The U.S. market is in a Downtrend. Indices declined 2–3% last week due to broad-based distribution. The S&P 500 is testing 100-DMA
(5,307) support, while the Nasdaq breached its 100-DMA (16,878) and is testing price support along ~16,500, which coincides with the top
of the prior base. Stay patient and wait for indices to settle and attempt a new rally.
Author: Deepashree MC
Won Europe Today
On Friday,
- European markets continued to decline for the second straight session, driven by weak U.S. economic data that fueled recession concerns. Global equity markets were impacted as the U.S. unemployment rate climbed to a near three-year high of 4.3% in July, reflecting a notable slowdown in hiring and potential weakness in the labor market. As the selling pressure on equities increases, investors are maintaining a keen focus on future company earnings.
- The Stoxx 600 slipped 2.7%, hitting an over three-month low. The index expects near-term support at its 200-DMA (493; -0.9%). We recommend that investors trim positions in stocks that have breached their logical levels of support. Book profit in names that are breaching their 21- and 50-DMA on high volume.
- Most sectors closed in the red. Food and Beverage (+73bps) and Utility (+48bps) were the gainers, while Technology (-575bps), Banks (-417bps), and Financial Services (-399bps) led the losses.
- Among major indices, France’s CAC 40 declined 1.6%, hitting new six-month lows. The index was trading below all its key moving averages. Immediate support is at its November 2023 highs (7,207; -0.6%). Germany’s DAX 30 gapped down 2.3%, with next support at its 200-DMA (17,399; -1.5%). The U.K.’s FTSE 100 extended its losses, closing 1.3% lower. The index breached its converging 21- and 50-DMA on higher volume, with immediate support at its 100-DMA (8,137.3; -0.4%).
- The Stoxx 600, France, Germany, Denmark, Sweden, Italy, and the Netherlands were shifted to a Downtrend from a Rally Attempt as the indices breached the Day 1 lows of their Rally Attempt.
- Switzerland was shifted to a Downtrend from an Uptrend Under Pressure as the index broke below its 50-DMA. Belgium was shifted to an Uptrend Under Pressure from a Confirmed Uptrend as the index breached its 21-DMA.
- Norway and Belgium recorded their fifth and sixth distribution days, respectively.
- All the 16 indices we track closed in the red. Two markets are in an Uptrend Under Pressure, five in a Rally Attempt, and nine in a Downtrend. The average distribution day count stood at 5.5.
- Actionable names in the Focus List include Biotage (BIOT.SE; BIOT:SS), Relx (REL.GB; REL:LN), Lonza Group (LONN.CH; LONN:SW), Siegfried ‘R’ (SFZN.CH; SFZN:SW), Swissquote ‘R’ (SQN.CH; SQN:SW), and Premier Foods (PFD.GB; PFD:LN).
Won Global View
The U.S. market remains in a Rally Attempt. Yesterday, the S&P 500 and Nasdaq declined 1.4% and 2.3%, respectively. Both indices
are finding resistance at their respective 21-DMA, with next support at the 100-DMA. The Rally Attempt count will be reset if the S&P 500
undercuts last Thursday lows of 5,391.
Won Europe Today
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 Bouygues (ENT.FR; EN:FP),
Hermes International (RMS.FR; RMS:FP), Accor (AC.FR; AC:FP), Kering (KER.FR; KER:FP), Brunello Cucinelli (BC.IT;
BC:IM), Nestle ‘N’ (NESN.CH; NESN:SW), and Julius Baer Gruppe (BAER.CH; BAER:SW).
Won Europe Today
Yesterday,
- European markets traded higher amid Eurozone’s unexpected headline inflation growth to 2.6% in July. Core inflation, excluding volatile energy, food, alcohol, and tobacco prices, hit 2.9% in the month, slightly higher than estimates of 2.8%.
- Technology sector witnessed strong gains after shares of ASML Holding (ASML.NL; ASML:NA) rose more than 5%, following the company’s exemption from the new U.S. trade rule on foreign chip equipment exports to China.
- The Stoxx 600 reclaimed its 21- and 50-DMA support on higher volume. The index was trading above all its key moving averages, gaining more than 1% in the month. Near-term resistance is at its July 15 highs (524; +1.1%). We recommend that investors trim positions in stocks that have breached their logical levels of support. Book profit in names that are breaching their 21- and 50-DMA on high volume.
- Among sectors, Technology (+265bps), Mining (+214bps), and Oil and Gas (+189bps) led the gains, while Automobiles (-55bps) and Retail (-50bps) lagged the most.
- Among major indices, France’s CAC 40 retook its 10-DMA, gaining 76bps on higher volume. It faced resistance at its 21-DMA (7,576.1; +0.6%). Germany’s DAX 30 regained its 21-DMA. The index extended its gains for a second straight session. Resistance is at its July 15 highs. The U.K.’s FTSE 100 was up more than 1%, bouncing off its 50-DMA on strong volume and attempting to hit new highs.
