Wall street is experiencing a bullish cycle that is more than seven months old. How long will it last? Doubts regarding the sustainability of this trend continue to rise; they are more than justified if we consider that this season of the year is the less favourable from a statistical point of view. One month ago, the S&P 500 had given an early warning signal through a pullback of more than 1% within a single session. It didn’t happen since months but the market had more or less ignored such signal since the uptrend had quickly resumed. It happens often this way: a first pullback occurs, then the stock hunters intervene at the earliest opportunity to jump into the market at prices just a bit lower than the highs, a typical behaviour reflecting the ripeness of the uptrending cycle and, by consequence, its vulnerability.

The price of Bitcoins has risen more than tenfold since it bottomed in February 2015. Such a parabolic move can be compared to the rise in Silver or Gold towards 1980 or 2011, or the NASDAQ in the run-up to its 2000 top during the dot.com bubble. And indeed, the promise of a finite non Fiat universal currency, which is easy to store and transfer are huge. Amid capital flight out of China and legalization in Japan, Bitcoins are finding increased legitimacy either as a practical store a value or as the possible next international transaction currency. We hereby attempt to monitor this parabolic rise, an exercise which is never easy.

Bitcoin prices skyrocketed last week and surged to all-time highs above $2.700, and this generated on the web a lot of articles about a possible bubble of this complex and strange asset.

Like all the financial assets, also Bitcoin can be studied in Technical Analysis using charts. One of the most common errors I have noticed, is the lack of a proper representation of this asset on the graphs.

In the chart below, you can see the BITCOIN/US DOLLAR FX SPOT RATE chart from 2011. It looks impressive but also misleading.

The massive cyberattack that targeted 300’000 devices in 150 countries around the world one week ago, including important social infrastructures, businesses and private users, raises serious question about growing internet vulnerabilities and computer safety. It is still unclear who is the responsible for the ransomware attack, government agencies around the world are investigating, but one thing is certain: the growing menace of cyber-attacks is escalating, governments and companies are expected to increase spending on IT security after being caught out by the attack and the firms providing IT security services are poised to expand.

At the beginning of October 2016, I wrote an article about the STOXX Supersector Europe 600 Basic Resources Index, and the possibility for this Index to start an intermediate uptrend. From that period we had an increase of about 36% until late February 2017, and now we are in a retracement window that started on February 22th with a drawdown of about -13%.

To better understand the performance of this Supersector it is advisable to take into consideration the historical graph prices of the last twenty-seven years.

Flows into European stocks gathered momentum since the end of April, in a resurging trend that accelerated sharply in the first week of May, reflecting a new positive sentiment towards the European markets after that investors had run off in 2016 and now, in just one week, poured 2,5 billions into European equity funds. Many reasons explain this new positive sentiment, from the evaporation of political risk after the French vote, to an improved economic confidence after that the ECB president Mario Draghi expressed optimism about the region’s economic recovery, still keeping the actual monetary stimulus.

The rapid rise in interest rates during H2 2016 and the concomitant fall of Gold prices did bring back memories of the 2012 -2013 sell-off of the Golden metal. Yet, we believe that this time is different: while the 2012-2013 was driven by the prospects of tapering which led to a subsequent rise in real interest rates, the current environment is more reflationary with measured improvement in inflation and growth worldwide. These economic dynamics should be supportive for Gold prices over the next 12 to 18 months. We would hence consider Gold as a reflationary asset with a defensive twist.

Generally, investing in smaller companies is riskier than investing in larger companies. Large caps tend to be less volatile during rough markets as investors fly to quality and become more risk-averse. The long-term statistics certainly suggest that smaller companies do indeed outperform larger ones.

Mid caps lie between large cap stocks and small cap stocks.

In Europe the Eurostoxx Mid Index, has historically outperformed the broader Stoxx 600 Index, and in the last bull market started in 2009, the real gap in the performance between the two indexes, started in 2013, as we can see in the graph below where it is represented in the upper side the relative strength of the Eurostoxx Mid Index versus the Stoxx 600 Index, and in the lower side the historical performance of the two indexes.