 Hello traders at CMC Markets, welcome to another update by RRG Research for Monday the 16th of May and I'm recording it on Friday the 13th before the market opens. My name is Julius de Campanar and I'm presenting to you from Amsterdam in the Netherlands. For today I want to look at a few things, starting with what happened in stock markets around the world in the past weeks, maybe I should say, because there's quite a lot going on. Now, if we look at a group of major stock market indexes and we're looking at a weekly RRG, a weekly relative rotation graph here, you see that this group is kind of evenly spread out around the benchmark, the benchmark center of the chart here is the MSCI World Index. What you've got to bear in mind is that this is all based on relative strength. So this doesn't say anything about direction of price because we all know that the general tendency for the stock market is going down. What this tells you is which stock markets are outperforming or doing better than the MSCI World. And I think that image is kind of clear, it will become even more clear when we switch to the daily. But what I want you to watch here is that it's predominantly the NASDAQ and the S&P and obviously the S&P is a very big chunk of the MSCI World Index, it's a big driver of that. So when that starts to turn around, it is by default that other countries have to move the other way. And if I zoom in on that S&P tail here, then you can see what just happened. It moved in the right direction and then last week it sharply hooked around. And that's a very significant sign I think. And you can see kind of a similar rotation in the NASDAQ as well as in Russia, I'm not sure whether that is a market you want to follow at the moment but it's still there. And what you also see is that there are a few other markets like the Nika in Japan, the Futsi in the UK, Australia which is the ASX200, AS51 is the ticker symbol and you got Europe with the DAX and the Stocks Index starting to improve. Again, this is all based on relative strength so don't mistake this for price direction. Now if we move to the daily version of this RRG, then it becomes even more clear because you got the NASDAQ here which has turned around inside the improving quadrant, that's quite a negative sign. So it started to improve but never reached leading and it's now hooking back towards lagging. That means that we're starting a new down lag in an already existing relative downtrend. And for the S&P it's not that bad but obviously that's much closer to the benchmark because it's such a big chunk of the MSR world but you see a similar rotation, it tried to move into the leading quadrant and is now hooking around and moving back to lagging. And also here in this cluster if you look carefully here you will find the tail for the Dow Jones industrials and that is also coming out of the leading quadrant moving into weakening. And you see that the European, the Western type markets are moving the opposite direction. Now once again it's all based on relative and I can tell you, I can show you a different picture because here the benchmark is the MSR world that makes it relative. If I change that benchmark to an annual rate of return of 0% then we are looking at relative strength versus 0%. And then you can see basically that means that we're looking at price direction and then you can see that all these indexes are in downtrends. They're all on the left-hand side of the chart. They're almost all inside the lagging quadrant which means that the price trends are down. By the way it gives traders a great opportunity to play around with pair trades because you can play the strong ones and short the other ones and try to see if you can find profitable pairs using this type of approach. You see the S&P is a very important chunk, I already told you that. Here's the weekly chart of the S&P and I think that is a very weak chart at the moment. We had a very nice run-up. We broke important support level a couple of weeks ago. We're now sort of hovering and I made that a very thin line because I don't think it is a major level. I think the next major level in the S&P 500 is around let's say 3500 which is still a long way to go. But the most important takeaway for this chart is probably that the upside is very limited. So for the time being I wouldn't be too strong on the S&P 500 and we can look at that here on the daily. It makes it even worse. You can see that around 4100, there's already a lot of resistance for the S&P 500. Quickly go to the US sectors because something interesting is going on in the US sectors. If you look at the ROG for the US sectors, this is the weekly ROG for US sectors and I did something here. You will notice that there are bubbles on the endpoints of these tails. The bubbles represent the market capitalization of these sectors and now it becomes interesting because what you can see here is that the biggest sectors in terms of market capitalization and I'm going to put energy out of the picture to zoom in on the others because energy is so way to the right. You can see that the biggest sectors is information technology and I'm not sure if you can read that dialogue but the lowest line tells you market cap as 26.4% at the moment. So information technology 26, consumer discretionary is a little bit above 11, financials is 10.5%. Together they are almost 50% of the market capitalization in the US. 50% of the market capitalization in the US is underperforming the S&P 500. That means that there has to be a lot of strength from the other sectors to pull that market up. That's not going to happen. In order for a strong bull market, you do need these big sectors to lead and to outperform the S&P 500. This is a very defensive rotation. These are growth sectors. These are offensive sectors and the defensive stuff is healthcare, is consumer staples, is utilities. You can see they're all still inside the leading quadrant. Healthcare is rolling over a little bit but it's still very high on the RS ratio scale. So for me, this still remains a very defensive rotation in the US. If we top it off with the charts for information technology, you can see that that is a big top information that has just been completed where we're looking for support somewhere 2100 in the information technology index and for consumer discretionary. Kind of similar. Breaking 1260, 1270 a couple of weeks ago, we're now threatening 1160 and the real support I think is coming from the peak in early 2020 and a little cluster here, which is 1,050. All in all, a pretty weak outlook for stock markets around the world, especially for the US. Nevertheless, there can always be bounces. There will be trading opportunities. But the upside, as far as I can see, is still very, very limited and that won't change anytime soon, I'm afraid. Thank you for watching and I hope to see you again next week, same time, same place.