Enel S.p.A. : chart update.

Here we have the chart update of Enel S.p.A. : the previous bullish trend has been confirmed ; indeed, the tops at 4.50 EUR and the top at 4.87 EUR are still valid (the same also for the dashed line, in the medium/long term) ; the pattern recognition (Dark Cloud Cover) has confirmed the change of the uptrend but strictly limited to the short-term. 

In this way, the last view was spot-on (for further info, please see the link http://michelecarollo.blogspot.it/2017/09/enel-spa-chart-framework.html). In the following charts, I propose the updated analysis with the previous levels. 

Chart from Investing.com

Chart from Investing.com

Now, let's look at the chart framework of the current situation. We must pay attention to the levels identified by the yellow circles (see also the FIBO retracements) : from the top to the bottom, 5.60, 4.80, 4.50, 3.40, 2.00. This is an overview to set a bullish or a bearish trading strategy, of course. 

Chart from Investing.com

We can notice a break in the previous parallel channel. This means that it is a first alert : it represents a price correction in the uptrend (even more so with a break of the support at about 5.00 EUR and then with a break of the top/FIBO level at about 4.80 EUR). The chart shows a volatility excess with the BBs indicator : that can be a rebound of the stock (for example, see the first red circle) or a confirmation of the abovementioned correction. The crossing of the EMA 50 and EMA 100 fits in this view. Therefore, the next trading sessions will be crucial in order to understand the market direction. 

Chart from Investing.com

If we extend the timeframe, the chart framework is very clear. Here we have a monthly timeframe : the price levels are those already mentioned. 

Chart from Investing.com

The management efficiency : cost-to-income of the italian banks.

The cost to income ratio is equal to the operating costs divided by the intermediation margin. 

In other words, using the bank balance sheets items, it is equal to the following expression :

COST/INCOME RATIO : operating costs ("item 230") / total banking income ("item 120")

The meaning is : the lower the value expressed by the indicator, the greater the efficiency of the bank. Usually, the index is expressed as a percentage. Otherwise, the operating expenses are a percentage of the operating income. The ratio is also useful to value the productivity and the profitability for the banks. 

Here we have a sample : it is the peer group of the main banks, in Italy. In order to have a fair comparison, I used the adjusted results and I used the same criteria with regard to the same period, last year (we speak about the nine months ended on 30th September 2017 and about the nine months ended on 30th September 2016). For further info, please consult the notes below the table (1-7) and visit the section investor relations. 

At a glance, we can notice that : 

• The efficiency is substantially the same compared to last year ; indeed, we can see a slight improvement, in general.
• We have two banks that represent the outliers of the peer group : CVAL and CRG ; the ratios had a strong worsening, compared to the nine months of the year 2016. 
• In the same way, we have other outliers (by the positive side), FBK and BGN. However, the two banks have a similar cost/income ratio, substantially, compared to last year. Reasoning by p.p. : by the negative side, about + 60 p.p. ; by the positive side, about from -2 to -7 p.p. (2017 vs 2016). 
• Following the considerations of the previous points, it is more useful to focus on the median than on the mean. See the following table. 

Finally, the bar chart is much more explanatory. The two period have two colors, respectively, the light blue for the year 2017 and the red for the year 2016. The median is highlighted by a horizontal line.

With the aim of ranking the abovementioned banks, we have :

1) BGN ; 2) FBK ; 3) ISP ; 4) IFIS; 5) BPSO ; 6) MED ; 7) UCG ; 8) BMPS ; 9) BPER ; 10) UBI ; 11) CREDEM ; 12) BANCO BPM ; 13) CVAL ; 14) CRG.

UCG S.p.A. : chart framework.

From a lateral trend (July-until the end of the year 2017), the stock began an uptrend until about mid-year (2017). More recently, UCG has a lateral trend again. This trend has just formed : in this way, it needs to monitor the next trading sessions, to better understand the subsequent events. 

The first lateral trend is indentified by the two horizontal lines : the support at about 9 EUR and the resistance at about 12 EUR. The uptrend is identified by the two bullish TLs, respectively, below and above the price chart. The previous resistance (12 EUR) becomes support and then, we have another resistance at about 15 EUR. The last one price level is important also for the raison that, between 14 and 15 EUR, we can notice a gap up in the chart. This gap up is a valid level in order to set bearish or bullish trading strategies (see the yellow stripe in the following chart). 

