* Bullish sectors driven by strong Earnings Revision Ratios…
Every sector with a ‘bullish’ signal has above average ERR scores, with stocks in Media and Personal & HH Goods showing particularly frequent upgrades. Positioning is also less stretched among the top five sectors, amid record sentiment for European stocks (see link). Financial Services, which has relatively weak sentiment and strong momentum, replaces Basic Resources as a bullish sector, which has suffered from poor recent performance.
* …while Bearish sectors stuck on ERR and positioning
Poor earnings revisions, weak price momentum or relatively stretched positioning means we maintain underweights on Construction, Oil & Gas, Banks, and Telecoms. We expect confirmation in macro improvement before the more cyclical names show significant progress in their rankings. Travel & Leisure replaces Retail in the bottom five sectors, due mostly to crowded fund manager positioning in the former.