The CSI 300 rose 7.55% this week on higher volume (+88.4%) and remains in a Confirmed
Uptrend with two distribution days after one expired. The index rallied from Monday through
Thursday and turned downward Friday for the first time since June 29. The index faced pressure
at Thursday’s high (4,854, +2.1%), while support lies at the 50-DMA (~4067, -14.4%). June
data showed signs of improved liquidity and domestic demand. CPI rose 2.5% y/y, versus
consensus of 2.6%. PPI dropped 3.0% y/y, better than estimates of -3.1%. Better-than-expected
total social financing rose to RMB 3.43T in June from 3.19T in May, up 12.8% y/y. M2 rose
11.1% y/y, holding steady from May but lower than forecasts of 11.2%. The CSI 300 has surged
~14% since July and prudent investors could trim profits. We remain optimistic but investors
are advised to beware of market volatility. We recommend staying disciplined and focusing on
quality stocks with strong support levels or breaking out of pivot.
Author: Saminathan Jaganathan
US Focus
The U.S. market is in a Confirmed Uptrend. The S&P 500 held support along its 21-DMA this
week before rallying and closing right at resistance along its downward trending channel line. The
next level of resistance is 3,233. The Nasdaq continues to constructively trend within a channel
which is rising into 11,000. Near-term support for both indices remains the 10- and 21-DMA.
Distribution now stands at five and two days, respectively, with two days expiring on the S&P 500
and one on the Nasdaq next week
European Focus
On Thursday, the Stoxx 600 ended 0.49% below last Friday’s close. Of the
17 indices that we cover, four are in a Confirmed Uptrend, and 13 are in an
Uptrend Under Pressure
Global Focus Developed
Australia’s ASX All Ordinaries Index declined 1.7% this week. The index
remains in a Confirmed Uptrend and added its fourth distribution day this
week.
Global Focus Emerging
The CSI 300 rose 7.55% this week on higher volume (+88.4%) and remains in a Confirmed Uptrend with two distribution days after one expired. The index rallied from Monday through Thursday and turned downward Friday for the first time since June 29. The index faced pressure at Thursday’s high (4,854, +2.1%), while support lies at the 50-DMA (~4067, -14.4%).
Global Focus Frontier
Saudia Dairy and Foodstuffs Company (Sadafco) is engaged in the manufacturing and distribution of food products. UHT Milk, tomato paste and Icecreams are its major products.
China A Shares
The CSI 300 rose 0.98% this week on lower volume. The market remains in a Confirmed Uptrend with three distribution days, as one expired. The CSI 300 is trending upward after it broke above the bottom of the previous gap-down at ~4,100 and faces immediate resistance at March highs of ~4,210 (+1.5%), followed by 2018 highs of ~4,400 (+6.3%). The market should hold above 200-DMA support at 3,930 (-5.3%) to remain constructive. U.S. President Donald Trump asserted that the trade deal between China and the U.S. remains in place. Shanghai’s Composite Index will be revamped by introducing more high-tech strength and removing loss-making companies. The coronavirus outbreak in Beijing looks to be under control. Two-thirds of stocks fell while leadership outperformed. We recommend investors beware of “risk on” sentiment since the index has surged 7% this month and faced strong resistance at 4,200 (+1.5%). Investors are advised to be selective and focus on quality stocks with sound fundamental and technical profiles. China’s market is closed Thursday and Friday for the Dragon Boat Festival.
US Focus
The U.S. market shifted back to Uptrend Under Pressure. Though we did have to briefly move back to Confirmed Uptrend intraweek as the Nasdaq made a new high, our overall recommendation never changed given severe sector divergence. After briefly making a new high on Tuesday, the Nasdaq quickly retraced that move to close below its 21-DMA for the first time since April. The S&P 500, which never fully resolved the June 11 sell-off, closed back below its 200-DMA on Friday. Both indices added a distribution day, taking the count up to six and three days, respectively, with no expiration next week. We will now be looking for both indices to
European Focus
On Thursday, the Stoxx 600 ended 0.82% below last Friday’s close. Of the 17 indices that we cover, three are in a Confirmed Uptrend, and 14 are in an Uptrend Under pressure
Global Focus Developed
Australia’s ASX All Ordinaries Index declined below its 21-DMA as the index lost 0.80% this week. It is currently testing support along its 100-DMA. The index remains in a Confirmed Uptrend with five distribution days
