Europe Ready To Play Catch Up?
The European banks are acting well, as seen on the chart below via the EUFN. We are not big believers in mean reversion, as we feel financial instruments that are showing strength relative to another trading vehicle are doing so for a reason. With the incessant chatter now about how US banks may come under pressure, with a possible peak in the 10-year yield, I think may be a bit early. The chart below of the EUFN, representing European banks, could be worth a long look. The ETF is higher 14 of the last 20 weeks, advancing nearly 50% during the timeframe. Looking at the ADRs of some of the more well known names, DB which we will speak later about looks attractive. UBS put in a strong showing this week rising nearly 4%, after the prior 5 weeks all CLOSED very taut within just .23 of each other. Bifurcation in the region however shows peer CS now 13% off most recent 52 week highs, and the last 5 weeks have all CLOSED in the lower half of the WEEKLY range, and fell by more than 11% the 2 weeks ending between 3/5/12. Buy strength, and sell weakness.