The Stoxx 600 was mixed this week, recording losses for two out of four trading sessions until Thursday. As of Thursday’s close, it had a weekly gain of about 0.23%, and was more than 1% above its 50- and 200-DMA. However, intraday Friday, the index was down 0.81%. It remains in a Rally Attempt and we look for the index to hold its 50-DMA. This week, we upgraded Italy to a Rally Attempt, and downgraded Denmark to an Uptrend Under Pressure after it broke below its 50- and 200-DMA.
Author: Raghavendra K
Global Focus Developed Long
Australia’s ASX All Ordinaries Index rose 0.64% this week. It added one distribution day, taking its total count to six. The index is currently in a Confirmed Uptrend.
Global Focus Emerging Long
China’s CSI 300 (
) rose 2.48% this week, rebounding from last week’s decline. We moved the market to a Rally Attempt after it closed positive in three out of the last four sessions. However, we still remain cautious with an eye on the U.S.-China trade war.
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
China’s market is in a Confirmed Uptrend. The CSI 300 dropped 5.85% on average volume for the week. The index saw a three-day losing streak after it tested 3,500 and logged two new distribution days. Due to the Shenzhen Composite undercutting previous lows on Thursday, we have downgraded China to a Downtrend as a result of the failed follow-through day. We are becoming more cautious and looking for the CSI 300 to climb back to 3,500. We would be more positive if the index could stand above the 10-WMA (currently 6.9% below) on strong volume. The Capital Equipment and Basic Material sectors experienced a smaller decline for the week than household appliances and food beverages. However, the rising trade tensions between China and U.S. are causing uncertainties in the market. We recommend a conservative approach and 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 an Uptrend Under Pressure. The S&P 500 is still holding its 21-DMA, while the Nasdaq remains above its 50-DMA. Distribution also remains relatively low at two days on the S&P 500 and three on the Nasdaq. Leadership, however, remains a concern as the market continues to rotate into previously lagging industry groups. Though we have seen an improvement in quality growth over the last few sessions, most ideas are still trading within consolidation and have yet to show enough improvement to begin buying. Therefore, we continue to recommend a selective approach focusing on ideas with the best relative strength while reducing exposure to names that have broken and stayed below near-term levels of support.
European Focus Long
This week through Thursday, the Stoxx 600 fell 1.4%. On Friday, the pan-European index managed to open with a gain, shrinking its losses for the week. The index continues to trade above its 50- and 200-DMA and remains in a Rally Attempt. We continue to wait for a follow-through day, which would signal a new uptrend. In terms of sectors, we reiterate our bullish view on Healthcare. From our Focus List, within the Healthcare sector, Straumann (STMN. CH) is actionable. Among the major European markets, we moved Italy to a Downtrend this week.
Global Focus Developed Long
Australia’s ASX All Ordinaries Index dropped 1.02% this week. It added one distribution day, increasing its total to seven. The index is currently in a Confirmed Uptrend.
Global Focus Emerging Long
China’s CSI 300 index (
) fell 5.85% this week, breaking three consecutive weeks of gains. We moved the market to a Downtrend amidst the U.S.-China trade war heating up. The index continues to slide below the 50-DMA, but is holding above its last level of support at 3,295.73.
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.
