DBD Strategy Daily - FRENCH LUXURY ON THE EDGE
Building long-term tops is a painful and usually slow process. Wide indices go through nerve-breaking periods of consolidation. In the meantime, sectors that are already in bearish trends recover -giving hope to investors- while leaders invalidate their medium-term bullish trends. Then and only then can wide indices fall. One should therefore concentrate on Nasdaq 100 stocks in the USA for an advanced sell signal on global equities. In Europe, the undisputed leaders are techno stocks too, and French luxury stocks. When those will invalidate their bullish medium-term trends, we will be sure that the Stoxx 600 will be taking its last breath before the big plunge (seasonality is in favour of a quiet July recovery and a hectic August). June monthly candlesticks are telling us that we may be going through that medium-term change for European luxury and technology. Should these come, food, healthcare, utilities and telecom will benefit. But beware of the bullish signals! Those sectors are either neutral in the medium term or bearish. They will probably continue out-performing, but they may not rise that much in absolute value. This sector rotation is a defensive of course.
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