The CSI 300 rose 0.46% on lower and less-than-average volume this week. The market remains in an Uptrend Under Pressure with the number of distribution days rising to five. The index remained above the 50-DMA (5,067, -1.3%) and 21-DMA (5,098, -0.7%), and is facing strong resistance at its 100-DMA (5,235, +2.0%). Economic data slowed in April and mostly missed consensus. Fix asset investment rose 19.9% y/y for January through April, slowing from January through March’s 25.6%. Social retail increased 17.7% y/y in April, down from 34.2% in March. Industrial output increased 9.8% y/y in April, lower than March’s 14.1%. Steel, energy, and metals lagged, as the government will strengthen management to stabilize commodities prices. New energy vehicle-related stocks led the market, due to U.S. President Biden’s proposal to invest $174B. Recent lagging sectors such as home appliances and automobiles rebounded. The index has been range-bound around its 100-DMA and 200-DMA for more than two months. We’ll have more conviction if the CSI 300 retakes its 100-DMA, and we advise investors to stay patient and disciplined before that happens. Take a cautious approach in the highly volatile market with very quick sector rotation. Be selective and focus on companies with strong earnings and improving technical profiles.
Author: Midhun Parameswaran
US Focus
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 is testing resistance at its 21-DMA (4,166) after a sharp pull back to and subsequent bounce off support at its rising 50DMA. The Nasdaq is testing resistance at its 50DMA (13,578) after a rally across oversold growth constituents. The distribution day count remains elevated at nine and five however next week two days will expire on the S&P 500 and one on the Nasdaq.
European Focus
On Thursday, the Stoxx 600 closed 0.14% lower compared with last Friday’s close. Of the 17 indices that we cover, eight are in a Confirmed Uptrend, including the U.K., France, and the Stoxx 600, and the remaining are in an Uptrend Under Pressure. We upgraded Belgium to a Confirmed Uptrend on Monday after it reclaimed its prior high.
Global Focus Developed
Australia’s ASX All Ordinaries Index gained 0.4% this week. It is trading between its 21- and 50-DMA and is slightly off its 52-week high. The index is in a Confirmed Uptrend with six distribution days after adding one distribution day this week. Two distribution days will expire next week.
Global Focus Emerging
The CSI 300 rose 0.46% on lower and less-than-average volume this week. The market remains in an Uptrend Under Pressure with the number of distribution days rising to five. The index remained above the 50-DMA (5,067, -1.3%) and 21-DMA (5,098, -0.7%), and is facing strong resistance at its 100-DMA (5,235, +2.0%)
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 rose 2.29% on higher but below-average volume this week. The market was shifted to an Uptrend Under Pressure Tuesday with the number of distribution days rising to four. The index traded around its 200-DMA (5,000, -2.2%) but retook its 21-DMA (5,055, -1.1%) and 50-DMA (5,080, -0.6%) Friday on much higher volume, with next resistance at the 100-DMA (5,226, +2.3%). The once-in-a-decade census showed that China’s population increased to 1.41B in 2020, a CAGR of 0.53% from 2010. April’s CPI rose 0.9%, meeting expectations but higher than March’s reading (0.4%). PPI rose 6.8%, beating expectations (6.2%) and March’s figure (4.4%). April’s liquidity data missed expectations. Social financing was RMB 1.85T, lower than consensus of RMB 2.25T and March (3.34T). Incremental loans were RMB 1.47T, lower than expectations of RMB 1.58T and March (RMB 2.73T). M2 rose 8.1%, missing the expected 9.1% and last month’s 9.4%. The Health Care sector rebounded strongly, driven by vaccines and aesthetic medical stocks. Steel, metal, and Energy stocks plunged after last week’s rally as the government warned steel companies about market manipulation. We would like to see the index hold above its 21-DMA to be constructive and advise investors to stay disciplined and take a cautious approach in the highly volatile market with very quick sector rotation. Inflation and possible liquidity tightening post pressures on the upside of the index. Be selective and focus on companies with strong earnings and improving technical profiles.
US Focus
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 bounced off its 50-DMA after a sharp sell off earlier this week. The Nasdaq , which is already below its key moving averages, is bouncing into resistance at the converging 50 (13,540) and 100-DMAs . The distribution day count stands at seven and four respectively, with one day expiring on the S&P 500 next week.
European Focus
On Thursday, the Stoxx 600 ended 1.71% below last Friday’s close. Of the 17 indices we cover, seven are in a Confirmed Uptrend and 10 in an Uptrend Under Pressure. This week, we shifted the Stoxx 600 and Luxembourg to a Confirmed Uptrend after they reclaimed their previous highs, and downgraded Norway and Ireland to an Uptrend Under Pressure after they breached their 50-DMA.
Global Focus Developed
Australia’s ASX All Ordinaries Index declined 1.2% this week. It has declined below its 21-DMA (+1%), and the next support is at the 50- DMA (-1%). The index is in a Confirmed Uptrend with five distribution days after adding one distribution day this week.
