The U.S. market is in a Rally Attempt. We are now looking for a follow-through day before
shifting the market into a Confirmed Uptrend or, conversely, an undercut of Friday’s lows of
2,585 before shifting the market back into a Downtrend. The market attempted to followthrough
Thursday, but was unable to close in convincing fashion, pulling back at the close.
We have cut ~12% of our U.S. Focus List over the last quarter due to technical weakness.
A further reduction in the list count would indicate a concerning technical breakdown in
leadership. Our 70 ideas are currently trading 10% off YTD highs on average, indicating that
most are forming new bases above longer-term support levels. We continue to recommend a
cautious approach until a follow-through day occurs.
Author: Damotharamanikandan R
European Focus Long
As of Wednesday’s close, the Stoxx 600 was up 0.94% on a weekly
basis, rebounding from a 3.15% decline the prior week. This
was aided by healthy gains on Tuesday and Wednesday. Trading
was similar across the major European indices, namely France,
Germany, Switzerland, and the U.K., with gains in later part of the
week offsetting Monday’s losses. A majority of European indices
remained in a Downtrend as of Wednesday’s close but are likely to
be upgraded to a Rally Attempt after Thursday’s positive action.
Global Focus Developed Long
Australia’s ASX All Ordinaries Index fell 1.01% from Monday
through Thursday. On March 26, the index breached its 200-
DMA, and we changed the market condition to a Confirmed
Downtrend. The index is trading 1.40% below its 40-WMA
Global Focus Emerging Long
Mainland China’s markets gained this week, led by the Shenzhen,
which gained 3.59%. The market continues to be in an Uptrend
Under Pressure. The Shanghai closed 4.5% below its 200-DMA
(~3,313), while the Shenzhen closed 4.1% below its 200-DMA
(~1,908). The 100-DMA (~1,891) continues to act as a strong
resistance level for the Shenzhen. We recommend a cautious
approach for any fresh additions.
Global Focus Frontier Long
US Focus Long
The U.S. market has been downgraded to Downtrend. The February 14 follow-through day
has failed. The S&P 500 and Nasdaq closed below their respective 100-DMAs this week
with an elevated number of distribution days. The next level of support is the 200-DMA on
both indexes. The majority of leading ideas have pulled back off extended highs and many
have now broken below their respective 50-DMAs. We recommend lightening up in both
extended ideas and ideas that have broken below short-term levels of support. Going forward,
we will be looking for the market to stabilize and establish a new low. At that point, we will be
looking for a new follow-though day before we recommend buying.
Global Focus Emerging Long
Mainland China’s markets fell significantly this week, led by the Shenzhen, which fell 5.18%, compared with the 3.58% fall for the Shanghai. The market status was changed to Uptrend Under Pressure on Friday. The Shanghai closed 4.8% below its 200-DMA (~3,312), while the Shenzhen closed 7.5% below its 200-DMA (~1,909). The 100-DMA (~1,900) continues to act as a strong resistance level for the Shenzhen. We recommend a cautious approach for any fresh additions.
Global Focus Frontier Long
European Focus Long
This week, through Thursday, the Stoxx 600 registered a weekly loss of more than 2% amid ongoing trade war concerns. Last week, the index was more or less flat, with a weekly loss of 0.13%. It is in a Rally Attempt and continues to trade below its 10- and 40-WMA. We continue to encourage investors to focus on stockspecific stories with attractive O’Neil technical characteristics. We added one name to our Focus List this week: Puma (PUMX. DE; PUM:GR). Given the considerable market weakness, we removed three names from our Focus List that did not hold up well from a technical standpoint, including Superdry Plc (SDRY. GB; SDRY:LN), Just Eat (JE.GB; JE/:LN), and Straumann Holding (STMN.CH; STMN:SW).
Global Focus Developed Long
Australia’s ASX All Ordinaries Index plunged 6.70% this week. The index is trading 0.37% below its 40-WMA. It is currently in an Uptrend Under Pressure.
