SX7P: Medium-Term Risk Building — "European Banks Showing Early Cracks Beneath the Surface”

💹 QM Trades | Quantmatix Insight

European Banks — Looking Vulnerable from a Position of Strength

📊 Quantmatix data is flagging early signs of weakness across the European Banks (SX7P) — both on a Relative and Absolute basis — across all time frames: Short (Daily), Medium (Weekly) & Long (Monthly).

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📉 Absolute Setup

• Short Term (Daily): Negative Reversal confirmed on 7th Oct

• Medium Term (Weekly): Pending Negative Reversal — to confirm at today’s close

• Long Term (Monthly): Still Positive, but momentum is flattening

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⚖️ Relative Setup vs STOXX 600

• Short Term: Negative Reversal confirmed on 30th Sept

• Medium Term: Confirmed Negative Reversal last Friday

• Long Term: Pending Negative — to confirm at month-end

These reversals suggest a shift in tone — a market that’s been strong now showing the first signs of rotation.

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🏦 Under the Hood

On the Medium Term time frame (Weekly):

• Of the 43 constituents, 74% of scores remain Positive

• But 95% are now declining, showing broad deterioration from strong levels

Last week, only 1 Negative Reversal was confirmed:

• Banco Sabadell (SAB)

However, 10 names are now pending Negative Reversals — to confirm on today’s close 👇

Pending Negative Reversals:

• Standard Chartered

• CaixaBank

• Lloyds Banking Group

• Bankinter

• Banco Bilbao Vizcaya Argentaria

• Intesa Sanpaolo

• Svenska Handelsbanken

• HSBC

• ING

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📈 QM View

European Banks remain strong at the surface — but Quantmatix signals are showing a broad softening beneath. With most names now declining across the Medium Term and fresh Negative Reversals pending, the setup points to potential further weakness ahead.

Today’s/Friday’s close will be key for confirmation — and could mark the start of a new rotation phase within the sector.