Generac Holdings (GNRC) – $21B market cap; $270M ADV – We removed Generac Holdings from the U.S. Focus List as the stock has come under heavy selling pressure in
the past few weeks. It declined 37% from its 52-week high and is trading below its 200-DMA.
Author: Gaghan
Economic Summary
Q3 GDP expanded 2.1%, revised 10bps upward from advance estimate:
The U.S. economy grew 2.1% in Q3, according to the second estimate, 10bps below market expectations. The
expansion for the quarter reflected an increase in private inventory investment, personal consumption expenditure
(PCE), state and local government spending, and non-residential fixed investment.
• Personal spending increased faster than expected:
Personal spending increased 0.6% m/m in October, mainly due to higher spending on goods as well as services. Within
goods, increases were widespread, led by motor vehicles and parts. Within services, increases were also widespread, led
by “other” services (mainly international travel).
• The 10-year bond resumed its uptrend after a small correction:
The 10-year yield corrected ~15bps in November and broke below 1.5%. The 2-year bond yield rose 2bps during the
month. In the first two weeks of December, the 2-year yield rose further to 0.69%.
• Unemployment rate declined for the fifth consecutive month; NFP came in below expectations:
The unemployment rate declined 40bps m/m to 4.2% in September, down from 14.8% in April 2020, but still up from
3.5% in February 2020. The number of unemployed persons on a temporary layoff declined 255K to 801K and the
number of permanent job losers dropped 205K to 623K. The readings are closing in compared to those seen in
February 2020. The non-farm payroll number increased 210K (versus consensus of a 550K gain). Employment increased
the most in professional and business services (90K), transportation and warehousing (50K), construction (31K), and
manufacturing (31K).
Won Europe Today
Yesterday,
- European markets closed in the red as investors reacted to corporate earnings and as the U.K. Finance Minister delivered his budget statement, stating that the country will be spending big on healthcare and transport. We recommend that investors add good names coming out of proper bases on strong volume.
- The Stoxx 600 lost 0.36% on lower volume. The index is trading 1% off highs with resistance at its all-time high. On the sectoral front, Mining stocks lost the most.
- Major indices like France’s CAC, Germany’s DAX, and the U.K.’s FTSE 100 closed in the red. All the three indices are trading above their key moving averages.
- All the 17 indices that we cover closed in the red, barring Luxembourg. Austria, Belgium, the Netherlands, Spain, and Italy recorded a distribution day each, taking the total distribution day count to 3.82.
- Actionable names in the Focus List include Soitec ( SOI.FR; SOI:FP ), Infineon Technologies ( IFXX.DE; IFX:GR) , Intesa Sanpaolo ( ISP.IT; ISP:IM ), Rentokil Initial ( RTO.GB; RTO:LN ), Hermes ( RMS.FR; RMS:FP ), and Keywords Studios ( KWS.GB; KWS:LN ).
WON Global View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq faded into the close despite positive overall technical action over the last several sessions. The first level of support remains their rising 10- and 21-DMA. The S&P 500 picked up a distribution day, increasing the count to six, while the Nasdaq remains at five days. One day will expire on each index after the close tomorrow.
WON Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq rallied toward 50-DMA (S&P 500: 4,439; Nasdaq: 14,884) resistance before pulling back intraday to close near the lows of the session. Support remains ~4,200 and ~14,200, respectively. The distribution day count stands at six and seven, respectively, with one day expiring on the S&P 500 and two on the Nasdaq next week.
WON Europe Today
Yesterday,
- European markets closed in the green after a decline the previous day due to concerns around inflation and spike in the U.S. bond yields. We remain cautious on markets until major indices retake their key moving averages and advice investors to avoid adding any new risks.
- The Stoxx 600 gained 1.61% on lower volume but is still trading below its 50- and 100-DMA. The index is in an UptrendUnder Pressure with eight distribution days. On the sectoral front, the majority closed in the green with Autos leading the gains.
- Major indices like France’s CAC, Germany’s DAX, and the U.K.’s FTSE 100 closed in the green on lower volume. Germany’s DAX retook its 200-DMA.
- All the 17 indices we cover closed in the green barring Austria. The average distribution day count stands at 6.76.
- Actionable names in the Focus List include Darktrace ( DRK.GB; DARK:LN ), Euronext ( ENX.FR; ENX:FP ), Rentokil Initial ( RTO.GB; RTO:LN ), and B&M European Value Retail ( BME.GB; BME:LN ).
WON Europe Today
- Yesterday,
European markets closed in the red due to rising inflation. We recommend that investors avoid adding any new
risks as major indices are trading below their key support levels and the distribution day count remains high. - The Stoxx 600 lost 1.03% on higher volume. The index is in an Uptrend Under Pressure with eight distribution days
and is finding support at the low of a current base. On the sectoral front, Retail and Travel and Leisure stocks lost
the most. - Major indices like France’s CAC, Germany’s DAX, and the U.K.’s FTSE 100 closed in the red on higher volume. We
downgraded Germany to a Downtrend after it breached all its key moving averages. - All the 17 indices we cover closed in the red with Austria and Norway being the major decliners. The average
distribution day count stands at 6.76. - Actionable names in the Focus List include Darktrace ( DRK.GB; DARK:LN ), Euronext ( ENX.FR; ENX:FP ), Rentokil
Initial ( RTO.GB; RTO:LN ), and B&M European Value Retail ( BME.GB; BME:LN ).
WON Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq recovered off intraday lows and closed near
session highs, along their respective 100-DMA (S&P 500: 4,352; Nasdaq: 14,531). The distribution day count remains elevated at six and seven, respectively
WON Europe Today
We released our European Weekly Summary yesterday, click here to access the report. Key points from it include:
- TheStoxx 600 lost 200bps last week, closing in the red for the fourth time in the last five weeks. The index is trading below its 50-DMA with support at the bottom of its current base, followed by the 200-DMA.
- Of the 17 indices we cover, the majority of them are in an Uptrend Under Pressure. We upgraded Austria, Norway, and Portugal to a Confirmed Uptrend and downgraded Ireland and the Netherlands to an Uptrend Under Pressure.
- All the sectors closed in the red, barring Energy. From our rotation chart, short-term momentum ( four weeks ) among leading Tech and Healthcare ( over 26-weeks ) is rolling-over. Energy continues to show strong short-term momentum.
- We removed Sika ( SIKA.CH; SIKA:SW ), Alphawave ( AWE.GB; AWE:LN ), and Carl Zeiss Meditec ( AFXX.DE; AFX:GR ) from our Focus List last week. Focus List Actionable Ideas include Rentokil Initial ( RTO.GB; RTO:LN ) and B&M European Value Retail ( BME.GB; BME:LN ). Focus List defensive plays include IMCD ( IMCD.NL; IMCD:NA ) and Novo Nordisk ( NON.DK; NOVOB:DC ).
- Watchlist ( fundamentally top-rated names showing improving technical characteristics ) includes several financial ideas such as Mediobanca ( MB.IT; MB:IM ) and Coface ( COFA.FR; COFA:FP . Refer to page 4 for the list.
WON Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq continue to consolidate in choppy fashion below 50-DMA resistance. Both indices tested the upper end of their respective support ranges Monday at ~4,200 and ~14,200, before rallying yesterday. Support below this level is at the rising 200-DMA. The distribution day count remains elevated at six and seven, respectively, with day expiring on the S&P 500 and two on the Nasdaq next week.
