LONG TREND TRADE in SANOFI

It is easy to look at technical charts and come up with trades that I either day trade or swing trade.

But recently, I have started to think in terms thematic investing.

So when I watched the below video, I got an idea of a theme that Jeffrey Gundlach mentions. At 23.20 min of this video, he says after 10 years he has started to buy European stocks. His main take is that US markets have outperformed other markets for so long. And according to him, there will be outperformance outside of US markets.

I also came across this tweet by Julian Brigden. As shown by him in this chart, US markets started outperforming rest of the world in 2015. As of now the over performance is 5 Standard deviations.

So, it made sense to me to look for a trend trade outside of the US. Plus the markets in US have been bearish lately.

With this theme in mind, I started making list of the European ETFs listed here:

VGK, EZU, EWG, EWU, EWQ, EUFN, IEUR are some of the European ETF’s.

Other than VGK, the other ETF’s do not have much volume. Most don’t have liquid options markets either.

Also as of now VGK is tracking the DIA. The blue line is the DIA line on the VGK chart. Putting money right now in an ETF that is tracking the US market pretty closely was not making sense to me.

Digging in bit more into the holdings of these ETF’s and going over the charts, I thought Sanofi can become a nice trend trade.

Here is a chart of the monthly VGK ETF compared with SNY. The magenta line is bullish while the VGK ETF is sideways to down.

Sanofi is in Healthcare sector. A theme I want to invest in. It has a market cap of 132 Billion. So, it is a large cap stock in Europe, in a growing healthcare sector.

Monthly chart below shows a huge base being formed. Above the 54–55 level it would be breakout of a huge base being formed for years.

Looking at all the above points, I have gone long SNY with a starter position.