the market to revisit 1 550 to 1 600 increasing uncertainty.
S&P 500 Weekly & Daily The main US Equity index is currently the most robust amongst all markets. After breaking through the 50 week moving average, we are seeing a 5 th week of consolidation with downside support in the area of 2 030 to 2 045 on a dailyclose.ontheupside,adailybreakabove2 100wouldleadthemarkettotestyearlyhighs.
DJ Eurostoxx50 -Daily European equities that have been our favored market since a few months showed extreme weakness last Thursday linked to positioning on the EUR/USD currency pair. We recommend to play a rebound in the short term as long 3 285 to 3 325 holds on the downside, otherwise we believe investors should tactically reduce exposure.
GLOBAL MARKETS
Dollar Index Daily We had been selling US dollar exposure during the upside stretch we saw over the past 2 weeks and start buying after the ECB comments of Last Thursday. We are buyers as long as 96.50 holds on a daily close (200 Day MA) since the global uptrend remains intact.
EUR/USD - Monthly The EURUSD is the leader in the US Dollar mix and is setting the trend. The medium to long term trend has only started resuming and a retest of the 2015 lows is imminent. The underlying should reach 0.98 over the coming 6 months in an attempt to replicate the last 6 month range amplitude.
Gold - Monthly We remain structurally bearish on Gold and have a short term target at USD 1 030. We shorted the recent bounce and believe that many investors are uninterested in the precious metal even if we are in times of increased volatility for risky assets. Only buy a clear break of USD 1 185 on a Weekly close.
CrudeOil-Weekly Crude Oil remains in a downtrend and even though we had a serious rebound last week, we believe that until 50.00 is not broken on a weekly closing level investors should take advantage of spikes to exit.
SECTORS AND RELATIVE VALUE
EuroStoxxvs. S&P 500 -Daily We see more upside on the EuroStoxx than the S&P 500 given our view on the Dollar and the technical pattern of each index. The relative performance remains close to multi years lows and there is ample room for a rebound. This view can be implemented as a long/short trade using mini-futures. Relative performance of the EuroStoxx versusthes&p500since2011.
European Banks (ishares EStoxxBanks) Daily The sector has lagged the broader market after the recent earnings season. Momentum is looking negative in the very shorttermandwerecommendtobecautiousifevereur13.00breaksonadailyclose.
US Banks (SPDR S&P Bank ETF) Daily HigherratesandgoodeconomicgrowthintheUSofferagoodenvironmentforUSbanks.Thesectorshouldcontinue tooutperformin2016.abreakabove$37.30couldfreeupthewayto$45.
US Pharma (SPDR S&P HealthCare ETF) Weekly After years of a strong and regular performance, the US Health Care sector entered a corrective movement in October. The noise about price controls was a excuse for investors to take some profit and reduce their overweight positions. The sector fundamentals remain strong and this correction offers an opportunity to reenter the trade.
US Consumer Discretionary (SPDR ETF) Daily ThesectorhasfailedtomakeanewhighafterThanksgiving.Ashorttermpullbackwillofferanopportunitytoreenter thetrade.technicalsshowanupsidetargetatusd88.00intheshortterm(3months).
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