China’s market is in a Confirmed Uptrend. The CSI 300 rose 0.8% on above average volume for the week. The index had a three-day losing streak with falling volume after its attempt to reach 3,600 failed. It is not surprising to see some pullbacks on its way to breaching key resistance at the 10-WMA. However, there were no new distribution days this week. We would be more positive if the index could stay above the 10-WMA (currently 3% below) next week on strong volume. If it does encounter resistance at the 10-WMA, we will be looking for ~3,500 to act as support in the near term. The Capital Equipment and Basic Material sectors rebounded this week thanks to the government’s possible fiscal stimulus. We will continue to pay close attention to how leading names are reacting to H1 2018 earnings next week.
Author: Ramesh R
US Focus Long
The U.S. market is in a Confirmed Uptrend. We will move the market back to Under Pressure should we see the Nasdaq close below its 50-DMA next week. We are concerned with the action of leading ideas, which came under severe selling pressure on Friday, resulting in the Nasdaq closing below its 21-DMA. Multiple names either pulled back sharply to their respective 50-DMA or broke below that level post-earnings results. Earnings will continue to play a big role next week, with another 25% of the U.S. Focus List reporting. We recommend a patient approach in the near term, waiting to see support come back into the market over the next few sessions.
European Focus Long
This week through Thursday, the Stoxx 600 advanced 1.3% and is trading above its 10- and 40-WMA. The index remains in a Rally Attempt and we continue to wait for a follow-through day, which would signal a new uptrend. This week, we moved Germany and Luxembourg to a Rally Attempt and downgraded Italy to an Uptrend Under Pressure.
Global Focus Developed Long
Australia’s ASX All Ordinaries Index gained 0.22% this week. It is trading 1% off its 52-week high and is currently in a Confirmed Uptrend.
Global Focus Emerging Long
China’s CSI 300 index (
) was up 0.81% this week, compared with last week’s flat performance. The market is in a Confirmed Uptrend with two distribution days. The index is still trading below its 50-DMA, with a strong resistance at the 200- DMA (~3,922).
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 Downtrend. Te CSI 300 dropped 2.7% for the week. We saw six down days over the past eight trading days after we downgraded the A-share market to a Downtrend last Tuesday. Te index breached key support at ~3,500 and even leading stocks in defensive sectors did not survive the crash. But the CSI 300 fnally bounced on Friday after hitting support. Friday’s surge does not make us less bearish until we see more signs of a rally, such as a follow-through day. We are still keeping an eye on outliers and defensive names from the Consumer Staples, Retail, Utility, and Healthcare sectors if the market continues to recover next week.
US Focus Long
The U.S. market is in an Uptrend Under Pressure. Te S&P 500 and Nasdaq are both holding support above their respective 50-DMA after a sharp pullback earlier in the week. We are now looking for this level of support to hold for the next few sessions before we recommend increasing risk in the market. Distribution also remains elevated at six days on the S&P 500 and seven on the Nasdaq. Next week, however, two distribution days expire on each index which would take the count back down to a more comfortable level. Lastly, we are still monitoring the action of leading ideas which have come sharply off recent highs. We will be looking for new ideas to emerge, while prior leadership consolidates. Our recommendation is still to remain patient here with a focus on high relative strength ideas bucking the general market pullback.
European Focus Long
Tis week through Tursday, the Stoxx 600 lost about 2% following a 1% decline the prior week. Te index is trading below its 50- and 200-DMA and remains in a Downtrend. However, on Friday, the index gained about 1% in early trading, trimming its losses for the week. We also downgraded a few other indices, including Denmark, Sweden, Switzerland, and Luxembourg, to a Downtrend
Global Focus Developed Long
Australia’s ASX All Ordinaries Index dropped 0.51% this week. While it added one distribution day during the week, it remains in a Confrmed Uptrend and is trading 1% off 52-week highs.
