We released our Weekly Global Laggards Report today. Click here to access the report. The stocks highlighted in this report are laggards relative to their own domestic markets. We recommend that they be underweighted as they may be vulnerable to further downside risk and underperformance. European stocks include Hennes & Mauritz B (HMBF.SE; HMB:SS), Volvo B (VOBF.SE; VOLVB:SS), Lvmh (LVMH.FR; MC:FP), and Pernod Ricard (RCD.FR; RI:FP).
Author: Deepashree MC
Won Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 declined 30bps, while the Nasdaq was up ~25bps on lower d/d
volume. The indices continue to test support at their 50-DMA (5,506) and 100-DMA (17,110), respectively. We see immediate support for
the S&P 500 at its 100-DMA (5,375) and for the Nasdaq at its March highs of ~16,540. The distribution day count remains at one and four,
respectively.
Won Europe Today
Yesterday,
- European markets extended their losses for a second consecutive session, driven by a sharp decline in the Technology sector. Global sentiment was weighed down by a Wall Street selloff following weak U.S. economic data. Persistent weakness in China continued, with manufacturing activity falling to a six-month low in August. Investors await the U.S non-farm payroll data, which is scheduled to release on Friday.
- The Stoxx 600 fell ~1% for a second consecutive session, closing marginally above its 100-DMA (-0.1%). Next level of support is at its 21-DMA (513.2; -0.3%). We recommend a selective approach to adding names on a high-volume breakout or decisive retake of their key moving averages.
- Among the heaviest decliners on the Stoxx 600, shares of ASML Holding (ASML.NL; ASML:NA) plunged almost 6% due to a UBS downgrade for the chip maker along with broader market weakness.
- Most sectors closed lower, led by Technology (-318bps), Travel and Leisure (-151bps), and Automobiles (-123bps). Telecommunications (+60bps) and Utility (+22bps) were the only gainers.
- Among major indices, France’s CAC 40 declined 1% and closed in line with its flattish 50-DMA. Near-term support is expected at this level, followed by its 21-DMA (-0.4%). Germany’s DAX 30 declined 93bps. Immediate support is at its 21-DMA (-1.2%). The U.K.’s FTSE 100 was down 35bps and breached its 21-DMA. Near-term support is at its converging 50- and 100-DMA.
- Germany and Switzerland recorded their second distribution day, while Denmark and the Netherlands recorded their third.
- The Netherlands was shifted to an Uptrend Under Pressure from a Confirmed Uptrend as the index breached its 100-DMA on higher volume.
- Thirteen of the 16 indices we track closed in the red., except Norway, Portugal, and Belgium. Five markets are in a Confirmed Uptrend, one (the Netherlands) is in an Uptrend Under Pressure, while all the others are in a Rally Attempt. The average distribution day count stands at two.
- Actionable names in the Focus List include Biotage (BIOT.SE; BIOT:SS), Ambu B (AMB.DK; AMBUB:DC), Premier Foods (PFD.GB; PFD:LN), Inditex (IND.ES; ITX:SM), Nkt (NKT.DK; NKT:DC), Swedish Orphan Biovitrum (SOBI.SE; SOBI:SS), Galderma (GALD.CH; GALD:SW), Siegfried ‘R’ (SFZN.CH; SFZN:SW), Rolls-Royce Holdings (RR.GB; RR/:LN), and Novozymes B (NZY.DK; NSISB:DC).
- All the 33 European Focus List names are trading above their 200-DMA, while 25 ideas are trading above their 50-DMA.
Won Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq declined 15–30bps on lower d/d volume and are
testing support at their 50-DMA (5,505) and 100-DMA (17,100), respectively. We see immediate support for the S&P 500 at its 100-DMA
(5,371) and for the Nasdaq at its March highs of ~16,540. The distribution day count remains at one and four, respectively.
Won Europe Today
We released our European Weekly Summary yesterday. Click here to access the report. Key points from it include:
- European markets witnessed a sharp recovery after the initial selloff pressures in August. Major indices hit fresh 52-week highs and are trading above their 50- and 200-DMA.
- Most sectors closed positive last week, except Energy and Retail. Technology was up 0.6%, while Consumer Cyclical closed flat. Health Care, Financial, and Retail remained in the best quadrant, exhibiting positive momentum in the rotation graphs.
Won Global View
The U.S. market has been shifted to an Uptrend Under Pressure. The S&P 500 declined ~210bps on lower volume and breached
support at its short-term moving averages. The index is trading just above its 50-DMA (5,504), with the next level of support at its 100-DMA
(5,368; -3%). The Nasdaq was down ~325bps on higher volume, registering its fourth distribution day. It has breached the 50-DMA
(17,616; +3%) and is trading right above the 100-DMA (17,094). Immediate support is near March highs of 16,540, followed by the 200-
DMA (16,233; -5%). The distribution day count stands at one and four, respectively.
