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%)
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 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.
Global Focus Emerging
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%).
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 fell 2.49% on higher volume this week. The market remains in a Confirmed Uptrend with the number of distribution days rising to three. The index fell below its 21-DMA (5,070, +0.2%) and is testing support at its 200-DMA (4,993, -0.1%), with next support at ~4,900 (-1.9%). Immediate resistance lies at its 21-DMA (5,062, +1.3%) and the declining 50-DMA (5,120, +2.5%). April’s Caixin Service PMI was 56.3, in the expansion range for 12 months and higher than the previous reading of 54.3. April’s exports and imports (in $) rose 32.3% y/y and 43.1% y/y, respectively, beating expectations and March’s growth. The trade surplus was $42.9B, beating consensus of $33.1B. Energy and Metals surged due to the supply shortage caused by the worsening relationship with Australia. Steel stocks surged as the government limits the expansion of steel production capacity in air pollution control areas. Health Care lagged as vaccine stocks plunged after the U.S. supported waiving patent protection for COVID-19 vaccines. The semiconductor sector plunged. Market sentiment was weighed down by Sino-West tensions. We advise investors to take a cautious approach as the index is testing the support of its last moving average. Be selective and focus on companies with strong earnings and improving technical profiles.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 remains at all-time highs after bouncing off support at its rising 21-DMA and testing its upper channel line. After a sharp pull back on Tuesday, the Nasdaq found support and bounced higher off its 50DMA. The distribution day count stands at five and four on the S&P 500 and Nasdaq, respectively, with one day expiring on Nasdaq at the end of next week.
