The U.S. market remains in an Uptrend Under Pressure. Indices jumped ~1% on lite volume. The S&P 500 continues to consolidate on the right side of a base and is 1% off all-time highs (4,743), while the Nasdaq is slightly above its 50-DMA (15,490). The distribution day count stands at five on each index, with one day expiring on the S&P 500 next week.
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Won Europe Today
Yesterday,
- European markets advanced 1.4% after the previous day’s sell-off. Investors continue to assess the risk associated
with the omicron variant for equity markets. We maintain a cautious view of the overall market. Indices remain in
consolidation with an elevated distribution. Continue to focus on quality ideas showing strong near-term relative
strength and trading above their respective 50-DMA. - The Stoxx 600 gained 1.4% on above average volume. The index closed near its day highs and above its 21-DMA. It
hasimmediate resistance at its 50-DMA (~0.7%) and is currently 4% off highs. Most sectors closed in the green,
retracing much of Monday’s loss. Travel and Leisure led the gains, up 3.5%. - Among major indices, France’s CAC and the U.K.’s FTSE closed above their respective 21-DMA while Germany’s
DAX is trading below its 200-DMA. All three indices closed in the green and are near their day highs. - Among the 17 indices we cover, all closed in the green with Austria gaining the most, up 2.8%. Six are in a
Confirmed Uptrend, two in a Rally Attempt, and the remaining nine in an Uptrend Under Pressure. The average
distribution day count stands at 4.7. - Actionable names in the Focus List include Dassault Systèmes (DSY.FR; DSY:FP), Schneider Electric (QT@F.FR;
SU:FP), Teleperformance (ROFR.FR; TEP:FP), Paragon Banking Group PLC (PAG.GB; PAG:LN), and Infineon
Techs (Xet) (IFXX.DE; IFX:GR).
Won Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq rallied strongly off early December lows; however, both remain within consolidation with no real trend yet to develop. The S&P 500 faces resistance at all-time highs of 4,743, while the Nasdaq is still 5% off highs and below 50-DMA resistance. The distribution day count stands at six and five, respectively, with one day expiring on the S&P 500 at the close today.
O’Neil Capital Equipment Sector Weekly
Vulcan Materials Co (VMC; $26B market cap; $152M ADV) is the largest manufacturer and supplier of construction aggregates in the U.S. The aggregates segment, which produces and sells crushed stone, sand, and
gravel, generates three-fourths of the company’s revenue. The company also produces aggregates-based construction materials, including asphalt and ready-mixed concrete (one-fourth of revenue). Its materials are used to
build and maintain infrastructure such as highways, railroads, bridges, airport runways, and other large projects, with ~43% of its shipments used in publicly funded civil construction projects. Private-sector residential and
non-residential construction accounted for the rest of its aggregates shipments. VMC should benefit from the increased investment in improving public infrastructure and increasing demand for single-family housing in the
U.S. The stock is forming the right side of a stage-one six-week flat base and testing support near its 50-DMA. It should turn actionable if it bounces off its 50-DMA and breaks out of pivot at $210.16 (+5%).
Won Europe Today
We released our European Weekly Summary yesterday. Click here to access the report.
Key points from it include:
- The Stoxx 600 retreated 35bps last week due to concerns about the spread of the Omicron variant along with the
pullback in monetary stimulus. The index remains in an Uptrend Under Pressure with five distribution days. Its 200-
DMA remains the key support level to watch. - We remain extremely cautious: continue to focus on high quality, high relative strength ideas, while avoiding or
reducing risk in lagging ideas trading below logical support. - Defensive sectors led the market last week. On our rotation chart, Basic Material, Consumer Staple, Utility, and
Capital Equipment showed improving short-term momentum (over four weeks). - European Focus List Update: We did not add any new names last week and removed Keywords Studios
(KWS.GB; KWS:LN). The list currently consists of 42 stocks, overweighted toward Capital Equipment, Financial,
and Health Care. - Stocks trading at support level with improving RS Rating over four weeks include: Schneider Electric (QT@F.FR;
SU:FP), Paragon (PAG.GB; PAG:LN), Tele performance (ROFR.FR; TEP:FP), Coface (COFA.FR; COFA:FP),
Sartorius (SRT3X.DE; SRT3:GR), Halma (HLMA.GB; HLMA:LN), and Dechra Pharmaceuticals (DPH.GB;
DPH:LN).
