The U.S. market remains in a Downtrend. The S&P 500 and Nasdaq were up ~90–110 bps on lower volume, staging the first day of a
Rally Attempt after declining for six consecutive sessions. The S&P 500 has immediate support at its 100-DMA (4,939) and resistance at
its declining 10-DMA (5,063). The Nasdaq has support at its 200-DMA (14,585) and is testing resistance at its 100-DMA (15,501). A follow through day (gain of 1.7% or more on higher d/d volume) can occur as early as Thursday.
Author: Deepashree MC
Won Europe Today
We released our weekly European Summary yesterday. Click here to acess the report. Key points from it include:-
- European markets declined for the third straight week, with major indices pulling back and currently at or below their 50-DMA. The Stoxx 600 is in a Downtrend and is below its 50-DMA.
- Most of the 11 O’Neil sectors closed in the red. Staples outperformed while Technology and Energy declined the most.
- As breadth has narrowed significantly, the number of breakouts in Europe hit extreme lows. Several defensive ideas that are currently basing are showing improving technical characteristics such as a rising RS line. It includes L’Oreal (OR@F.FR; OR:FP) in Consumer Staples, Spire Healthcare (SPI.GB; SPI:LN) in Health Care, and Telecom stocks such as Tele2 (TEL2.SE; TEL2B:SS) and Telekom Austria (TKA.AT; TKA:AV).
Won Global View
The U.S. market is in a Downtrend. Last Monday, we shifted the market to a Downtrend for the first time since late October 2023. Last
week, the S&P 500 and Nasdaq fell 3.0% and 5.5%, respectively, and breached their 50-DMA for the first time in over five months. The
Nasdaq also sliced below the 100-DMA (15,490), while the S&P 500 remains slightly above (4,935). Long-term 200-DMA support is 6%
and 4% below, respectively. With another low set on Friday, we need to see four days off the bottom before a potential follow-through day,
which could now occur this Thursday at the earliest.
Won Europe Today
On Friday,
- European markets closed marginally in the red. The Stoxx 600 had three consecutive weeks of decline and was down 1.2% last week. Technology stocks declined the most while Food & Beverages and Telecommunication outperformed.
- We recommend taking profits in extended names. If looking to add risk, consider stocks that are part of leading industry groups and are breaking out of proper bases with a strong and rising RS line.
- The Stoxx 600 was down 0.08% and continues to trade just below its 50-DMA. A retake of the 50-DMA and subsequently its 21-DMA will be positive for the index. Support levels: 495 (0.6% lower), 100-DMA (2.2% below), and 200-DMA (5.6% lower). Resistance levels: 50-DMA (0.2% above), 21-DMA (1.5% above), 515 (3.3% above).
- Among major indices, France’s CAC and Germany’s DAX are at their 50-DMA and have their 21-DMA above them. The U.K.’s FTSE 100 is trading above all its key moving averages.
- Most indices we track closed mixed. Two indices are in a Confirmed Uptrend, three are in a Rally Attempt, six are in an Uptrend Under Pressure, and five are in a Downtrend. The average distribution day count is currently at 3.6.
- Actionable names in the Focus List include Universal Music Group (UNMG.NL; UMG:NA), Alfa Laval (ALF.SE; ALFA:SS), and Trigano (TRI.FR; TRI:FP).
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 mentioned in this week’s laggards were Tryg
(TRY.DK; TRYG:DC), and Cellnex Telecom (CLNX.ES; CLNX:SM)
Won Global View
The U.S. market is in a Downtrend. The S&P 500 and Nasdaq declined 22bps and 52bps, respectively, and closed at session lows. We
see the next level of support for both indices near the rising 100-DMA (4,931/15,479). We would like the indices to hold above yesterday’s
low for three sessions and then look for a follow-through day or for indices to move back into new highs before upgrading back to a
Confirmed Uptrend.
