Saturday, January 7, 2017

January effect.

The January effect is a calendar anomaly that occurs during the month of January. It provides a general increase in the average returns of the stocks during the first middle of the month.
A fortiori, it is true for the small caps more than mid and large caps.
It refers to a statistical behavior and in this way, the exceptions may exist. Anyway, the effect is consistent over the years and for the majority, it is relevant.
If we had an efficient market, it should not exist. Until proven otherwise, the market is not efficient (at least, not totally) and we have market phases where it exists and market phases where it disappears.

There are multiple reasons for that ; the main explanations are the following : it is a psychological matter because January is the first month to begin a good investment program or it is the result of the tax-loss selling , with regard to the end of the previous year.

For further info, see the links : ; ; .

Currently, it would seem to prove the rule. For the first days of January, FTSE ITALIA small cap index have performed better than mid and large cap.

Chart from

The following table shows some best performances (5 days), among the small caps stocks. The effect seems to occur this year. 

Friday, January 6, 2017

Intermarket analysis : focus on luxury sector.

About the relative performance, a year now, the stocks that have performed better are : Kering, Brunello Cucinelli, Hermes, Burberry, C. Dior, Moncler, M. Kors and LVMH. 
In the middle, we have : Salvatore Ferragamo, Yoox-net-a-porter, Prada, R. Lauren, Tod's and Luxottica. The worst are : Safilo, Hugo Boss and Geox.

Chart from

About the risk, the luxury sector is an industrial, by definition. It provides low risks (individual, volatility and systematic, beta) in the face of good average returns, compared to banking and financial sector. The last one is far riskier with disappointing returns, over the long-term. The luxury stocks and industrial (in general) are more likely to the investor instead banks are best suited to the pure trader. 
As shown in the following chart, the industrial (green) is in the upper left (high returns, low risks and the financial (light blue) is in the lower right (low returns, high risks). 

The following graph shows risk-reward among the luxury industry, with a time frame of one year (252 returns). All in all, the intraday volatility is low (about 2%) and the same, for the beta (about 0.70), with some outsiders (downward) like Luxottica (1.75%) or C. Dior (1.45%) and (upward) Yoox-net-a-porter (2.73%) or Safilo (2.72%) ; with regard to the market risk (downward), Brunello Cucinelli (0.52) or Luxottica (0.45) and (upward) R. Lauren (1.15) or Hugo Boss (1.07). 
There are also the comparative returns (TE, TEV and IR=TE/TEV), related to the specific benchmarks : Ftse-mib (ITA), cac 40 (FRA), Ftse 100 (GBR), dax (GER), s&p 500 (USA), hang seng (HONG KONG). The best is Kering, the worst is Geox.

Geox is very interesting : there is a huge "performance gap" to cover and, with regard to the business plan and other expectations, at the current prices, it could be an opportunity (see my previous post, dated December 26, 2016, 

Monday, January 2, 2017

Geox S.p.A. : chart framework and renewed interest in the stock.

About the chart, we got the break of the TLs (medium and long-term), the break of the previous maximum at 2.07 (after the 9M sales release ; it was formed a gap up, immediately covered) and the break of the previous minimum at 2.15 (October 2014), with good volumes. 
The last uptrend is well set with the support held at 1.80.

Chart from

The crossovers of the EMA (50, 100) are good, too. However, the EMA 200 is far away from the chart. The uptrend is strong but it needs some physiological corrections : RSI (overbought), BB (high volatility).

Chart from

Chart from

With regard to the high targets, we must pay attention to the support at 2.60 but particularly to the first FIBO level (23.6%) at 2.40. About the low targets, 1.80 is the main reference.

Chart from