After two weeks of declines, Mainland China’s markets advanced this week through Wednesday, led by the Shenzhen, which gained 3.6% compared with a 2.2% gain for the Shanghai. The market condition was changed to a Rally Attempt from a Downtrend. We are waiting for a follow-through day before shifting the market into a Confirmed Uptrend. The Shanghai is trading 3% below its 200- DMA (~3,292), while the Shenzhen is 9% below its 200-DMA (~1,908). The 100-DMA (~1,935) continues to act as resistance for the Shenzhen.
Author: Raghavendra K
Global Focus Frontier Long
US Focus Long
The U.S. market was downgraded to Downtrend on Monday. The S&P 500 and Nasdaq broke below their respective 50- and 100-DMAs on heavy volume this week. The 200-DMA is now acting as support for both indices. We will move the market into a Rally Attempt should the S&P 500 and Nasdaq hold above Friday’s lows for a minimum of two days. From there, we will be looking for a follow-through day (as early as Wednesday) before moving the market back into a Confirmed Uptrend. We continue to recommend a patient approach, waiting for the follow-through day and for more ideal technical set-ups in individual ideas before buying.
European Focus Long
We moved the Stoxx 600 to a Confirmed Downtrend this week. As of Thursday, the index was down 3.62% on a weekly basis, accelerating from last week’s 3.12% decline. We also moved France, Germany, and Switzerland to a Confirmed Downtrend this week. As of Thursday’s close, 10 of 16 European indices were in a Confirmed Downtrend and six indices were Under Pressure.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index declined 4.69% this week. The index is trading 0.3% above its 40-WMA and is currently in an Uptrend Under Pressure.
Global Focus Emerging Long
Mainland China’s markets fell significantly over last week, led by the Shanghai index, which fell 9.6% compared to the 7.8% fall for the Shenzhen. The market condition was changed to a Downtrend from an Uptrend Under Pressure this week because of the elevated number of distribution days and technical weakness amid the global sell-off. The Shanghai index is 5% below its 200-DMA (~3,292), while the Shenzhen is 12% below its 200-DMA (~1,912). The 100-DMA (~1,955) continues to act as a strong resistance level for the Shenzhen. We recommend avoiding any fresh positions in the market.
Global Focus Frontier Long
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The Nasdaq held its 50-DMA this week, while the S&P 500 remained at all-time highs. Distribution stands at five days on the S&P 500 and four on the Nasdaq with expiration beginning next week. Multiple sectors, including Financial, Retail, and Transportation, continue to act well, all trading at all-time highs. Technology did find support over the last three sessions, but the majority of ideas are still forming new bases. We continue to recommend a patient approach to Technology until we see more ideal entry points in individual ideas.
European Focus Long
As of Thursday this week, the Stoxx 600 was up 0.64% compared with last Friday. Intraday on Friday, the index was up 0.81%, retaking its 50-DMA. However, we note that since the index broke this level on November 13, it has faced strong resistance. We remain cautious on European equities as the vast majority of European indices are in a Downtrend or Under Pressure. Focus List ideas from defensive sectors have been the top performers this week.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index gained 0.03% this week. It added one distribution day, increasing the total to four. The index is trading 3.5% above its 40-WMA and 1% off its 52-week high. It remains in a Confirmed Uptrend.