- Belgium recorded its fifth distribution day.
- Twelve of the 16 indices we track closed in the green. One market (Belgium) is in a Confirmed Uptrend, two in an Uptrend Under Pressure, and 13 in a Rally Attempt. The average distribution day count stood at five.
- Actionable names in the Focus List include Biotage (BIOT.SE; BIOT:SS), Relx (REL.GB; REL:LN), Lonza Group (LONN.CH; LONN:SW), Nkt (NKT.DK; NKT:DC), and Premier Foods (PFD.GB; PFD:LN).
Won Global View
The U.S. market remains in a Rally Attempt. Indices have rallied off recent lows, with the S&P 500 and Nasdaq advancing 1.6% and
2.6%, respectively, on higher volume. The S&P 500 regained its short-term moving averages and narrowly missed a follow-through day
(+1.7% on higher d/d volume). It has immediate support at its 21-DMA (5,502) and resistance at its prior high (5,670). The Nasdaq has
support at its 50-DMA (17,582) and resistance at its 21-DMA (17,715). We will upgrade the market to a Confirmed Uptrend if the S&P 500
stages a follow-through day or closes at an all-time high. However, Monday is the earliest a follow-through day can occur on the Nasdaq.
Won Europe Today
Yesterday,
- European markets advanced higher, led by earnings-driven gains across multiple sectors. Germany’s GDP and CPIprints suggested unexpected economic contractions in Q2 and inflation surge in July, highlighting the ongoing challenges of Eurozone’s biggest economy. Investors will focus on the Federal Reserve’s upcoming July meeting and anticipate rate cuts by the central bank in September.
- The Stoxx 600 gained 45bps on higher volume and closed above its 100-DMA. Immediate resistance is at its 21-DMA (515; +0.2%), followed by its 50-DMA (516.3;+0.4%). We recommend that investors trim positions in stocks that have breached their logical levels of support. Book profit in names that are breaching their 21- and 50-DMA on high volume.
- Among sectors, Banks (+105bps), Retail (+97bps), and Financial Services (+97bps) gained the most, while Mining (-107bps) and Oil and Gas (-16bps) led the losses.
- Among major indices, France’s CAC 40 advanced 42bps, attempting to catch up with its declining 10-DMA (7,528.9; +0.7%). Germany’s DAX 30 gained 46bps after testing strong support from its 100-DMA. The index reclaimed its 50-DMA on slightly higher volume. Next resistance is at its 21-DMA. The U.K.’s FTSE 100 declined 22bps after advancing for three straight sessions. Support is at its 50-DMA.
- The Stoxx 600, France, and the Netherlands were shifted to a Rally Attempt from a Downtrend. Norway recorded its fourth distribution day.
- Thirteen of the 16 indices we track closed in the green. One market (Belgium) is in a Confirmed Uptrend, two in an Uptrend Under Pressure, and 13 in a Rally Attempt. The average distribution day count stood at five.
- Actionable names in the Focus List include Adidas (ADSX.DE; ADS:GR), Biotage (BIOT.SE; BIOT:SS), Relx (REL.GB; REL:LN), Lonza Group (LONN.CH; LONN:SW), and Premier Foods (PFD.GB; PFD:LN).
Won Global View
The U.S. market has shifted to a Rally Attempt. The S&P 500 and Nasdaq were down 50bps and 128bps, respectively, on higher
volume. We shifted the market to a Rally Attempt as the S&P 500 held Thursday’s low of 5,390 for three days. A follow-through day can
occur on this index as early as today. The Nasdaq, however, undercut its Thursday’s low of 17,033; hence, the earliest a follow-through
day can occur on this index is Monday. The S&P 500 has immediate support at the prior low of 5,391, followed by its 21-DMA (5,298), and
it faces resistance at the declining 21-DMA (5,500). The Nasdaq has support at its 100-DMA (16,846) and resistance at the 50-DMA
(17,564).
U.S. Economic Summary
Q2 GDP was up, 80bps above estimates: As per the advance estimate, the U.S. economy grew 2.8% on an annualized basis in Q2, 80bps above estimates, higher than 1.4% in Q1. This marks a rebound from the last two consecutive quarters of deceleration in GDP growth. Consumer spending increased, driven by a rebound in
consumption of goods, which offset a slowdown in services. Non-residential investments accelerated, while residential investment declined for the first time in a year. Government spending increased, led by defense, while imports rose faster than exports. Private inventories increased.
Won Global View
The U.S. market remains in a Downtrend. The S&P 500 and Nasdaq were up 8bps and 7bps, respectively, on lower volume, staging the
second day of a Rally Attempt. The S&P 500 has immediate support at its 50-DMA (5,439) and resistance at the declining 21-DMA
(5,506). The Nasdaq has support at its 100-DMA (16,835) and is testing resistance at its 50-DMA (17,555). A follow-through day (gain of
1.7% or more on higher d/d volume) can occur as early as tomorrow.
