The Shenzhen Index fell for the fourth consecutive week, down 1.32% from last week, compared with the 0.55% gain for the Shanghai Index. The market continues to be in an Uptrend Under Pressure. One new distribution day was added this week, taking the total count to four for the Shanghai. The Shanghai has found support near its 40-WMA (~3,259), which it has not broken since June. We recommend a cautious approach; avoid buying until market conditions improve.
Author: Raghavendra K
Global Focus Frontier Long
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to diverge with Technology coming under severe selling pressure this week. Multiple leading ideas in the sector have now broken short-term support levels and will likely go through a period of consolidation before a recovery takes place. Though weakness in Technology persisted through the end of the week, Financial, Transportation, and Retail are still trading at or near new highs as rotation into value continues. A further rise in distribution that takes the major averages below their respective 50-DMAs will result in a downgrade of the U.S. market.
European Focus Long
The Stoxx 600 dropped two distribution days this week but gained two additional ones for a total of five. As of Thursday’s close, the index had gained 0.02% versus last Friday’s close. It continues to look technically weak, closing below its 200-DMA on four out of five trading days this week. Wednesday saw the index trying to move above its 50-DMA but failing to hold intraday gains, closing back below its 50-DMA for the day. As of Thursday’s close, France and Germany gained two distribution days each for the week. The U.K. was the worst performer among major European indices and, as of Thursday, had gained three distribution days this week
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index gained 0.2% this week. The index is trading 3.6% above its 40-WMA and 1% off its 52-week high. It is in a Confirmed Uptrend.
Global Focus Emerging Long
Mainland China markets fell for a third consecutive week, led by the Shanghai, which was down 1.08% compared to the 0.31% fall for the Shenzhen. The market continues to be under pressure. One new distribution day was added this week, taking the total count to five. The Shenzhen found support near 1,890, while the Shanghai found support at its 100-DMA. We recommend a cautious approach and would avoid buying until market conditions improve.
Global Focus Frontier Long
US Focus Long
The U.S. market is in a Confirmed Uptrend. The major averages continue to push into new highs with healthy action across leading ideas. Distribution stands at five days on both the S&P 500 and Nasdaq with multiple days set to expire next week. We maintain our positive view on the general market.
European Focus Long
The Stoxx 600 recovered some of the losses it took last week. As of Thursday, it had a gain of 0.87%, compared with a loss of 1.26% the prior week. The current distribution day count is down to six after two dropped off due to time this week. Additionally, we moved Switzerland back to a Confirmed Uptrend this week. However, we continue to have a cautious approach to European equities since the Stoxx 600 has so far failed to hold above its 50- and 200-DMA.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index gained 0.4% this week. The index is trading 3.9% above its 40-WMA and 1% off its 52-week high. It is in a Confirmed Uptrend.
