The Stoxx 600 Supersector stronger than S&P500

When we want to invest in stock indices, sometimes we are very focused on large, medium or small capitalization indices. Sometimes we try to understand if it is better to invest in value stocks rather than growth stocks, and sometimes we follow only the sector indices that fundamentals indicate us more attractive for that period. But in Europe there is an index representing one of the Super Sectors of the Stoxx 600, which has always performed in an excellent way, and in the last twenty years has beaten the S&P 500 and the Stoxx 600 (see the graph below). This index is the Stoxx Europe 600 Personal & Household Goods Index.

Since January 2015 this index is above the S&P 500 by about 7.5% and above the Stoxx 600 by almost 25%. And if we look to the chart of this Supersector Index from 1992, the interesting thing that we could note is that the maximum of 2007 is not aligned with the maximum of 2000, as happened on the S&P500, but it is higher, and the index curve is currently at an all time high.

The relative strength vs. the Stoxx 600 is in uptrend since 2000, with two weak semesters (in yellow background), in 2013 and in 2016.

From a point of view of medium-term technical analysis, we can see on the weekly chart that the price broke in January 2017 a continuation symmetrical triangle (b), and the oscillator has anticipated the breakup some weeks before (a), up crossing the zero line.

The first target price, if the up trend continues, is around 975.

Mario Valentino GUFFANTI CFTe – SAMT Vice President – Swiss Italian Chapter – mario.guffanti@samt-org.ch

Disclaimer: the above article is for general information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.