Defensive stocks are making new relative highs as the overall move lower in equities continues, according to Andy Dodd, Head of Technical Research at Louis Capital Markets.
Dodd says tobacco companies like British American Tobacco (BATS), Imperial Brands (IMB) and Swedish Match (SWMA) are all at 3-month or 52-week relative highs, along with Unilever (ULVR) and GSK (GSK).
Conversely, he points out that Real Estate remains a theme on the relative low list, including SEGRO (SGRO LN) which is continuing its move lower towards the 854 target (see Chart 1). There are also no signs of a low being in place for the Swedish real estate company Samhällsbyggnadsbolaget i Norden (SBBB SS) following its recent continuation pattern (Chart 2).
Travel is also a theme making new relative lows, including easyJet (EZJ), International Consolidated Airlines (IAG), Deutsche Lufthansa (LHA), Wizz Air (WIZZ), Intercontinental Hotels (IHG) and TUI (TUI). The same is also true for the US where Carnival Corp (CCL), Expedia (EXPE), Hilton Hotels (HLT), MGM Resorts (MGM) and Royal Caribbean Cruises (RCL), amongst others, posted 3-month relative lows.
Also making new lows are Dutch payment company Adyen (ADYEN NA) (Chart 3), with Dodd saying the recent break below support at 1311 suggests further downside in absolute terms, and Dutch high-tech company ASML (ASML NA). Dodd says ASML is at a 52-week relative low with scope for further underperformance following the break below the yellow neckline of a continuation pattern (Chart 4).