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.
Author: Saminathan Jaganathan
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 dropped 1.28% this week and remains in a Confirmed Uptrend with two distribution days added for a total of four. A significant amount of important financial and economic data was released during the week, impacting market sentiment. China’s new yuan loans and year-over-year money supply growth in April beat expectations, indicating that monetary easing had been effective in maintaining liquidity. A larger-than-expected PPI decline (-3.1% versus -2.6% y/y consensus) and weaker-than-expected retail spending (-7.5% versus -7% y/y consensus) in April suggest greater-than-expected pressures on growth. The market is watching the upcoming “two sessions” meeting next week and expecting fiscal stimulus. Meanwhile, rising China-U.S. trade frictions have also damaged investors’ appetite for risk. We recommend investors stay moderately cautious amid clustering distribution and low trading volume. Avoid ideas that would be vulnerable to a trade war. The CSI 300 failed to hold above its 100-DMA and we see immediate support at the 200-DMA (3,900, -0.3%), followed by the 50-DMA (3,837, -1.9%) and ~3,738 (-4.4%). Resistance remains at the gap of ~4,028 (+3.0%), followed by ~4,135 (+5.7%).
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq staged back to back upside reversals to close the week, holding above key support levels and keeping an overall low distribution count. Distribution now stands at three days on the S&P 500 and two on the Nasdaq, with no expiration for two weeks. To remain constructive, we would like to see the S&P 500 and Nasdaq hold above Thursday’s intraday lows at 2,766 and 8,705, respectively.
European Focus
On Thursday, the Stoxx 600 ended 4% 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 was up 0.1% in the week. It closed 2% above support along its 50-DMA. The index remains in a Confirmed Uptrend with two distribution days.
Global Focus Emerging
The CSI 300 dropped 1.28% this week and remains in a Confirmed Uptrend with two distribution days added for a total of four. A significant amount of important financial and economic data was released during the week, impacting market sentiment. China’s new yuan loans and year-over-year money supply growth in April beat expectations, indicating that monetary easing had been effective in maintaining liquidity. A larger-than-expected PPI decline (-3.1% versus -2.6% y/y consensus) and weaker-than-expected retail spending (-7.5% versus -7% y/y consensus) in April suggest greater-than-expected pressures on growth.
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 fell 5.05% this week, registering its biggest weekly loss since last April. The number of distribution days increased to three and we shifted the market to an Uptrend Under Pressure from a Confirmed Uptrend as the CSI 300 broke below its 50- and 100-DMA Friday. Rising fears of the coronavirus spreading outside China triggered selloffs around the world. China, seemingly unaffected the first few days of the week, joined the U.S. market in a correction. Previously leading technology stocks suffered more losses: the ChiNext index plunged nearly 7% this week on higher volume. We advise a defensive approach amid rising coronavirus concerns worldwide and trimming positions in extended names. As companies release their preliminary earnings reports for FY19, investors should watch for disappointing results. The CSI 300 is now trading 0.7% below its 100-DMA. Next support lies at the 200-DMA or ~ 3,870 (-1.7%).
US Focus
The U.S. market is in a Downtrend. The S&P 500 and Nasdaq have broken below all major moving average support levels this week. The next level of price support is ~2,822 on the S&P 500 and 8,243 on the Nasdaq.
