On Friday, most European markets closed half a percentage lower mainly due to lack of any positive news on Friday unlike the rest of the week. Germany’s DAX fell 0.31% on lower volume, while France’s CAC 40 and the U.K.’s FTSE 100 were down 0.51% and 0.36%, respectively, on higher volume.
Author: Anuj Kumar Chouhan
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq have shown constructive action over the last two sessions, reversing off early session lows and avoiding distribution. Both are now testing resistance at their respective 50-DMA (S&P 500: 2,628 (+1.2%); Nasdaq: 6,988 (+0.3%)). Though this is an obvious level of resistance, we would still like to see the indices close above it and consolidate for several sessions. Should the market pullback, look for the indices to continue closing in the upper half of the intraday session and for new leadership ideas to emerge. Conversely, a big price move lower that closes at the lows of the session in heavy volume will be a major red flag.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq positively staged upside reversals yesterday, avoiding distribution and continuing a move toward their respective 50-DMA (S&P 500: 2,630 (+1.3%); Nasdaq: 6,992 (+0.05%)), which the Nasdaq is now touching. Though this is an obvious level of resistance, we would still like to see the indices close above this level and consolidate for several sessions, which should lead to a broadening of leadership.
WON Europe Today
With a majority of European markets in a Confirmed Uptrend (including the Stoxx 600), we continue to look out for these indices crossing the long-term resistance of 50-DMA. However, we are seeing an increase in the number of stocks breaking out and advise investors to remain selective in their approach. In this report, we provide a list of stocks of interest that have strong fundamental characteristics and are currently setting up well, trading near pivot or breaking out. We recommend taking a deeper dive into these stocks as they may become poised for a strong run should the market confirm its uptrend.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq have continued to make progress since Friday’s follow-through day and are set to test resistance at their respective 50-DMAs (S&P 500: 2,631 (+1.8%); Nasdaq: 6,993 (+0.5%)). We will look for each to close above these levels, which should lead to additional breakouts in individual ideas.
WON Europe Today
On Wednesday, all European indices barring Spain closed higher. A majority had a second consecutive positive trading session, aided by positive sentiment among investors with respect to the U.S.-China trade talks.
The Stoxx 600 was up 0.53%. France’s CAC 40, Germany’s DAX, and the U.K.’s FTSE 100 rose 0.84%, 0.83%, and 0.66%, respectively. All the indices are trading slightly below the 50-DMA, and have failed to cross that level for more than three months.
Economic Summary
Q3 GDP final estimate revised down from its priliminary estimates.
The Bureau of Economic Analysis released its Q3 third estimate for real GDP at 3.4% y/y, 10bps down from the previous
estimates, reflecting a downward revision in PCE and exports. Net trade continues to act as the the biggest drag
during this quarter.
APAC Weekly Summary
On Monday, we shifted several APAC markets to an Uptrend Under Pressure as markets continued to pull back below their 50-DMA. Markets have recovered somewhat, but we are now more cautious due to the choppy action along with an increase in distribution days. Only two markets (Indonesia and the Philippines) are in a Confirmed Uptrend, while the majority are either Under Pressure or in a correction. Despite this volatility, emerging market performance continues to improve relative to the S&P 500. Related APAC markets have held up while U.S. markets have declined in the short term.
In our note, we revisited our take on the China A-shares market, which is Under Pressure and in bear market territory but found support above October lows. There are still very few (17% of liquid stocks) trading above the 200-DMA but among them, Capital Equipment stocks comprise the most at 19%. The sector is also displaying short-term momentum, noticeable in our Sector Rotation Graph. Out of those trading above the 200-DMA, we provided the best ideas to keep on your radar should Capital Equipment begin to lead. Lastly, we highlighted our Focus List idea, China Railway Construction (CRC.CN; 601186: CH), which recently broke out to 2018 highs and is currently actionable.
Economic Summary
Q3 GDP second estimate unaltered from its advance estimate.
The Bureau of Economic Analysis released its Q3 second estimate for real GDP at 3.5% y/y, confirming the growth figures released in the advance estimate. Net trade continues to act as the the biggest drag during this quarter.
Economic Summary
Q2 GDP estimate revised up:
The Bureau of Economic Analysis released its Q2 second estimate for real GDP at 4.2% y/y, 10bps above the advance
Q1 real GDP.
