Author: Midhun Parameswaran

The CSI 300 lost 1.35% on higher and close-to-average volume and remains in an Uptrend Under Pressure with eight distribution days. The index lost support at the 50-DMA (~4,888, +1.0%) with next support at July 28’s low (~4,664, -3.7%). Next resistance is at the 100-DMA (~4,974, +2.7%). October official manufacturing PMI slid further to 49.2 (from 49.6) on weaker demand and supply. Metaverse-related stocks led gains following Facebook’s rebranding to Meta. Consumer-related stocks such as food and beverage outperformed on price hike expectations. Electronics went up on expectations of demand recovery following improving Q3 earnings. Tourism stocks led losses amid rising domestic COVID cases following disappointing earnings from leaders. Cyclicals weakened further on lower commodity prices after continuous regulatory efforts. Real estate-related sectors underperformed amid persistent credit worries. Contract Research Organization stocks sold off sharply on lofty valuation worries following signs of trimming by some institutional investors. The market remains volatile with strong sector rotation. Upward momentum is weak with an elevated distribution day count. We will stay patient until the CSI 300 breaks above ~5,000 on good volume. Investors should adopt a cautious, disciplined, and selective approach.

The CSI 300 lost 1.03% on slightly higher and below average volume and remains in an Uptrend Under Pressure with six distribution days. The index pared early week losses to retake its converging 21- and 50-DMA (~4,900, -0.2%), with next support at July 28’s low (~4,664, -4.1%). Next resistance is at the 100-DMA (~4,995, +1.8%). Sino-American relations were back in focus following spats over Taiwan and a U.S. ban on China Telecom. Clean energy stocks led the gains following detailed action to achieve carbon neutrality. Power battery-related companies outperformed on a robust outlook following upbeat earnings. Defense also led. Real estate-related sectors led the losses on a dimmer outlook amid property tax worries and slower earnings growth. Cyclicals like coal mining and steel stocks retreated further amid consistent regulatory concerns. The market is still trading sideways with volatility and sector rotation on earnings. Trading volume remained less than average. We would stay patient until the CSI 300 breaks above ~5,000 on good volume. Investors should stay disciplined and selective following more clues from earnings.