market outlook from a technical...

11

Market Outlook from aTechnical Perspective

“MARKETING“ BEST Calls

Bruno Estier, MFTA, MSTADecember, 2012

Bruno Estier Strategic Technicals • Geneva p. 2

Mon message: discuter de tendances de marché avec B.E.S.T.

Partenariat de 25 ans d’expérienceen Analyse Technique des marchés

avec Bruno Estier Strategic Technicals

=> Raccourci d’analyse de marchés => Meilleur « Timing « => Allocation Tactique d’actifs plus flexible => Gérer les Risques de demain

au lieu de collectionner des opinions diverseset subir le syndrome du dernier fax .


Avantages d’un dialogueà long terme avec un analyste technique ayant une vision globale

1. Opinion Indépendante des positions prises par le gérant

2. Découvrir Préjugés, Méthode & Style de l’analyste

3. Vision Globale Top Down basée surtout sur l’Analyse

Technique

• Interprète les directions prises par les marchés

• Se concentre sur la Force Relative des classes d’actifs

• Recommande une Allocation de classes d’actifs

4. Analyse les situations en termes de Risques / Potentiels


L’analyse de marché

1. Mes SourcesEconomics

JP Morgan – lecture hebdomadaireTechnicals

Charts from Stockcharts.com U.S. market volume & Adv-Dec Line Commodities & Canada – Gold Market Cycles U.S. sentiment data Pas de contact avec le “Sell side” (No “broker” contacts)


L’analyse de marché

2. Domaines d’analysesTechnicals

Mon analyse “B. E.S. T.” hebdomadaire des indices globaux. Un suivi de recherche externe dans 3 domaines:

Profondeur du marché actions US (“Breadth”) Cycles et recherche analogique (“Historical Price Pattern”) Indicateurs de Sentiment de marché (“Behavioral area”)

Mon méthode est de complémenter mon analyse des prixpar un nombre restreints de sources externes, analysées enprofondeur et régulièrement, afin d’éviter du bruit non filtré.


La boite à outils

3. Choix des méthodesParamètres :1. Horizon de temps: T, M, H, J2. Tendance: Direction & force avec MA (40) & MACD3. Cycle: Retour à la Moyenne (Trading range) se base sur

principe “ Vitesse précède Prix” (“Momentum precedes price”) & Slow Stochastics (7; 14)

4. Volatilité: “break out” & Bollinger bandes (20)5. Configuration: nature fractale de prix & 3 E - «Expérience 3x»6. Sentiment: comportement en situations extrêmes


En théorie, le concept de cycle et d’oscillateur de « retour à lamoyenne » est relié à la courbe sinusoïdal (F) et à sa dérivéepremière (F’), ainsi qu’au concept de «divergence technique»

distribution

accumulation

UP phase


En pratique, ce graphe suggérant un rebond a été publié parB.E.S.T. dans le journal Le Temps (20.12.2012) pour illustrer le“Retour à la moyenne “ (concept cyclique) saisi par le SlowStochastic hebdomadaire, situé sur le panel inférieur.


La palette de produits

4. Produits1. “Bi-quarterly review” – texte en anglais

• Conférence “One to One ”- chez vous, dans votre langue• Participation avant / pendant votre « comité de stratégie »• Ma chronique «La minute Technique» depuis 2004 - Le Temps

2. Revue hebdomadaire de notre Allocation Tactique (“pro format”)

3. Coaching journalier court terme pour “Futures Overlay managers”• S&P 500, Eurostoxx 50• Euro/$ and $/yen


Index of our Bi–Quarterly Review…..

Synopsis – outlook & one pager p. 3- 4Allocation Grids & Levels for action p. 5- 6

1. Global Long Bond (10 yr ) review p. 7USA, Bunds p. 8-14

2. FX summary p. 15FX charts p. 15-18

3. Commodity headline p. 19Commodity charts p. 20-28AGRI DBAOILGOLD

4. EMERGING MARKETS p. 29for Latin America and Asia,“CDTY EQUITY markets p. 30-33

5. US equity global analysis p. 34(51. Flows) p. 35-36(52. Sentiment Analysis,medium term) p. 37-41(53. Sent- Positions, Volatility) p. 42-44(54 ADL, 5 Breadth) p. 45-51(56 S&P pattern and Cycles) p. 52-59(57 US sectors) p. 60