Won Europe Today
Yesterday,
- European markets continue to tread water with a gain of 6bps as investors are concerned with sticky inflation in the U.S. and resultant higher interest rates. Heading into Q1 earnings, markets are adopting a cautious approach. We could see the index consolidate between the 50-DMA and 493.4level (103bps below). The index has next support at 489.6 (180bps below) and the rising 21-DMA (220bps below).
- While leadership has not broken yet, we recommend that investors book profits in extended names and cut losses in stocks that have broken below their logical support levels. While entering long positions, investors should look for names breaking out of proper bases and focus on leadership names breaking out of new bases, turnaround stories, and defensive ideas.
- Sectoral performance was mixed with Mining and Banking stocks both leading gains with a positive move of 127bps, followed by the beaten down Food and Beverage and Telecom stocks which rose 87bps and 69bps, respectively, but continue to trade below key moving averages. Technology stocks were the worst performing laggards, plummeting 267bps and could test support at its 21-DMA (120bps below).
- Of the 16 indices we track in Europe, all except for Finland and the Netherlands closed in the green. The Netherlands recorded its sixth distribution day, bringing the average count in Europe to 4.2.
- Actionable names in the Focus List are Alfa Laval (ALF.SE; ALFA:SS), Partners Group (PGHN.CH; PGHN:SW), Recordati (REC.IT; REC:IM), Trigano (TRI.FR; TRI:FP), and Universal Music Group (UNMG.NL; UMG:NA).
Won Global View
The U.S. market is in a Downtrend. The S&P 500 and Nasdaq declined 60bps and 120bps, respectively, and closed at session lows. We
see the next level of support for the indices near the rising 100-DMA (4,926/15,465). We would like the indices to hold above yesterday’s
lows for at least three sessions before shifting them to a Rally Attempt. A follow-through day (a gain of 1.7% or more on higher volume)
can occur as early as Tuesday.
Won Europe Today
Yesterday,
- European markets plunged 153bps, breaking the 50-DMA support on high volume as the conflict in the Middle East
and economic data from China weighed on investor sentiments. The next key support level is at ~488 which
coincides with its 100-DMA (2% downside risk), followed by the 200-DMA (6% downside risk). The index has been
shifted to a Downtrend. - While China’s GDP growth rate of 5.3% exceeded expectations of 4.6%, the growth was primarily driven by the first
two months, as industrial production and retail sales decelerated in March. The housing market continues to remain
a laggard and hence investors are not convinced that China, a key market for most European companies, is on a
clear path to recovery. - The decline in market breadth has accelerated, raising the likelihood of a more prolonged and significant pullback.
The number of stocks breaking out in the region is decreasing rapidly. In addition, several technical indicators, such
as the 12-week new high/new low ratio (T2121), indicate a more extended and deeper pullback. - Therefore, the Value side of the market is leading the Growth area. From our rotation chart, momentum continues
to increase among Energy, Basic Materials, and Utility, while deteriorating among Cyclicals and Technology. Small
caps are underperforming large caps. - All of the 16 indices we track in Europe closed in the red with Austria recording its second distribution day, thus
bringing the average count in Europe to 3.8. Eight markets are in an Uptrend Under Pressure, four in a Downtrend
(including France, Switzerland, and Denmark), and two in a Rally Attempt. Norway and Belgium are the only two
countries in a Confirmed Uptrend. - Actionable names in the Focus List are Adidas (ADSX.DE; ADS:GR), Alfa Laval (ALF.SE; ALFA:SS), Partners
Group (PGHN.CH; PGHN:SW), Trigano (TRI.FR; TRI:FP), and Universal Music Group (UNMG.NL; UMG:NA).
Won Global View
The U.S. market is in a Downtrend. The S&P 500 and Nasdaq declined 21bps and 12bps, respectively. Both indices are trading below
their 50-DMA, with the next level of support near the rising 100-DMA (4,921/15,451). We would like the indices to hold above yesterday’s
low for three sessions and then look for a follow-through day or for indices to move back into new highs before upgrading back to a
Confirmed Uptrend.
