The market remains Under Pressure as the indices were met with distribution and unable to regain their respective 50-day moving averages. Many stocks, in particular growth-oriented stocks, came under heavy selling pressure after failing to exceed earnings expectations. With distribution days accelerating to seven on both the Nasdaq and S&P 500, our outlook remains cautious. We will upgrade our market outlook once we see distribution subside, indices regain key resistance levels, and leadership re-emerge.
Author: Neeraj Khanna
US Focus Long
The market remains Under Pressure as the indices were met with distribution and unable to
regain their respective 50-day moving averages. Many stocks, in particular growth-oriented
stocks, came under heavy selling pressure after failing to exceed earnings expectations. With
distribution days accelerating to seven on both the Nasdaq and S&P 500, our outlook
remains cautious. We will upgrade our market outlook once we see distribution subside,
indices regain key resistance levels, and leadership re-emerge.
European Focus Long
Weak corporate earnings and mixed economic news caused
European indices to close down slightly, 0.2% on average,
excluding Denmark’s almost 7% decline. On Friday, Novo Nordisk
tumbled 15% after cutting its earnings growth target, sending
Denmark’s index down more than 5%. A majority of indices closed
lower, but five markets – Austria (+1.6%), France (+0.2%), Italy
(+0.9%), Spain (+1.2%), and Luxembourg (+0.3%) – gained.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index lost 2.6% this week, falling sharply
from resistance at its 10-week moving average. The index remains in a
Rally Attempt but, at just 1% above its 40-week moving average, is close
to being moved into a Downtrend.
Global Focus Emerging Long
led by the Shanghai which gained 0.43%. Markets remain
in a Confirmed Uptrend, but two distribution days for the
Shenzhen and one for the Shanghai were recorded during the
week. We continue to look for support at the 10-week moving
average to hold in the near-term. Each market is trading 2% above
respective moving averages and has been trading above for the third
consecutive week.
Global Focus Frontier Long
US Focus Long
The market remains Under Pressure until we see the indices begin to trade back above their
respective 50-day moving averages, distribution subside, and leadership re-emerge. U.S.
indices traded slightly higher this week, still trading within a range and above the breakout in
early July. Distribution stands at five days for the S&P 500 and four for the Nasdaq, with no
days set to expire until November 2. Leadership has improved, though most ideas continue
to consolidate ahead of a heavy influx of earnings results set to hit the tape over the next few
weeks.
European Focus Long
A relatively quiet Friday trading session capped a strong week for
European markets, advancing 1.6% on average. This was the second
consecutive week indices gained, following a 0.6% gain on average last
week. All 16 Developed Markets closed higher except for Switzerland,
which lost 0.7%. Three markets, Spain (+3.8%), Denmark (+3.6%), and
Italy (+3.4%), rose more than 3% and two others, Ireland (+2.3%) and
Portugal (+2.2%), gained more than 2%. The U.K., up 0.1%, continues
to consolidate near record highs.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index lost 0.1% this week,
closing just slightly under its 10-week moving average for a
second week. There has been no net movement in the index for
the past 14 weeks, and it remains in a Rally Attempt.
Global Focus Emerging Long
The Shenzhen and Shanghai continue to trade near four month
highs, edging higher this week. The Shenzhen gained one
distribution day, bringing the total to four. Markets are in a
Confirmed Uptrend as both indices have now traded above
moving averages for two weeks. The 10-week moving average will
now serve as an area of support.