Won Europe Today
Yesterday,
- European markets were trading mixed after staging a strong recovery in August following a sharp initial selloff. Germany’s DAX 30 recorded new highs as the populist wing won the state elections, spurring signs of instability before the parliamentary elections next year. On the data front, manufacturing PMI for major European economies came in slightly above estimates.
- The Stoxx 600 closed flat at its 52-week highs. The index is extended from its key mid-term moving averages and is expected to consolidate here. Immediate support is at its 10-DMA (-0.8%). We recommend a selective approach to adding names on a high-volume breakout or decisive retake of its key moving averages.
- Among sectors, Telecommunications (+84bps) and Technology (+36bps) led the gains, while Retail (-83bps) and Financial Services (-46bps) lagged.
- Among major indices, France’s CAC 40 closed 20bps higher, testing support at its rising 10-DMA. Germany’s DAX 30 closed 0.1% higher. The index was trading at fresh 52-week highs. The U.K.’s FTSE 100 continued to find support slightly above its 10-DMA.
- Seven of the 16 indices we track closed in the green. Six markets are in a Confirmed Uptrend, while all the others are in a Rally Attempt. The average distribution day count stands at one.
- Actionable names in the Focus List include Biotage (BIOT.SE; BIOT:SS), Inditex (IND.ES; ITX:SM), Premier Foods (PFD.GB; PFD:LN), Nkt (NKT.DK; NKT:DC), Swedish Orphan Biovitrum (SOBI.SE; SOBI:SS), 3i Group (III.GB; III:LN), Galderma (GALD.CH; GALD:SW), Novozymes B (NZY.DK; NSISB:DC), and Swissquote ‘R’ (SQN.CH; SQN:SW).
- All the 33 European Focus List names are trading above their 200-DMA, while 28 names are trading above their 50-DMA.
- Shares of Vitrolife (VITR.SE; VITR:SS) were up around 1%. The stock gained nearly 11% in the past two sessions after Trump announced that he would support measures to make IVF treatments free in the U.S., either through the government or by mandating insurance companies to cut all costs associated with the treatment. It broke out of a stage-one flat base and is slightly extended above the pivot.
- Shares of Rolls-Royce Holdings (RR.GB; RR/:LN) were down more than 6% after Cathay Pacific canceled numerous flights across Asia, including key Hong Kong-Singapore routes. This was after identifying faulty Rolls-Royce engine components on its Airbus A350s. The stock is slightly below its pivot range post breaking out of a stage-four flat base.
Won Global View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 was up 25bps last week and continues to trade in a tight sideways
range above its 10-DMA (5,590). The Nasdaq declined ~1% and is testing its 50-DMA (17,628). The distribution day count remains at one
and three, respectively.
Won Europe Today
On Friday,
- European markets had a flat to positive session with 12 of the 16 indices closing in the green. Most of the major indices are in a Rally Attempt and are awaiting a follow-through day. We recommend that investors reduce risk in the extended names.
- The Stoxx 600 is testing support at July highs. It looks slightly extended from its 21-DMA and remains in a Rally Attempt. The index might consolidate here after a sharp rally in August. Among sectors, Real estate stocks gained more than 1%. Defensives such as Healthcare and Utilities gained 0.4% and 0.6%, respectively. Oil & Gas stocks were down close to a percent.
- Among stocks, Novo Nordisk (NON.DK; NOVOB:DC) gained 1.7% while ASML Holdings (ASML.NL; ASML:NA) and Shell (SHEL.GB; SHEL:LN) lost more than a percent each.
- Among other major indices, France’s CAC 40 is testing support at 7,630 level. DAX is testing support at its all-time highs of May. The U.K.’s FTSE is testing support at 8,360 level.
- Among the 16 indices that we track, six are in a Confirmed Uptrend while the rest are in a Rally Attempt. The Netherlands recorded its first distribution day.
- Actionable names in the Focus List include Adidas (ADSX.DE; ADS:GR), Biotage (BIOT.SE; BIOT:SS), Inditex (IND.ES; ITX:SM), Lonza Group (LONN.CH; LONN:SW), Premier Foods (PFD.GB; PFD:LN), Rolls-Royce Holdings (RR.GB; RR/:LN), Inditex (IND.ES; ITX:SM), Nkt (NKT.DK; NKT:DC), Relx (REL.GB; REL:LN), Swedish Orphan Biovitrum (SOBI.SE; SOBI:SS), 3i Group (III.GB; III:LN), Galderma (GALD.CH; GALD:SW), Novozymes B (NZY.DK; NSISB:DC), and Swissquote ‘R’ (SQN.CH; SQN:SW).
U.S. Economic Summary
Q2 GDP rose 20bps above estimates: mer the second estimate, the U.S. economy grew 3% y/y in Q2, 20bps above estimates and higher than 1.4% y/y growth in Q1. This marks a rebound from a dec\ine in GDm growth in the \ast two consecutive quarters. Growth was driven by increases in consumer spending, private inventory investment, and non-residentia\ fixed investment, despite a rise in imports.l
