The U.S. market has been moved back into a Confirmed Uptrend. Though volume continues to come in below average, the S&P 500 closed at a new all-time high and the Nasdaq closed above resistance at 6303. The action of leadership remains strong, with multiple ideas forming the right side of their respective bases or even breaking out into new highs. Q2 earnings season has begun and will drive market direction over the next several weeks.
Author: Pramod Gopal
European Focus Long
On July 12, the Stoxx 600 gained 1.5%, marking its highest close in two weeks and the biggest one-day percentage increase since April 24. The index continues to be in a Downtrend, although it is inching toward its 50-DMA. This week we moved France and Norway from Rally Attempt to Confirmed Uptrend after they gained 1.6% and 2.3%, respectively, on higher volume.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index gained 1.1%, bouncing off its 40-WMA mid-week and closing at weekly highs. It also retook its 50-DMA after back-to-back gains on Thursday and Friday. We will be watching this level closely as the index has failed in its two previous attempts to retake it.
Global Focus Emerging Long
Mainland Chinese markets were mixed this week with the Shenzhen underperforming the Shanghai significantly. The Shenzhen is finding resistance at the 100-DMA (~1,920) while the Shanghai is holding above the 100-DMA (~3,180). For the
Shenzhen, we are looking for the 10-WMA (~1,850) to serve as support. Nonetheless, the market is still in a Confirmed Uptrend with three distribution days in the trailing five weeks.
Global Focus Frontier Long
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The S&P 500 continues to hold above its 21-DMA, while the Nasdaq is holding above its 50-DMA. Distribution remains low with an additional day set to expire next week. Though Technology has taken a hit over the last week, the sector is still sitting above its 50-DMA and looks to be consolidating rather than breaking down. We will become concerned should these support levels on both the major averages and leading ideas give way.
European Focus Long
The Stoxx Europe 600 index showed significant weakness this week and, as of Thursday’s close, was heading for a loss of 1.11%
for the week. Due to the high distribution day count and the index breaking below support levels, we changed its condition to
Uptrend Under Pressure from Confirmed Uptrend. We also moved several European countries, such as France, Belgium, and Spain, to Uptrend Under Pressure.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index gained 1.6%, bouncing off 40- WMA support a week after hitting four-month lows. We moved the index back into a Confirmed Uptrend after two consecutive 1%+ days but we remain a bit wary, as it picked up a fifth distribution day as well.
Global Focus Emerging Long
Mainland Chinese markets are now testing the 50-DMA, setting up for either a bearish reversal or bullish move higher on a break above resistance. Next week on June 20, the MSCI decides for the fourth time whether it will include Chinese A-Shares to its Emerging Markets Index. We view this decision as a likely catalyst for the market given indices are trading at resistance. Although we put the market condition in Uptrend earlier this month, we know from our historical studies that each rally begins with a follow-through day, but not all follow-through days work. Therefore, we will be watching Tuesday’s market action closely and would advise using it as a more decisive confirmation for market direction.
