The Swiss stock market is one of Europe’s most stable and globally recognized markets, known for its high concentration in a few multinational giants and defensive sectors. It is dominated by the health care, consumer staples, and financial sectors, which together make up the majority of market capitalization. This reflects the outsized influence of global leaders such as Novartis, Roche, and Nestlé, companies with strong earnings stability and global revenue streams.
The Swiss Market Index (SMI), Switzerland's primary benchmark, is highly concentrated, with just 20 blue-chip stocks, while broader indices like the SPI or MSCI Switzerland Index include mid- and small-cap firms as well. Health care typically accounts for around 35 to 40% of the index, followed by consumer staples at 20 to 25%, and financials (including banks and insurers) around 20%. Other sectors like industrials, technology, and materials are present but much smaller. This defensive sector makeup gives the Swiss market a reputation for resilience, particularly in times of global economic uncertainty.
Analyzing the point and figure chart supports this dependable growth that the Swiss market enjoyed over the past couple of decades. The last point and figure signal was a double top at $53.01, where resistance taken from prior bands of consolidation might suggest a point and figure price objective of $60.89 and further up at $68.57 based on both vertical and horizontal counts. While a zone of support has been blocked from $34.97 to $48.01, the level $51.97 is set at the 3-box reversal as well as the natural support at $45.24, which dates back to 2022.
An exciting exercise for SIA practitioners is to quickly extract the holdings for top-performing ETFs with the objective of ascertaining the top relative performers that might be driving a particular index or country. Of course, this is something SIA accomplishes well for North American markets, but for smaller indexes like those in Europe, this requires a customized step.
Let's use the iShares Switzerland Capped ETF as an example. Quickly doing a search for the holdings, we can add them to a custom portfolio and then run a relative strength matrix. The result gives us a short list of favored names within the broader index that can point us toward sectors of opportunities or even individual names that we can dig deeper into.
One such name is ABB Ltd. ADR (ABBNY), a leading global technology company headquartered in Zurich, Switzerland, specializing in electrification, automation, robotics, and motion solutions. Formed in 1988 through the merger of Sweden’s ASEA and Switzerland’s Brown, Boveri & Cie, ABB operates at the intersection of digital and industrial innovation. The company serves a wide range of industries, including energy, transportation, manufacturing, and utilities, offering products and services that improve efficiency, safety, and sustainability. With a strong global presence and a focus on driving the energy transition, ABB is a key enabler of smart infrastructure and industrial automation across more than 100 countries.
To dig under the hood technically, we find a late summer breakout on ABB Ltd's stock as it moved past the $59.10 level and ran up to current levels around $70. Support is now at the 3-box reversal level of $65.55, as well as the old resistance (now support) at $57.94, where new resistance is extrapolated out to $77.98 and $82.75 based on both vertical and horizontal point and figure methodologies.
ABBNY now carries a near-perfect SMAX score of 9 out of 10, a near-term measure of relative strength against a basket of alternative asset classes.
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