Author: Derek Higa

Derek Higa is a senior equity analyst and a lead for the APAC region and the Consumer Cyclical sector. He serves on the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets, and compiles Asia Watch, a weekly recap of regional investing news. Since joining William O’Neil + Company in 2005, he has lent his market expertise to alpha capture, product development, and historical studies on outperforming stocks. Derek graduated summa cum laude from California State University Los Angeles with a B.S. in Finance and Information Systems. He holds a Series 65 securities license.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia ex Japan is at 52-week highs. We recommend a selective approach, focusing on allocating capital to markets in a Confirmed Uptrend and to leading stocks with rising relative strength. Distribution days have declined in recent weeks. This is encouraging for a sustained rally in our view.
  • Five of 13 markets are in a Confirmed Uptrend, five are in an Uptrend Under Pressure, and three are in a Rally Attempt. The average number of distribution days has declined to 3.4, compared with 4.2 last week.
  • In the short term, performance has rotated back into long-term leading sectors like Retail and Technology, led by the Retail-Internet and Computer-Tech Services industry groups. Refer to pages 9 and 10 for APAC stocks near pivot.
  • The broader Nikkei 500 is outperforming the Nikkei 225 by 8ppts year-to-date. Leading Nikkei 500 constituents have better O’Neil Rating and Rankings.

APAC Market Update

Posted on by Derek Higa

Key points from this report:

 

  • We upgraded Hong Kong to a Confirmed Uptrend from a Rally Attempt after it staged a day 10 follow-through day.
  • Over the past week, APAC markets have traded resilient as distribution days have expired. Furthermore, leading stocks have held support or are trending higher.
  • Hong Kong Focus List ideas breaking out or near pivot include:

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia ex Japan retook its 21- and 50-DMA after briefly declining below the moving averages for a few sessions. We consider consolidation above key moving averages a constructive sign. We maintain a cautious approach as many major APAC markets remain under pressure. However, several leading stocks have held support, which is encouraging.
  • Yesterday, we shifted India to a Confirmed Uptrend from an Uptrend Under Pressure. Refer to page 8 for stocks near pivot in India.
  • The EEMA index continues to outperform the IPAC index since June, with the EEMA up 7.2% and the IPAC down 2.9%, year-to-date. Refer to page 7 for a price comparison chart of the EEMA and the IPAC. Leading emerging markets include India, South Korea, and Taiwan.
  • Despite underperformance of the Hang Seng index, many Hong Kong stocks continue to remain resilient. High RS Rating stocks have continued to gain despite weaker index performance. The Hang Seng index may not necessarily be an indicator of the underlying health of leading stocks. Refer to page 9 for a list of stocks with high RS Rating that are trading near pivot.
  • Highlighted Focus List idea: HDFC Bank (HFC.IN).

The Trade Desk

Posted on by Derek Higa

Key points from this report:

 

  • Buy TTD as it breaks out to new highs following a strong rebound from September lows on above average volume. The Trade Desk will benefit from the ongoing accelerated shift to CTV, which will result in more ad dollars transitioning to data-driven advertising.
  • Stellar fundamental profile: Composite Rating 96, EPS Rank 97, and SMR Rating A.
  • Strong technical ratings: RS line is at all-time highs, with an RS Rating of 97 and A/D Rating of B.
  • Comml Svcs-Advertising is among the top performing groups with an Industry Group Rank of 14 (1 being the best among 197 industry groups).
  • Institutional sponsorship has increased 40% y/y to 792 funds (all-time high) as of June.
Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia ex Japan is consolidating with support at its previous highs. Investors should remain cautious. Focus capital on ideas with rising RS until distribution subsides and stock breakouts increase.
  • Japan is the only market in a Confirmed Uptrend. Eight markets are in an Uptrend Under Pressure, Thailand is in a Downtrend, while Hong Kong, Singapore, and Indonesia are in a Rally Attempt.
  • Japanese breakouts are broadening. The number of stocks breaking out in Japan is at a three-year high, led by the Technology and Capital Equipment sectors. Small- and mid-cap breakouts have also improved m/m in September.

APAC Market Update

Posted on by Derek Higa

We are downgrading Hong Kong and Indonesia to a Downtrend from an Uptrend Under Pressure. Overall, we are seeing a clustering of distribution across APAC, with a majority of markets shifted to an Uptrend Under Pressure last week. We recommend a cautious approach to buying growth stocks due to a rise in distribution days and weak price action.

Hong Kong’s Hang Seng index declined 1.8% and breached its support level at June lows of ~23,700 on above average volume and registered its sixth distribution day. We see immediate support at May lows of ~22,500 (-3%), followed by March lows of ~21,100 (-9%). The index is now 20% off highs and is in bear market territory.

See our note for ideas holding up well and weakening technically. Ideas include: Tencent ( TCNT.HK ), Alibaba ( ALGH.HK ), Meituan Dianping ( MEDI.HK ), Li Ning ( LNIN.HK ), Xinyi Energy ( XIE1.HK ), Ausnutria Dairy ( AUST.HK ), Enn Energy ( XINA.HK ), and others.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia index is testing support at its 50-DMA. We recommend a cautious approach to buying growth ideas amid a clustering of distribution days.
  • Japan is in a Confirmed Uptrend, 10 markets are in an Uptrend Under Pressure, and Singapore and Thailand are in a Downtrend. The average number of distribution days is elevated at 5.3. Refer to page 7 for key support levels.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia ex. Japan (AAXJ) bounced back above its 21-DMA after testing 50-DMA support the last week. Volume has remained low in the past five sessions compared with the previous declining week.
  • We recommend a cautious approach to growth stocks due to increased volatility and distribution days over the last two weeks. Look for the AAXJ to hold above the 21-DMA in the next few sessions as this week’s price action has not been supported by convincing volume.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia index is testing support at its 50-DMA. We recommend taking a cautious approach and not chasing extended ideas. Reduce risk in ideas trading below key moving averages or logical support levels.
  • Seven of 13 markets are in a Confirmed Uptrend, while six are in an Uptrend Under Pressure. The average number of distribution days remains elevated.
  • Rotation into Consumer Cyclical stocks has occurred in the medium term. See Sector Rotation Graph on page 7.
  • Several leading stocks have begun to exhibit technical weakness. See pages 8 and 9 for a list of leading stocks that have violated our technical criteria.
  • Focus List removals remain low, but weakness is broadening. Among 12 ideas we removed since July, six are from the semiconductor industry. Currently, Health Care and Retail stocks represent a majority of our Focus List stocks under pressure. See pages 10 and 11 for Focus List ideas that are holding up well and others that are displaying weak price action.
  • Highlighted Focus List idea: LG Household & Healthcare (LHH.KR). Annotated chart on page 6.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia is trading near 52-week highs and has gained 49% from March lows. It is 6% below an all-time high made in January 2018. We recommend that investors avoid chasing extended ideas and increase risk selectively in stocks with good fundamentals breaking out from sound bases.
  • Eight of 13 markets are in a Confirmed Uptrend. The average distribution day count is elevated at 5.2, compared with 4.8 last week. Price action is constructive despite a rise in distribution.