It is a historic event: our Ftse All Share index is above the high of February 2020. And it is also on the highs of congestion that has kept us harnessed as an Italian market from 2008 to today. In short, technically we are on the upside. There are some things that screech though and this explains why I tend to be very cautious:
1. Optimism is at an all-time high for stocks and I place two graphs that say a lot: the first is the historical average trend of the last recent SP500 rallies (black line) compared to today’s (red line). As you can see, we are facing a summer retracement phase:
The second graph is the Citigroup Economic Surprise Index, an indicator that measures the gap between market expectations and reality. To be more precise, every day the index measures the standard deviation between macroeconomic data and the average consensus of operators (Bloomberg survey median). When the index chart rises to the top, it means that the macro data has beaten the consensus of traders; conversely, when the index falls, the economic data has disappointed.
2. At the level of cyclical analysis our historical MIB index shows a terrifying Sequential on the quarterly chart while it has breached a Sequential on the weekly chart a few weeks ago. In short, for Sequential we are at the end of the race. However, we must always remember that the Sequential can be read in one direction or another, that is, the Sequential tells you that the cycle is over and something is about to happen but it does not tell you which side the market will turn.
The market breadth on Italian equities measured by Mc Clellan is in the neutral zone and we would like to see it at more euphoric levels for a breakout of this magnitude
I hope you understand that taking such a strong stance amid the runaway euphoria of equities is very difficult for me and very risky as a professional reputation. But you will also understand that this is what the readers want and this I deliver. And I’ll do even worse. If the rise were to consolidate and continue for a few more days, I could also change my mind and start buying because only dead traders do not change their minds quickly on the stock market.
But let’s see some interesting action on the Italian price list reported by the ITI (Independent Trend Index) which is available for free every day at 18.30 (Click here):
PORTOBELLO SHARES: As for the news released on the news channels, there is little to add about Portobello shares compared to what has been said in recent weeks. The more the days pass, however, and the more we can see on the graph that after the breaking of the all-time high (and what a break: the prices from February to today have increased by more than 195% and now touch 50 euros) a real and own congestion. Fluctuating volumes. Among the latest news, the loan transaction signed by the company with MPS for a value of 6 million euros and the encouraging end of the 2020 financial year (revenues and income, equal to 64 million, increased by 39%).
INTRED SHARES: The Intred stock curve is perhaps the one that, for the moment, comes closest to our idea of ITI. Leaving aside some burrs, the trend really gives the idea of regularity and the slope even with the protractor in hand should not be very far from 45 degrees. Prices have currently reached € 17.20 and it is not yet clear whether congestion has started or if after this pause the climb will start again. The lower part of the graph makes us satisfied: the volumes do not disappoint. The telecommunications operator has recently announced that it has closed the first quarter of the current year with revenues of over 9 million euros (+ 10% compared to the same period of the current year). The result is mainly attributable to the increase in sales of ultra-broadband connections (a very strong sector in this period and therefore bodes well for the future).
EMAK SHARES: After the surge in prices and volumes last month, Emak shares continue to reach the highest levels. The leap that changed the cards on the table, transforming a slow upward trend into a bunjee jumping, took place immediately after the communication of the results of the first three months of 2021. The company closed the period with revenues of over 162.8 million euros, an improvement of 38.1% compared to the same period of 2019. Ebitda also increased, from 13.92 to 26.92 million euros. According to the leaders of Emak, in 2021 turnover growth will continue between 15 and 20%.