The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq regained their respective 50-DMA yesterday after
shaking out below that level Monday. We would now like to see indices consolidate and settle above this level or continue to push higher
over the next few days before shifting the market status back to a Confirmed Uptrend. The distribution day count remains low at two and
three, respectively, with no expiration for three weeks.
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Won Europe Today
Yesterday,
- European markets had a strong day with most of the major indices regaining their respective 100-DMA. However,
we remain cautious on the markets due to a high distribution day count and high volume while breaking below their
respective 50-DMA. - The Stoxx 600 has reclaimed its 100-DMA, though volume was low. We would like to see the index reclaim its 50-
DMA (0.6% from the current price levels) on strong volume. It is in an Uptrend Under Pressure with seven
distribution days. Most sectors closed in positive territory, with Banks gaining more than 3%. - Among other major indices, France’s CAC is facing resistance at its June 2021 highs. Germany’s DAX is trading
below its 100-DMA while the U.K.’s FTSE 100 is facing supply at its declining 100-DMA. - Among the 17 indices we track, only Denmark closed in negative territory. Average distribution day count stands at
6.36. - Actionable ideas from the Focus List include: Ashtead (AHT.GB; AHT:LN) and B&M European Value Retail
(BME.GB; BME:LN).
Won Global View
The U.S. market is in an Uptrend Under Pressure. The S&P 500 and Nasdaq bounced off their respective 100-DMA (S&P 500: 4,332;
Nasdaq: 14,417) after pulling back sharply to this moving average earlier in the week. However, both indices are at or within 1% of testing
resistance at their 50-DMA (S&P 500: 4,436; Nasdaq: 14,880). The distribution day count stands at two and three, respectively.
O’Neil Capital Equipment Sector Weekly
Caterpillar (CAT) – $104B market cap; $649M ADV: We removed Caterpillar from our U.S. Focus List as the stock breached
support along $199. It is trading below its 200-DMA and has declined 23% from its 52-week high. It is the market leader in
construction equipment globally and was impacted adversely by a lower-than-expected infrastructure bill in the U.S. We expect to
revisit the stock on technical improvement
Won Europe Today
We released our Weekly European Summary yesterday (please click here to access the report). Key points include:
- We recommend a cautious approach toward European equities, given the rising distribution day count and
narrowing of leadership, along with indices breaching key short-term areas of support. - The Stoxx 600 was moved to an Uptrend Under Pressure last week after it breached its 50-DMA on rising
distribution day count (seven) and broke below its 100-DMA yesterday for the first time since it started its uptrend
on November 4, 2020 (follow-through day). - The majority of country indices trade between their 50- and 200-DMA. The number of shares breaking out of
consolidation is at a historical low. Average distribution among individual names is significantly rising. - In terms of groups, short-term momentum is rising among Health Care, Capital Equipment, and Consumer Staple
names. - Last week, we added Darktrace (DARK.GB; DARK:LN) and Rentokil Initial (RTO.GB; RTO:LN) to our Focus List
and removed Kering (KER.FR; KER:FP) and Moncler (MONC.IT; MONC:IM) from our Focus List.
Won Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq closed relatively flat following severe selling and
technical damage Monday. Both indices are now trading ~4% off highs and just above support along their respective 100-DMA (S&P
500:4,330; Nasdaq: 14,408). Prior support at the 50-DMA (S&P 500: 4,436; Nasdaq: 14,876) is now a primary level of near-term
resistance. The distribution day count stands at two and three, respectively, with no further expiration for three weeks.
Won Global View
The U.S. market has been shifted to an Uptrend Under Pressure. Indices gapped down through their 50-DMA. The S&P 500 is testing
support at its 100-DMA (4,328), followed by price support at ~4,230, which coincides with the top of the prior base consolidation in June.
The next level of support on the Nasdaq is at its 100-DMA (~14,400). The distribution day count remains at three and four, respectively.
Won Europe Today
Yesterday,
- European markets closed in the red due to global market weakness led by China’s Evergrande crisis. Investors are
also tracking the two-day meeting of the U.S. Federal Reserve, which starts Tuesday. As the major indices are
trading below their key moving averages, and the distribution day count is elevated, we recommend investors take
a cautious approach and reduce exposure to stocks breaking below their key moving averages on higher volume. - The Stoxx 600 closed in the red, losing 1.65%. It is in an Uptrend Under Pressure with seven distribution days and
has breached its 100-DMA. On the sectoral front, Banking stocks were the major losers. - Major indices like France’s CAC, Germany’s DAX, and the U.K.’s FTSE 100 closed in the red. The three indices are
trading below their 100-DMA. - All the 17 indices we cover closed in the red, with Luxembourg and Italy being the major losers. Portugal recorded a
distribution day and, along with Austria, Denmark, Luxembourg, and Italy, was downgraded to an Uptrend Under
Pressure after breaching its 50-DMA. The average distribution day count is at 6.71. - Actionable names in the Focus List include Rentokil Initial (RTO.GB; RTO:LN), Darktrace (DARK.GB; DARK:LN),
Carl Zeiss Meditec (AFXX.DE; AFX:GR), and B&M European Value Retail (BME.GB; BME:LN).
Won Europe Today
On Friday,
- European markets closed in the red due to concerns around global economic growth led by weak global economic
data. As the major indices are trading below their key moving averages, and the distribution day count is elevated,
we would recommend investors reduce exposure to stocks breaking below their 21- or 50-DMA on higher volume. - The Stoxx 600 closed in the red, losing 0.88%. It is in an Uptrend Under Pressure and trading below its 50-DMA,
with next support at its 100-DMA. On the sectoral front, Travel & Leisure stocks gained 1%, while Basic Resources
fell 3.8%. - Major indices like France’s CAC, Germany’s DAX, and the U.K.’s FTSE 100 closed in the red and recorded a
distribution day each. All the three indices are trading above their 50-DMA. - All the 17 indices we cover closed in the red, barring Spain. Austria and Finland were the major losers. Fourteen
indices recorded a distribution day each, taking the average distribution day count to 7.24. - Actionable names in the Focus List include Rentokil Initial (RTO.GB; RTO:LN), Darktrace (DARK.GB;
DARK:LN), Mips (MIPS.SE; MIPS:SS), Carl Zeiss Meditec (AFXX.DE; AFX:GR), Interroll (INRN.CH; INRN:SW), and
B&M European Value Retail (BME.GB; BME:LN).
Won Global View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq pulled back for a second straight week, with the S&P 500
closing just below its 50-DMA (S&P 500: 4,436; Nasdaq: 14,875). Despite the pullback, indices remain just 2% off highs. The next level of
support below the 50-DMA on the S&P 500 is ~4,367, while the Nasdaq has good support at ~14,900. The distribution day count stands at
three and four, respectively, with one day expiring on each this week.
