It is difficult to trade in current market conditions because the market is only driven by the political newsflow (Fed's decisions, Bernanke's testimony, Draghi's declaration, Obama, Boehner, Merkel, ...). In this context, trend are less relevant and huge move (up or down) can occur at any time. Anyway, we want to continue to test our model, even in those difficult market conditions...
The US and EU equity market was able to rally on both Thursday and Friday. When we look at recent performance, the Eurostoxx is the clear leader followed by the CAC. The DAX isn't anymore the leading European index and US indexes are lagging the European ones.
The Sigma Whole Market Index is just below a small horizontal resistance (pink line). We think it would be normal to get some sort of pullback at this level and it will be very interesting to analyze (if it occurs) if the pullback is impulsive or not.
The Eurostoxx is very strong and was able to print a new 52 weeks high. It looks very clear there is a shift from US to EU and from industrials to financials. This is the main justification of the recent outperformance of the Eurostoxx and CAC40 vs the DAX.
The CAC is right below its 52weeks high. Will we get some sort of consolidation prior to further advance?
The DAX is weaker than the Eurostoxx and the CAC but the chart remains bullish, no doubt about that.
The Sigma trend Index increased from '1' to '6' and Friday's move was impulsive (with the 'Swing' at '4').
The ST model uplifted its stop levels on most indexes:
Short Term Trading Book:
- SPX: 1 long at 1691.97 (stop @ 1653, 3pts below the ST model to take into account bid/ask spread)
- NDX: 1 long at 3204.34 (stop @ 3116, 5pts below the ST model to take into account bid/ask spread)
- CAC: 1 long at 4219.62 (stop @ 4131, 5pts below the ST model to take into account bid/ask spread)
- DAX: 1 long at 8717.86 (stop @ 8384, 10pts below ST model to take into account bid/ask spread)
- EStoxx: 1 long at 2974.95 (stop @ 2878, 5pts below the ST model to take into account bid/ask spread)
Medium Term Trading Book:
- No more medium term position at this stage.
For those of you interested in our trades or in our methodology, you can visit our site. A full description of our ST model and MT model is available on our site. You can also subscribe to our twitter account (@SigmaTradingOsc), it is free and you are updated on our latest view/trades.