The U.S. market remains in a Rally Attempt. Despite Friday’s strong rally, day over day volume was lower negating a potential follow-through. Monday will mark day six of the attempted rally. We will upgrade the market status to Confirmed Uptrend should a follow-through day occur or shift back to Downtrend should Monday’s lows undercut. The S&P 500 is now sitting just under 200-DMA (4,435) resistance as the 10- 21- and 50-DMA are all now turning lower. Near-term support remains Monday’s low of 4,222. The Nasdaq is still trading 15% off highs with near-term resistance at the rolling 10-DMA (13,949) and support at 13,094.
Author: Midhun Parameswaran
European Focus
On Thursday, the Stoxx 600 ended 0.6% below last Friday’s close and remains in a Rally Attempt. Of the 17 indices we cover, six are in an Uptrend Under Pressure, five in a Rally Attempt, and the remaining six in a Downtrend.
Global Focus Developed
Australia’s ASX All Ordinaries Index declined 3.0% this week. The index is trading below all its key moving averages and 11% below its 52-week high. This week, we moved it to a Downtrend from an Uptrend Under Pressure.
Global Focus Emerging
The CSI 300 fell 4.51% on lower and below average volume this week. On Tuesday, the market condition was shifted to a Downtrend as the index breached below the consolidation around 4,700~5,000. The index continued to trend down and hit a 13-month low, with next support at the low in September 2020 (~4,550, -0.2%) and July 2020 (4,479, -1.9%).
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 rose 1.11% on lower and below average volume this week and remained in an Uptrend Under Pressure, with the distribution day count at six. The index slightly rebounded from last Friday’s low at 4,724 (-1.2%), and if it fails, the next immediate support is July 2021’s low of ~4,664(- 2.4%). The central bank announced a 10bps cut for one-year LPR and a 5bps cut for five-year LPR, meeting consensus. The five-year LPR was cut for the first time since April 2020. Finance, real estate, and infrastructure construction stocks showed strengths thanks to the easing policies against the economic slowdown. Consumer Staple rebounded. Health Care slumped due to the centralized procurement of Guangdong province. Technology and EV shares were also weak due to their high valuations. CSI 300 was still below all key moving averages with strong sector rotations. Investors are still waiting for more policy support to boost economic growth. Recommend that investors adopt a defensive approach and pick up stocks with strong relative strength. Avoid chasing highs.
US Focus
The U.S. market was downgraded to Downtrend. The S&P 500 closed below its 200-DMA with the next level of support at 4,278. The Nasdaq is now trading ~15% off highs and ~6% below its 200-DMA with the next level of support at 13,000. With the market in a Downtrend, we are now looking for indices to establish and hold a new low for a minimum of three sessions, at which point we will shift the market status to a Rally Attempt. From that point forward (day four and beyond), we will be looking for a follow-through day before advising a gradual increase in risk.
European Focus
On Thursday, the Stoxx 600 ended 1.1% below last Friday’s close. Of the 17 indices we cover, eight are in a Confirmed Uptrend, one in a Rally Attempt, and six in an Uptrend Under Pressure. Denmark is in a Correction. Europe and Sweden were downgraded to an Uptrend Under Pressure.
Global Focus Developed
Australia’s ASX All Ordinaries Index declined 2.9% this week. The index breached support along its 200-DMA and added two distribution days this week. We moved it to an Uptrend Under Pressure from a Confirmed Uptrend. It has six distribution days with one expiring next week.
Global Focus Emerging
The CSI 300 rose 1.11% on lower and below average volume this week and remained in an Uptrend Under Pressure, with the distribution day count at six. The index slightly rebounded from last Friday’s low at 4,724 (-1.2%), and if it fails, the next immediate support is July 2021’s low of ~4,664(-2.4%).