Won Global View
The U.S. market remains in an Uptrend Under Pressure. Indices gapped down on above average volume. The S&P 500 pulled back to support near its 100-DMA (4,522), while the Nasdaq is testing price support along its December low (~14,931). The distribution day count stands at six and five, respectively, with one day expiring on the S&P 500 after the close tomorrow.
O’Neil TMT Weekly
Software (IGV): The software index reversed mid-week gains following the Fed’s hawkish commentary. The IGV is 13%
off highs and is testing long-term support along its 200-DMA ($391). RS Rating of 63 and A/D Rating of D-. Distribution
remains broad-based as six of 11 of software-related groups are ranked 100th or worse within the O’Neil 197 Industry
Groups (1=best, 197=worst). Most vulnerable are high P/S stocks with no path to profitability, including OKTA and AVLR.
However, the distribution is spreading to high-quality large caps, including ADBE and CRM, as these ideas could be rerated given a tapering/rising rate environment. One area bucking the distribution and under accumulation is the computer
tech svcs group, led by value stocks including INFY, CTSH and ACN, which gapped up on better-than-expected results.
Overall, we recommend a cautious approach on the IGV and software constituents.
O’Neil Health Care Weekly
XLV jumped 2.5% and back into all-time highs last week, sending its RS line even higher. Though Health Care
remains a long-term lagging sector, it is improving on a short-term relative basis.
Won Europe Today
On Friday,
- European markets pulled back, closing 0.6% lower amid a volatile week. Markets have given back Thursday’s gains
due to central bank’s policy decisions as concerns persisted over the spread of omicron COVID-19 variant and the
inflation outlook. We recommend a patient approach to adding risk and reducing exposure in ideas breaking below
logical levels of support as the price action is likely to remain volatile. Continue to focus on ideas showing the best
near-term relative strength as they tend to lead when the broader markets rally. - The Stoxx 600 declined 0.6% on above average volume. The index closed below its 50-DMA (~1%) and is finding
resistance at the same level. It is currently 4% off highs. Sectors closed mixed, with Travel and Leisure up 2.3%
and Real Estate gaining 0.8%. Auto was down 2.7% and Oil and Gas declined 1.7%. - Among major indices, France’s CAC and the U.K.’s FTSE took support at their 50-DMA while Germany’s DAX took
support at its 200-DMA and closed above it. - Among the 17 indices we cover, Luxembourg gained the most, up 0.7% while the Netherlands lost the most, down
1.3%. Nine indices recorded a distribution day. Six are in a Confirmed Uptrend, two in a Rally Attempt, and the
remaining nine in an Uptrend Under Pressure. The average distribution day count stands at 4.8. - Actionable names in the Focus List include Dassault Systèmes (DSY.FR; DSY:FP), Schneider Electric (QT@F.FR;
SU:FP), Tele performance (ROFR.FR; TEP:FP), Yougov (YOU.GB; YOU:LN), Paragon Banking Group PLC
(PAG.GB; PAG:LN), and Infineon Techs (Xet) (IFXX.DE; IFX:GR).
Won Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 pulled back to 50-DMA support after testing all-time highs early last week. The Nasdaq pulled back to its 100-DMA for the second time this month, unable to sustain follow-through day type action last Wednesday. Both continue to chop within consolidation with no real trend yet to develop. The S&P 500 has added four distribution days in the past five sessions, clustering near all-time highs. The count now stands at six and five, respectively, with one day expiring on the S&P 500 this week.