Finally, we can notice the abovementioned lateral trend : it is indentified in the same way like the previous one by the horizontal lines (supports and resistances). The support and resistance levels are light blue circles.  

The trend is also shown by the slope of the EMA 40 (red line) : the sequence is flat-upward sloping-flat. Another aspect is that the EMA can be an indicator of the volatility of the asset : wider deviation  of the price chart from the EMA, higher volality and viceversa. This arrangement is useful to set purchase or sale orders. 

Chart from Investing.com

If we extend the timeframe, we get the same conclusions : with a weekly chart, the sequence is lateral trend-uptrend-lateral trend. Now, the RSI is not overbought : the allert levels are 30 and 70. Previously, there was a "RSI exhaust",  an oversold, in the first half of the year 2016. 

Chart from Investing.com

Lastly, it's interesting to see the FIBO retracements (see the chart below). I set the 100% and the 0% FIBO level, respectively at the bottom (8.54 EUR) and at the top (18.36 EUR). The yellow circles indentify the previous price levels (supports and resistances). This is another confirmation. 

Chart from Investing.com

This is the substantial chart framework. However, we must not to forget that other factors influence the stock market. UCG belongs to the banking sector. In this way, primarily, it means that its price will be directly correlated to the macroaggregate events and to the italian economy and italian politics. The beta of the stock is about 1.93 : we have an high leverage compared to the FTSE-mib. 

Data source : FT.com

The comparative chart UCG-FTSE-mib is very explanatory.

Chart from Investing.com

ABB : a bearish strategy opportunity (in the short-term).

OVERVIEW

ABB, aka accelerated book building, is a procedure by which institutional investors are given significant shareholdings. It is an operation to get capital quickly (for M&A reasons, for debt refinancing and so on). 

The main benefits are the following :

1. The speed of the procedure ; it takes about one or two days and it doesn't need any advertising (like the IPOs) ;
2. The placement of the stocks is directly on the institutional investors and not on the market ; it means that the market is not always able to absorb such much stocks in a short time. 

The main disadvantages are the following :

1. The ABB provides a discount for the institutional investors who buy the shares ; usually, the range of the discount is between about 1% and 5%. That range is their profit margin. In this way, the market reaction is negative, at least in the short-term ;
2. Linked to the previous point, there will be most likely a market dispersion among all the stockholders. 

From a statistical point of view and in order to build a trading strategy, we must consider some examples, in the history of the financial market. As already announced, the ABB will produce probably a downward pressure on prices, for the aforementioned reasons, in the short-term. On the contrary, in the long-term, it could be a bullish strategy opportunity : it means buying a stock with a cheap price, buying the quality at good prices (of course, the second scenario requires a study and other conditions, to set a pure value strategy or a "buy and hold" strategy). 

CASE-STUDIES

About citing the examples, see the following links (TOD's and Brunello Cucinelli) :

• https://www.marketwatch.com/story/mediobanca-places-10-of-tods-shrs-at-eur76shr-for-eur2326m-2010-12-15. We speak about TOD's S.p.A. The package was equal to the 10%. The price was set at 76 EUR/share. As shown in the chart (see the circled area), we can notice the classic gap down after the ABB and consequently, a bearish performance in the following days. The discount was huge, about the 9.50%. After the ABB, the market price aligns itself with the transaction price, theoretically. Indeed, from about 84 EUR to 76 EUR. Then, in medium/long-term the performance became bullish (see the red arrows). 

Chart from Investing.com

• http://investor.brunellocucinelli.com/yep-content/media/CS_Shares%20Placement%20Launch_ENG.pdf ; http://investor.brunellocucinelli.com/yep-content/media/CS_Shares%20Placement%20Completion_ENG.pdf. It was the 5.14% of the company's share capital. The price was 18 EUR per share. In this case, the discount was smaller, about 7.90%. The pattern structure and other aspects are substancially the same, compared to TOD's. See the chart. 

Chart from Investing.com

Recently, the case of  Moncler S.p.A. For further info, consult the link :

https://fashionunited.it/news/business/moncler-eurazeo-ha-venduto-un-altro-3-3-percento/2017102616444. The discount is much smaller than the previous cases (about the 0.85%). For this reason, the market reaction is not so negative. Anyway, we must consider the following trading sessions to confirm that. See the chart and the gap down immediately covered. 

Chart from Investing.com