Markets sold off Friday, decreasing more than 1% on average,
after the ECB provided no indication that it intends to extend
QE beyond March 2017. Friday’s losses pushed most European
markets into negative territory, closing down 1% on average
for the week. Only two markets, Spain (+1.3%) and Austria
(+1%), closed higher, while Italy (-0.2%) was relatively flat. The
Netherlands was the worst performing country, losing more than
2.4%.
Author: Neeraj Khanna
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index lost 0.6% this week. After
breaking below its 10-week moving average last week, the index
closed below it again this week. The index is Under Pressure and
has seven distribution days after picking up one more this week.
The next support level is likely AUD 5,400, where the index had a
follow-through day in mid-July.
Global Focus Emerging Long
Chinese markets continued its trend rising for the week, but staying
within a flat consolidation over the last four weeks. Both markets
logged one distribution day bringing the total to four in the last five
weeks. Although distribution of greater than four would be an elevated
level, markets have not yet traded downward and still remain above
moving averages giving little sense of concern. We continue to view
support at the 40-week moving average as a key area of support to hold
going forward (i.e. 3,042 for the Shanghai and 1,951 for the Shenzhen).
Global Focus Frontier Long
US Focus Long
U.S. Indices traded higher this week with the majority of gains coming Friday after the
August non-farm payrolls number was released. The market was still unable to break out of
this now two month range. This sideways action has allowed the 50-day moving average to
catch up to current prices, which is now acting as a clear level of short-term support. The
majority of leadership ideas remain constructive though most have begun to mimic this index
action. Going forward, we would like to see the indices break into new highs coupled with an
increase in U.S. Focus List ideas. If, however, the S&P 500 closes beneath its 50-day moving
average and leadership begins to fall off, our current bullish stance on the market will likely
change. Currently, we remain in a Confirmed Uptrend with five distribution days on the S&P
500 and three on the Nasdaq.
European Focus Long
A weaker-than-expected U.S. jobs report sent European
markets soaring on Friday, as higher interest rates may be
on hold in the largest economy. Friday’s average gains of 1.6%
across Europe pushed indices from slightly negative to positive
for the week, up 1.5% on average. Five countries, Spain
(+2.8%), Austria (+2.4), Belgium (+2.3%), the Netherlands
(+2.3), and France (+2.1), increased more than 2%, while most
other countries saw gains of at least 1%. Denmark was the only
country to close down for the week, losing 0.1%, and recorded
the smallest gain on Friday, 0.2%.
Global Focus Developed Long
The Australia ASX All-Ordinaries Index lost 2.4% this week, falling in
four of five trading days and clearly breaking below its 10-week moving
average. At 4% off recent highs and with seven distribution days in the
past five weeks, the index is Under Pressure. The next support level is likely
AUD 5,400, around where the index had a follow-through day in mid July.
Global Focus Emerging Long
Chinese markets traded relatively flat for the week with the Shenzhen
down 0.7% and the Shanghai only down 0.1%. Markets continue to
consolidate above moving averages which is constructive. Distribution
remains relative low compared to other APAC countries (average over five
days). We continue to view the 40-week moving average as key level
of support for both indices. Each is currently trading approximately
2-4% above these levels and we are looking for indices to remain
above it to stay constructive.
2. China’s official PMI came in at
Global Focus Frontier Long
Economic Summary
Q2 GDP growth comes below expectation amidst robust consumer spending. Underwhelming economic growth The U.S. economy grew 1.2% in Q2, lower than the consensus estimates of 2.6%, primarily due to the inventory drawdown. Inventories fell by USD 8.1 billion, the worst fall since Q3 2011, as companies slimmed down inventories and remained wary of investing amidst a weak global demand.
