 Hello traders at CMC Markets. Welcome to another update by RRG Research for Monday 1st of August. I'm recording this on Friday the 29th of July. My name is Trevor Neal and I'm presenting for RRG Research this morning from London. We'll start as we always do talking about the looking at the review of major global indices. Then we'll look at the US and Europe and see what we conclude about this relative strength there. We will come back to something that Julius was talking about last week which was growth versus value and also sectors and then we'll look at the fang stocks remember them. This week as we look at the major industries usually we look at it versus the MSCI World Index as a benchmark but this time we've chosen to look at it versus a zero percent annual return. So this is the actual real appreciation not versus the global index but versus cash. So what we can see is generally almost everything is in this crowded area here in the leading quadrant pointing generally east so that's with increasing JDK-RS ratio and many of them moving upside as well so with RS JDK-RS momentum also as well. So in a good position stocks are in a good position versus cash. There is one exception here isn't there which is the Hang Seng HSI that is way on on its own out on the left in the lagging quadrant. Yes it's moving up but it's really an outsider it's in the absolutely wrong place. So most industries are in this leading quadrant here meaning that stocks are in a short-term uptrend in terms of price versus this zero percent return and that is good after long declines in stock markets that we've had this official bear market that we've suffered. So practically everything is looking good but as an asset class. Last week Julius focused on the stocks 50 Euro stocks 50 as a leader and he was at the time we were just below this 3600 resistance level. So during the week as he suspected the Euro stocks started to make its break to the upside. So it has bounced several times at the 3400 level one two three times there and they're now approaching resistance and which at this moment as I speak this frees up upside potential for the market having broken these two resistance highs around 3600. Now we notice the fall down from 3800 area down to 3600 was very fast occurred in just two days we had this jump. These are daily hours here this fall sorry not jump but fall but so this means that having cleared that resistance the move up potentially could be quite quick because there is little resistance. Now what is very interesting and really probably more important for us is the RRG lines and we see both of these are above 100 and looking fairly good and pushing us in towards the into the leading quadrant underscoring this relative strength of the European market. Now we saw on the first RRG chart that the NASDAQ 100 which we see here now as a chart as a weekly chart is the index with the highest JDK Rs ratio was the NASDAQ 100. So the also the ARS momentum also indicates increased momentum in the relative strength. So let's look at this chart in some detail. It is approaching two significant resistance level one is from this May high here at 12800 a minor resistance level but we've got a significant support level from these two lows here this consolidation here just above the 13000 levels. So we're moving up in this parallel channel towards these two resistance levels. Now what is the chances that these two levels are going to give way and we're going to break the pattern of lower highs that has been intact and dominated the markets since we had the March high. It depends on the nature of the approach and here we've got that I'm showing the weekly MACD this is 1226 and 9 weeks. Now look at the MACD line here is above its signal line it's moving average line and the gap between the two is widening. This means that the the move in the NASDAQ 100 is upwards and the momentum of that move up is increasing. Now when you approach resistance levels and the momentum increases as opposed to fades away then you have a higher chance of the possibility that these old resistance levels previous support now resistance levels are likely to give way. Another resistance level I should have mentioned as well is 13000 the round number itself. So I would conclude that we are generally moving higher towards significant resistance levels and we're doing so with increasing momentum and so the chances of a successful break and change of the trend it's already going up but a consolidation and a clarification of that we're not going down in the NASDAQ but going up will come quite soon with this break of the 13000 level which looks likely. Now let's look at this graph here which has just got two elements in it. One is the Dow Jones US growth index here and this one here is the Dow Jones US value index against the Dow Jones US index. We see that the growth is heading in a northeasterly direction but in the improving quadrant and the value is in the weakening quadrant and in a southwesterly direction. It's a weekly chart and therefore shows a longer term picture. Now last week Julius pointed out that the recent improvement for growth and the opposite rotation for value improvement for growth and opposite rotation the value is very clear but we need to keep in mind this is still on the right hand side here and I know it's weakening it's still relatively better than the the growth picture here. Given the distance from the centre of the chart here and percentage terms it is still possible for both tails to complete a rotation complete a rotation on to the same side of the graph so this could swing fast around and also being on the plus 100 side of the JDK ratio. He also looked at the last week at the sectors of the S&P and he noticed that amongst in constituents major constituents heavyweight constituents of the growth sector with technology and consumer discretionary were both in the leading quadrant. Now I want to expand on this a little bit and just discuss is it time to stop hating the tech stocks. Now here's a relative rotation graph of what we used to call although it's a bad name now the Fang stocks some stocks have changed their names and the constituents have changed a little bit here but these were the powerhouse stocks of the bull run the ones that soared away and gave us the great driver of that bull run but they were also the stocks which dropped very hard when we had the bull market the bear market moved down the collapse of this year and they were the leaders of that fall proving that what goes up does come down eventually. We can see that versus the S&P NF, Alex, Netflix, Facebook, Nvidia and Apple are all improving in this improving quadrant are all in the improving quadrant versus the S&P itself. BABA but Alibaba furthest to the right and so the one with the highest Rs ratio and also we've got Twitter also pretty far to the right although losing some momentum. We've got one notable security two notable securities one is Google which is going absolutely in the wrong direction it is moving southwest so it's moving deeper into the lagging quadrant and furthest the left lowest on the Rs ratio is Amazon there and although it's pointing up it's just really hesitating at this very low reading and so we've got a message here that these leaders which are again driving us we've seen from our earlier comments here that this is the sector that is driving this bounce in the growth stocks and in stock market but you have to be careful which ones you choose these ones in the improving quadrant are the ones to go for and these ones here are the ones that we don't like so much and so be careful what you decide and pay attention to the message of the RG stocks if you want to participate in the growth and technology bounce and you agree that is underway I'll leave it here for this week thank you very much for watching we will be with you again the same time next week in the same place goodbye from Julia and I at RRG research and may the trend be with you