6. European Regional Equityallocation p. 61Eurostoxx50 p. 62-63FTSE 100 p. 64-65SMI p. 66-67

Q&A, Disclaimer p. 68


Weekly Tactical Allocation Update & LevelsExample as of October 26, 2012

MY Equity long VIEW IS: Bull - see Bi-quarterly review Gold : no action FX: EURO $ (1.2965) Long 25% Euro agst $ at 1.2920 (Oct 11); stop 1.3070 (Oct 18 )Current tactical Allocation 40% Equity , Zero Bonds , 5% Gold, 55% CashDone since Oct 22 open :OCT 22 XLV -Healthcare: bought 5% at open 40.60 ; XLF-Financials: bought 5% 16.09 ;OCT 22 :EWG Germany : bought 5% 22.68 (open lower than22.90)OCT 22: EWL CH : bought 5% 25.88OCT 22: FXI china : bought 5% 37.55OCT 23: XLB Materials : sold 5% 36.37 (open lower than 36.65 )OCT 23: EWG Germany : sold stop 10% 22.65OCT 23: EWL CH :sold stop 10% 25.27 (open below 25.55)OCT 23 EWW Mexico : bought 5% 66.81 (=open below 67.05) – Sold stop 5% 66.60OCT 24 GLD : bought 5% 165.10OCT 25 EWM Malaysia : bought 5 % 15.03

Levels from Oct 29 Open onward ( RS = relative strength ) Level done on “first Done” basis till cash is available:GLD (166.97) : Buy 5% 167.00 and buy stop 5% at open. Sell stop 5% 161.90 & 5% at 164.50XLY -Discretionary ( 45.92) : Buy 5% stop 46.00 -- stop 10% 45.40 --RS: in flat range- daily momentum neutral.XLV Healthcare (40.32): Buy stop 5% at 40.55 and Buy stop 5% at open Monday . RS: new high- bull MomentumXLF Financials (15.80) : buy stop 5% 15.90 – stop 5% 15.68. RS: declines –flattening momentum .XLK technology (15.80) : nothing yet , waiting for a turn around.EWW Mexico (66.47) : Buy stop 5% 67.60 – sell stop 5% 66.10. RS: rising at new high –still rising daily momentumEWM Malaysia (15.05 ) : Buy stop 5% 15.12 -stop 5% 14.74 . RS: rising since Oct –emerging bull momentum after a downtrend–FXI (36.93) : buy 5% 37.10 - sell 5% stop 36.70-EWL (25.13) : buy 5% at open Monday


Nr 151. Theoretical Allocation GRID as of Oct 26, 2012 : Equity 40%; Bonds 0%; CDTY & CCY 5%, Cash $ 55%, Cash euro 0%

Asset allocation as of Oct 26, 2012 Equity allocation: 40% Pacific 15% (EWJ Japan 0%; EWY Korea 0%;

Singapore EWS 0%,EWM Malaysia 5%China FXI 10%,

USA 10% (S&P500 0%, XLK 0 % , XLY 0% , XLB 0% ,XLV 5% XLF 5% )

Europe 10% ( EWG (Germany) 10%, FTSE100 0% ; EWL (CH) 0% )

Latin Am : 5% (Brazil EWZ 0% EWW Mexico 5% )

Bond allocation : 0 % Europe 0% (Swiss Conf Bonds 0% +

Bunds 0% ) Asia : 0% ( JGB’s ) USA : 0% (10yr NOTES )

Commodities & CCY : 5% ( ETF GLD 5%, ETF CYB (Yuan fund) 0% )

Cash in USD : 55%( from 70% ) Cash in EURO: 0% ( from 10%) – FX Flat (Long euro 25% agst $ at 1.2920

stopped 1.3070 Oct 19 )

Asset allocation as of Oct 19 , 2012 Equity allocation: 30% Pacific 5% (EWJ Japan 0% ; EWY Korea 0%;

Singapore EWS 0%, China FXI 5%,

USA 5% (S&P500 0%, XLK 0 % , XLY 0% , XLB 5% ,XLV 0% XLP 0% )

Europe 15% ( EWG (Germany) 10%, FTSE100 0% ; EWL (CH) 5% )

Latin Am : 5% (Brazil EWZ 0% EWW Mexico 5% )

Bond allocation : 0 % Europe 0% (Swiss Conf Bonds 0% +

Bunds 0% ) Asia : 0% ( JGB’s ) USA : 0% (10yr NOTES )

Commodities & CCY : 0% ( ETF GLD 0%, ETF CYB (Yuan fund) 0% )

Cash in USD : 70%( from 20% ) Cash in EURO: 0% ( from 10%) – FX Flat (Long euro 25% agst $ at 1.2920

stopped 1.3070 Oct 19 )


