Australia’s ASX All Ordinaries Index declined 0.7% this week. It is testing support at its 50-DMA and is 3% below its 52-week high. The index is in a Confirmed Uptrend with five distribution days. One distribution day will expire next week.
Author: Midhun Parameswaran
Global Focus Emerging
The CSI 300 dropped 1.98% on higher but above average volume this week and
remained in an Uptrend Under Pressure, with the distribution day count rising
to six. The index continued to trend lower and breached the November 2021 low
of ~4,754 (+0.6%). Next immediate support lies at the July 2021 low of 4,664
(-1.3%)
Global Focus Frontier
Ho Chi Minh City Development Joint Stock Commercial Bank (HD Bank) is one of the top banks in Vietnam and a constituent of the VN30 Index. Its industry-leading growth and key financial ratios, along with its exposure to the consumer finance industry, will drive growth.
China A Shares
The CSI 300 dropped 2.39% on higher but below average volume in 2022’s first trading week and remained in an Uptrend Under Pressure with the distribution day count rising to five. The index breached converging 50- and 100-DMA support with the next immediate short-term support at November 10’s low of ~4,754 (-1.4%). The Tech-heavy ChiNext index slumped 6.8% and lost its 200-DMA support as the U.S. Fed indicated faster-than-expected rate hikes and balance sheet reductions. Leading green energy and EV stocks dragged the market down. However, rising hopes on more easing policies to stabilize the economic growth lent support to the market. Long-term lagging stocks related to property development, infrastructure construction, building materials, engineering machinery and home appliance recovered substantially. Sector rotation was still strong in the volatile market. Wait-and-see sentiment is observed without major catalysts before the Chinese New Year. We would like to stay cautious due to concerns about clustering distribution days. We recommend investors adopt a defensive approach and pick up stocks with high relative strength. Avoid chasing highs.
US Focus
The U.S. market is back in a Confirmed Uptrend. Indices were under selling pressure to start the new year however the S&P 500 found support slightly above its 50-DMA (4,674). The Nasdaq broke below its 50-and-100-DMAs after declining ~4% for the week and is testing December lows (14,860) followed by its rising 200-DMA (14,681). The distribution day count is at seven and three respectively with no days set to expire next week.
European Focus
On Thursday, the Stoxx 600 ended 1.0% above last Friday’s close and remains in a Confirmed Uptrend with three distribution days. Of the 17 indices we cover, 12 are in a Confirmed Uptrend, one in a Rally Attempt, and the remaining four in an Uptrend Under Pressure.
Global Focus Developed
Australia’s ASX All Ordinaries Index declined 0.1% this week. The index briefly declined below its 50-DMA, but regained above the moving average today. On Tuesday, we shifted the index to a Confirmed Uptrend from an Uptrend Under Pressure as it closed at a 52-week high. It currently has four distribution days (two expire next week).
Global Focus Emerging
The CSI 300 dropped 2.39% on higher but below average volume in 2022’s first trading week and remained in an Uptrend Under Pressure with the distribution day count rising to five. The index breached converging 50- and 100-DMA support with the next immediate short-term support at November 10’s low of ~4,754 (-1.4%).
Global Focus Frontier
Ho Chi Minh City Development Joint Stock Commercial Bank (HD Bank) is one of the top banks in Vietnam and a constituent of the VN30 Index. Its industry-leading growth and key financial ratios, along with its exposure to the consumer finance industry, will drive growth.
China A Shares
The CSI 300 gained 0.39% on lower and below average volume in this year’s last trading week and remained in an Uptrend Under Pressure with three distribution days. The index traded around its converging 50- and 100-DMA (4,912, -0.6%) with short-term support at November 10’s low of ~4,754 (-3.8%) and immediate resistance at its 200-DMA (~5,005, +1.3%). Investors parsed lower November industrial profit growth (+9.0% y/y, previous 24.6%) and below-consensus official December manufacturing PMI (50.3, consensus 50.5). Traditional Chinese medicine stocks were boosted by policy support in a five-year development plan for drug safety and files from the National Healthcare Security Administration. Solar and defense led on a robust long-term outlook. Lithium stocks rebounded on strong prices after digesting supply chain disruption worries. Liquor companies were hit by rumors of a consumption tax. Power stocks retreated from recent strong upward moves. Long-term leading auto-related stocks underperformed on profit-taking pressures with rich valuations and less EV subsidies in 2022. Wait-and-see sentiment continued to rise amid increasing domestic COVID infections ahead of year-end. The market remained volatile with strong sector rotation. Investors should stay patient and adopt a disciplined and selective approach as annual earnings clues start to come out.
