The CSI 300 ended 1.21% higher on slightly higher and above average volume this week. The market remained in an Uptrend Under Pressure with four distribution days. The index tested resistance at its 21-DMA but pared earlyweek gains to close below the short-term 5- (~4,850, +0.5%) and 21-DMA (~4,907, +1.7%). Support lies at July 28’s low (~4,664, -3.4%) followed by July 2020’s low (~4,500, -6.8%).
Author: Midhun Parameswaran
Global Focus Frontier
Ho Chi Minh City Development Joint Stock Commercial Bank (HD Bank) is one of the top banks in Vietnam and is 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 its growth.
China A Shares
The CSI 300 ended 3.57% lower on higher and above average volume this week. The market was shifted to an Uptrend Under Pressure following a greater than 2% loss on higher volume Tuesday. The distribution day count increased to three from one last week. The index tested but failed to break above short-term resistance at its 5- (~4,861, +1.9%) and 21-DMA (~4,913, +3.0%). Support lies at July 28’s low (~4,664, -2.2%) followed by July 2020’s low (~4,500, -5.6%). July’s industrial production (+6.4% y/y versus expectations of 7.9%), retail sales (+8.5% y/y versus expectations of 11.6%), and fixed-asset investment (+11.4% y/y versus expectations of 12.6%) all slowed and missed consensus. Lingering policy concerns pressured sentiment as regulatory worries broadened to the liquor and medical sectors. Buying into brokers and developers continued. Defense companies remained strong, but liquor makers and healthcare companies led losses on worries of policy uncertainties. Risk appetite was dampened by a slowing domestic economy and upcoming tapering by the U.S. Federal Reserve. Upward momentum lost steam and volatility is increasing with more earnings to come. We are becoming more cautious and recommend investors adopt a patient and selective approach. Focus on stocks with sound fundamentals and strong technical profiles.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq pulled back to their respective 50-DMA, before finding support and closing within the upper half of their weekly range. Support below the 50-DMA is ~4,233 on the S&P 500 and ~14,200 on the Nasdaq. Despite adding a distribution day on Tuesday, the overall count declined to three and two, respectively, with no expiration next week.
European Focus
On Thursday, the Stoxx 600 closed 1.8% below last Friday’s close. The index remains in a Confirmed Uptrend but with an elevated distribution day count of five. We downgraded the U.K., France, Norway, and Sweden markets to an Uptrend Under Pressure after they breached their respective 50-DMA support. Of the 17 indices we cover, six are now in an Uptrend Under Pressure while the others are in a Confirmed Uptrend
Global Focus Developed
Australia’s ASX All Ordinaries Index declined 2.2% this week. The index closed at a new 52-week high and has immediate support along its 21-DMA (-2%). It is in a Confirmed Uptrend. It has four distribution days currently, after adding two this week. One distribution day will expire next week.
Global Focus Emerging
The CSI 300 ended 3.57% lower on higher and above average volume this week. The market was shifted to an Uptrend Under Pressure following a greater than 2% loss on higher volume Tuesday. The distribution day count increased to three from one last week. The index tested but failed to break above short-term resistance at its 5- (~4,861, +1.9%) and 21-DMA (~4,913, +3.0%). Support lies at July 28’s low (~4,664, -2.2%) followed by July 2020’s low (~4,500, -5.6%).
Global Focus Frontier
Ho Chi Minh City Development Joint Stock Commercial Bank (HD Bank) is one of the top banks in Vietnam and is 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 its growth.
China A Shares
The CSI 300 gained 0.5% on lower but above average volume this week. The market remains in a Confirmed Uptrend with one distribution day. The index ended below the short-term 5- (4,993, +1.0%) and 21-DMA (~4,975, +0.6%), pulling back off its weekly high. Support is at July 28’s low (~4,664, -5.7%) and resistance is at ~5,100 (+3.1%), the lower edge of the consolidation range since June this year and where the 50-, 100- and 200-DMA sit. Sentiment was dampened by weaker-than-expected growth in total social financing (RMB 1.06T versus consensus of RMB 1.52T). The domestic economic recovery is slowing, indicated by lower-than-expected trade data on falling demand. A faster-than-expected surge of factory-gate prices is adding to business cost pressures. Banks, developers, and food & beverage companies rallied after months of pullback, while semiconductor stocks sold off. Auto and clean energy fluctuated over the week, with mixed performance by individual stocks. Upward momentum was weak with quick sector rotation on position rebalancing. Upcoming earnings also increased market volatility. We would like to see the CSI 300 regain its 5- and 21-DMA to be constructive. Investors should stay patient and focus on stocks with sound fundamentals and strong technical profiles.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 is trending into all-time highs, while the Nasdaq continues to consolidate within 1% of a new high and above 21-DMA support. Distribution has mostly been avoided over the last two weeks, with the count now standing at four each, with two set to expire on the S&P 500 and three on the Nasdaq next week.