Tactical Allocation in 2012 - Part 1January 23 to May 18, 2012

1004545104518.05.12

10010708051507.05.12

10010607052504.05.12

10010203056527.04.12

100202057526.04.12

100559512.04.12

10015158505.04.12

1001015257527.03.12

10010109020.03.12

100515208013.03.12

100555604006.03.12

100545505005.03.12

100510158527.02.12

10010109017.02.12

100202008013.02.12

1000109007.02.12

1000109030.01.12

1000109023.01.12

totalCashYen

CasheuroCash sfrCash $

CashtotalCDTYBondsEquityDate


Tactical Allocation in 2012 - Part 2May 18, 2012 to September 24, 2012

TotalCashYen


CashtotalCDTYBondsEquityDate

100102030155524.09.12

100101020156521.09.12

100101030106018.09.12

100101020107006.09.12

100103545104531.08.12

100104555103528.08.12

100103545154024.08.12

100152057516.08.12

100151558013.08.12

1000109030.07.12

1000109023.07.12

1005510108018.07.12

10010515107513.07.12

100101020107011.07.12

1001010108027.06.12

100102030106019.06.12

100103040105007.06.12

1000109029.05.12

10055108521.05.12

1004545104518.05.12


Tactical Allocation in 2012 - Part 3September 24 to November 19, 2012

10000109019.11.2012

10055108516.11.2012

1001515107514.11.2012

1004545104509.11.2012

1001010157531.10.2012

100555554026.10.2012

100707003019.10.2012

100202008015.10.2012

1003030106011.10.2012

100000109002.10.2012

100055108501.10.2012

10010304055526.09.2012

100102030155524.09.2012

TotalCashYen


CashTotalCDTY

BondsEquityDate


Grille Technique PerformancePerformance through 31 December 2012

-50

-40

-30

-20

-10

0

10

20

30

2004 2005 2006 2007 2008 2009 2010 2011 2012

Grille Technique

S&P 500


Grille Technique CumulativePerformance through 31 December 2012


Performance of FX PositionsJanuary through December 31, 2012

14.52%59%1217

CumulativeReturn %% WinnersLosersWinners

These are discretionary positions taken mostly when Euro is moving or whenwe think it may be gaining value against the US$, as the tactical allocation ismade of US ETFs. Thus the performance of this pro format non-systematichedge for a Euro-based investor is recorded separately.


Since Thanksgiving 2011: our theme has been to look for “ A Low in first half of 2012 along presidential cycle ending in “2”,THEN Up in H2 of 2012 to 1450 , may be 1500++ !

July 23, 2012 : 90% Equity 10% Cdty

May 4, 2012 : 25% Equity 5% Cdty

May 21, 2012 : 75% Equity 25% Cash

Nov 23, 2011: 90% Equity 10% Cdty


B.E.S.T : review of calls from 2009 to Nov. 14, 2012Selected tactical allocation on specific datesDashed line outlook was published in Le Temps of Nov 20, 2012

Oct 31 , 2011Assessingpotential ofa rallyin EquityInto year end

Oct 19-Nov 23, 201190% Equity 10% Cdty

April 26- May 4 : 25% Equity ; 5% Cdty

May 18-21 : End of mid year Correction For US Equity

June 19-27 : 80% Equity 10% Cdty10% Cash

July 30, 2010: 70% Equity 15% Bonds

April 16, 2010 :30% Equity60% Cash

April 1, 2011 :45% Equity ; 10% Cdty

May 11, 09 : 75% Equity 5% Bonds 20% Cash

May 30, 07 : 10% Equity 0% Bonds 90% Cash


Bruno Estier

More than 25 years experience in FX, Bond and Equity markets: JP Morgan in New York, Zürich and Paris, 1981-1994 Lombard Odier & Cie, 1994-2003 International Financial Risk Institute (IFRI Geneva), 2004 Le Temps newspaper,

columnist in Lundi Finance, since 2004 Bruno Estier Strategic Technicals, 2005-present

independent market advisor


Bruno Estier

The University of Chicago, Graduate School of Business (MBA in Finance) University of St. Gallen, HSG (lic.oec. in economics) University of Tübingen Vordiplom in VWL

Technical Analysis Professional activities:- Past Chairman,

- International Federation of Technical Analysis (IFTA) 1998-2000- Past Secretary,

- International Federation of Technical Analysis (IFTA) 2000-2009- Past President,

- Swiss Association of Market Technicians (SAMT) 1996-2008

GSCGI – member NON IQ


Contact

Bruno Estier, MFTA, MSTABruno Estier Strategic Technicals

22 chemin Rieu1208 Geneva, Switzerland

+41 (0) 78 815 14 99Fax: +41 (0) 22 346 90 73

bruno DOT estier@sunrise DOT chwww.estier.net/bruno


Disclosure Statement This document has been carefully prepared with information derived from sources Bruno Estier believes are

reasonable and appropriate. It is intended for sophisticated investors. Bruno Estier does not guarantee itsaccuracy, completeness or its conclusions. Any opinions expressed reflect our current judgment at this date andare subject to change without notice.

Bruno Estier does not accept any responsibility for liabilities arising from the use of this document or its contents.Past performance is no guarantee of future returns. The value of investments can fall as well as rise as a result ofmarket or currency movement and due to these factors, you may get back less than you invested. If derivativesare used, it should be noted that they can be highly volatile and such investments may carry a high risk of loss.

This information is being furnished to you solely for your information and does not constitute a recommendation topurchase any security. Neither this document nor its contents, nor any copy of it may be altered in any way. Thisdocument is not directed to, or intended for distribution to or use by, any person or entity of any jurisdiction wheresuch distribution, publication or use would be unlawful.

If you have questions about the analysis contact bruno DOT estier AT sunrise DOT ch

Chart source: www.stockcharts.com

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