Technical weekly 08/14/2012

1. Equities
-Most indices are now at a key juncture trading close to their March highs. The trend evidence leans bullish but equity
markets are short term overbought. We do not expect major bearish reversal because the trend is so strong and many
investors wished to be positioned earlier and many of them will not take the risk of waiting too long for a steeper decline
to return. This will limit the potential bearish waves in the short term.
Conclusion : weekly indicators are calling for more upside to come with some daily indicators are calling for (short term)
cautiousness.
-The technical picture of the Stoxx 600 is improving, as you can see the weekly momentum has now turn bullish and
Europe is outperforming the rest of the world since May.60% of European markets trade now above their 200 day MA
and have rising 200 day MA. Since 1986 they have gained an annualized 13,7% when more than 50% (slide 2) of them
have traded above their rising 200 day MA.
-The S&P500 is also close to resistance zone, (slide 3&4) the US Economic Surprise Index is rising from low level, the
model giving a buy signal for the S&P500 in late July. Profitable long trades track record since 2003 is close to 86% with
the S&P500 gaining 14.2% per annum (Buy and hold 4.6%)
-Bovespa (Brazil-one of the worst equity markets in recent months) validated a bullish reversal pattern. (slide 5)
-Bonds&Currencies&Commodities
-The trend of the €/$ is still down but is showing signs of exhaustions with bullish divergence on the Macd weekly (that is
close to give a buy signal) and extreme pessimism.(slide 6)
- Bund future : As the recent early June high have not been reached (around 146), the correction should continue
towards 142 and may be towards the confluence of the 200 day MA and the breakout point made in April.(around139.5-
slide 7).We will also be vigilant in the coming weeks to the eventual formation of a major double top pattern.
1

2. Stoxx 600
Supports:lower part of the bullish channel, 200&50 day
MA, 240
Resistances: March high around 270
2

3. SP500
Supports: lower part of the bullish channel, 50 day
MA
Resistances: 1420
3

4. Daily Data 2003-01-02 to 2012-08-10 (Log Scale)
S&P 500 and the Citigroup US Economic Surprise Index
1,556 Profitable Trades: 71.4% 1,556
S S
1,480 Profitable Long Trades: 85.7% 1,480
Gain/Annum: 14.2% S
1,408 S 1,408
Buy/Hold Gain/Annum: 4.6% S
1,339 Latest Signal: 07/31/2012 = 1,379.32
1,339
1,274 B B 1,274
B
S
1,212 1,212
1,153 S 1,153
1,097 B
1,097
B
1,043 1,043
B
992 992
944 944
898 898
Sell signals are generated when the smoothed
854 B 854
Surprise Index crosses below the upper bracket
812 and buy signals occur when the smoothing rises 812
773 above the lower bracket. B 773
735 735
699 Source: S&P Index Alert
699
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
75 75
50 50
25 25
0 0
-25 -25
-50 -50
-75 -75
-100 -100
Citigroup Economic Surprise Index for the US
measures how much data from the past three months
-125 -125
is beating or missing median estimates in Bloomberg surveys
Source: Haver Analytics, Citigroup 2012-08-10 = -33.3
Citigroup US Economic Surprise Index (9-Day Exponential Smoothing)
DAVIS183
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4
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5. Brazil Bovespa reversal pattern
5

6. €/$
Support:
LT Target&Support : 1.20 (reached)
Resistances:1.263 then 1.3
6

7. Bund Future
Supports :142, 140, 200 day MA
Resistances :146
Target : 146 (reached)
7