DBD Strategy Daily - DEFENSIVE HITTING RESISTANCES
Up to now, 2018 has been a year of consolidation. Technical analysts differentiate between two sorts of consolidations: accumulation and distribution. The former precedes a fall, the latter precedes a rally. The only difference between the two is sentiment. Sentiment is more and more optimistic in distributions, more and more pessimistic in accumulations. We have already commented on the evolution of Put/Call ratios. Sector rotation is another way to understand risk-attitude. The recent moves show that investors in Europe are leaving sectors which are most supported by economic growth and are slowly piling into defensive sectors. Those periods can take a lot of time to mature. Yet, we are now close to a possible deterioration, at least in the short-term. The sectors which have recently been leaders are now close to resistances, they can easily turn down for consolidations. If we also get signals from the sectors which have turned weak in 2018 (such as Banks and Autos), indices will really lack support...
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