Looking at the shares that have suffered most since Brexit is a common client strategy for identifying recovery opportunities and we could be set to see a great rotation. It’s human nature to consider the possibility that share prices will return to where they fell from. So my clients have me closely monitoring a handful of names – a who’s who of Housebuilders/Property/Real Estate, Financials (including Banks), Retailers and, rather pertinent in the wake of last night’s horror on the French Riviera, Airlines and Travel.

The UK 100 Index is back trading 300pts/5% above its pre-Brexit highs, having delivered a mammoth 900pt/15% rebound from its post-Brexit lows. Bullish sentiment has returned. But not in the way you might expect. A host of stocks still trade at 10-30% discounts to their pre-Brexit levels, in many cases justified by worries about the economic fallout of our collective decision to leave the EU. But most of these stocks are those that you would normally expect to have helped the index rally back to where it now trades. But that not been the case this time round. It’s actually been a rush to high-yielding, non-cyclical defensives and safe havens, rather than the aforementioned risk-assets exposed to growth and consumer sentiment, that has driven the UK Index recovery.

This has me wondering whether some of the major helpers (Gold and Silver Miners, Healthcare, Consumer staples, Utilities, Beverages, Tobacco) are set to lose momentum. Investors are starting to feel tempted to cash out of their 10-60% gains since Brexit. Now that money has to go somewhere. And with some of the recently shunned stocks exposed to economic growth (Miners of industrial metal, for example) already starting to subtly creep up the UK Index ladder I wonder whether what we’ve been discussing (the ‘great rotation’) is already in motion. And there’s potential for it to gain traction in the weeks to come. Results season has already begun stateside with companies beating expectations, especially those all-important Banks from whom we will hear much more from next week.

Many UK names will join the results season party next week, including certain Miners, Property and Airlines (oh look, it’s some of those the names we were talking about earlier). Corporate updates can see share prices move way beyond their usual ranges, so there is potential for this results season to drive some of the shares I’m watching north to the tune of 30%, back to where they fell from.

Now you wouldn’t want to miss out on that would you? This type of opportunity is time sensitive. It’s the bread and butter of what I do as a trader, highlighting what’s important to my clients when they need it most. The same is true of our fantastic research which you can access here. As a sweetener it includes our Week in Advance –which details all the companies reporting next week. What will you find to trade and profit from next week? If you need any help, please call or email me on [email protected] or 0203 051 7418.

Enjoy your weekend,

Aymen Azizi, Trader, 15 July