China’s CSI 300 index edged up 0.28% this week after increasing sharply the week before. We upgraded the market status to a Confirmed Uptrend on Monday, subsequent to strong price volume action. However, the index was moved to an Uptrend Under Pressure on Friday due to the index trading below the 50-DMA. The index continues to face stiff resistance at the 50-DMA due to renewed trade war fears.
Author: Raghavendra K
Global Focus Frontier Long
Saudi Arabian Mining Company (
) is one of the leading mining and metals companies in the Kingdom of Saudi Arabia. The Company’s key catalysts include production expansion of aluminium and phosphate and rising commodity prices.
China A Shares Long
The CSI 300 rose 3% for the week. The index made a new low this week but found support at ~3,209 and closed near the top of the week’s range. This is the third week in a row that the index has undercut its prior year-to-date low. Volume continues to be light. We upgraded the market to a Rally Attempt on Wednesday as it has kept above its recent low for three days. We are now looking for a follow-through day. However, the index is still 14% below its 200-DMA. If the CSI 300 could break through 50-DMA resistance, which is 3.3% higher currently, on volume, our conviction would increase. Until then, we recommend a defensive approach.
US Focus Long
The U.S. market is in a Confirmed Uptrend. Indices are at all-time highs. Distribution is low with only three days on the S&P 500 and Nasdaq, with one day expiring on each index next week. Leadership remains constructive, with multiple groups and stocks breaking out into new highs. We maintain a positive outlook on the market and recommend buying or adding high quality stocks emerge from sound bases
European Focus Long
As of Thursday this week, the Stoxx 600 was up 0.61%, rebounding slightly compared with last week’s 1.15% decline. The index remains in a Rally Attempt and we continue to have a cautious view of European equities, given the lack of clear leadership in the market. We moved the U.K., Spain, Italy, and Finland to a Rally Attempt this week.
Global Focus Developed Long
Australia’s ASX All Ordinaries Index fell 1.06% this week. It added one distribution day this week, taking its total to five. The index is currently in a Confirmed Uptrend.
Global Focus Emerging Long
China’s CSI 300 was up 2.11% after reaching a low on Monday. We updated the market status to a Rally Attempt after it continued to trade above the August 20 low. There were two distribution days earlier in the week.
Global Focus Frontier Long
Saudi Arabian Mining Company (
) is one of the leading mining and metals companies in the Kingdom of Saudi Arabia. The Company’s key catalysts include production expansion of aluminium and phosphate and rising commodity prices.
China A Shares Long
The CSI 300 rose 2.7% on average volume for the week. The index experienced a strong recovery after undercutting the previous low of ~3,296 and hitting a new low of ~3,257. We updated China to a Rally Attempt on Thursday. Volume has not been strong and we believe that investors were snapping up leading stocks hit by the previous selloff. The CSI 300 is trading 23% off highs and is still below key support levels. If the index undercuts 3,257, the next support would be ~3,050. Capital equipment, cement, steel, and rail stocks led the gain on expectations of China’s fiscal stimulus. We recommend keeping positions low and trying to find defensive leaders with strong fundamentals. In addition, we will continue to pay close attention to how leading names react to the H1 2018 earnings season next week.
US Focus Long
The U.S. market is in a Confirmed Uptrend. Despite the pullback on Friday, the majority of growth ideas held up well, with multiple recent IPOs also breaking out into new highs. Further, small-cap indices, including the S&P 600 and Russell 2000, also held up well relative to the other major averages, indicating a further rotation into U.S.-based ideas. Overall, despite choppy market conditions, we maintain our positive view as the major averages remain above moving average support with a low number of distribution days
