I must admit that after the Fed announcement overnight I kind of asked myself, “ok the waiting game is now over, what’s next?” Many of us thought that the rotation wasn’t quite over but given today’s move, we are back to the old themes. Worries over a second wave of the virus, the economic implications of it and questions on whether we will see a V,W, or U shape recovery soon. Nearly all EU equities have been in the red since the open and all indices are at least 3% down (worst day in Europe in a month). VIX spiked +9% this morning and is currently just below 22 May high resistance at 31.55 (above here could target 40 area with support on recent lows 23.54).Volumes are not poor either (with all indices trading c.15% above vs their 20d AVAT) but strangely enough, it doesn’t feel like that’s being reflected here. It does feel quite machine driven today but I guess we will need to wait and see how today’s session evolves.  

With all eyes on the Fed, today has been a quieter session relative to the last couple of days. All EU indices have been trading below their AVATs since the open so clear that markets have decided to play the waiting game. We are not expecting any big policy changes, though it’ll be interesting to see if the Fed mentions anything about state-based forward guidance.

Keeping up with the rally was always going to be difficult, especially after we saw the S&P erasing all of this year’s losses overnight. Seems like investors have chosen today for some profit taking. All indices ticked lower at the open and have no desire to move the opposite way. Volumes are still pretty robust across the board and although our pad is dominated by sell orders today, note that we are still seeing money going into the Autos, Banks and Oil sectors. On the positive side of all, we might be set for more busy sessions before the weekend!

Fairly quiet start today after the hefty moves over the last week. Seems like EU investors have taken some time to decide their next move (reasonable/healthy) hence the lower volumes across the board. Aside from that, it is encouraging to hear our charts team confirming that more defensives are making it to the 3-month rel lows list and more cyclicals to the 3-month rel high list. The trend continues to be in favour of the bulls so we will see if it keeps up this week. One to watch is the SX5E, which has been up for the last 3 weeks and hasn’t managed 4 in a row since September – hopefully it will this week. Also note that all EU indices started the session in the red and some have slowly made their way up already.

Busy day here at Redburn as we finish the week on a pretty interesting note. The rotation (and conviction) manifests again with cyclicals back outperforming defensives. Volumes are also supporting the case with all EU indices trading well above their 1d, 20d, oh wait, and also their 30d AVATs.  Adding to the good mix, Copper surpassed the key resistance at 250 this morning (next resistance at 263.95, +4.5% higher), Treasury yields are slowly picking up (with the US 10 year above 0.90% today) and the FTSE MIB is currently trading 20000 (200dma resistance is at 21162).

After a non-stop rally over the last couple of days, it seems reasonable for markets to take a break. We are seeing lower volumes across the board and it felt like investors were playing a waiting game ahead of the ECB meeting. EU equities traded pretty sideways throughout the morning but recently ripped (or more like tried?) post the ECB announcement. As we suggested at the time, the move was likely to fade.

The bullish trend continues and encouragingly, we are seeing more indices approaching their 200dma levels every day (with the DAX and EuroStoxx smalls joining the list of those breaking above today). In the US, we had the S&P making another 3-month high last night, we saw further improvement across Asia this morning and EU equites extended the rebound after having their best day in two weeks yesterday. Volumes have been decent since the open, which suggests once again where the conviction stands. Cyclicals keep outperforming with Autos (supported by Chinese data this morning) and Banks (regardless of Bailey’s warning over a no-deal Brexit) leading the way and Healthcare amongst the losers.

Another day in the green regardless of the US/China tensions and protests in the US. The S&P had its 5th up Monday in a row overnight (making a 3 month closing high), Asia had a decent session this morning (with the Topix and SHCOMP trading above their 200d averages for the first time since Feb/ March accordingly) and EU equities are not trading any differently. The FTSE MIB once again confirmed the up-trend in the region as we saw it going through the key resistance level that our charts team has been flagging for a while(18600). Big gap to fill now but next resistance targets 20000 (7.5% higher). Volumes picked up after having a quiet day yesterday and all indices are trading well above their 20d AVATs. The focus will now be the ECB meeting and any news on the next OPEC meeting (Brent crude 39.1, a move above 40 could target 50).

The new month has started more with a whimper than a bang given several European markets are closed due to the Whit Monday holiday. Of those markets that are open, volumes are down hard versus the 20d AVAT, though are managing gains. Looking at the SXXP sectors, all are currently in the green with Travel & Leisure and Banks leading the way. With Friday’s month end and subsequent profit-taking now in the rear-view mirror, the Airlines and Tui resumed their rally. Cyclicals are generally outperforming Defensives today, while in the US, the protests over the weekend has had little impact on US Futures, which are currently trading flat, despite the possibility of store closures in some major cities.

We are set to finish the week (and the month!) on a slightly different note as we see lower volumes across the board and most EU equities trading in the red (amid US/China tensions). Investors’ eyes will be on President Trump this afternoon as he will be holding a press conference on China and by the looks of things, the takeaway isn’t likely to be positive. On the plus side though, weather forecast this weekend looks pretty good so at least something to look forward to!