Australia’s ASX All Ordinaries Index gained 2.2% this week. The index remains in a Confirmed Uptrend with four distribution days and is testing resistance along its 21-DMA.
Author: Sandeeep N
Global Focus Emerging
The CSI 300 rose 4.76% from Monday through Thursday this week on higher and above average volume and remains in a Confirmed Uptrend with three distribution days. The index rallied and broke above March highs of ~4,200. The next immediate resistance lies at January
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 2.39% this week on higher volume and remains in a Confirmed Uptrend with four distribution days, as two expired. The CSI 300 broke above the lower bound of the previous gap-down of ~4,100, with next immediate resistance at March’s highs of ~4,210 (+2.7%). The market should hold above 200-DMA support at (3,925, -4.2%) to remain constructive. Beijing reported new COVID-19 cases but the government immediately curbed travel and movement to contain a second outbreak. Industrial output rose 4.4% y/y in May, retail sales fell 2.8% y/y, and fixed-asset investment declined 6.3% in the first five months, slightly missing consensus but improving over April. Policymakers are confident the economy is gradually recovering from the coronavirus crisis while pledging more reforms and liquidity. Risk appetite improved as investors expect more liquidity in capital markets and COVID-19 to be under control. Our conviction builds as the market is trading actively but we recommend staying patient given that the market is still volatile. Investors are advised to focus on leading stocks with strong fundamentals breaking out of sound bases or bouncing off key support on heavy volume.
US Focus
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq held support this week, rallying off their respective 50- and 21-DMA, respectively. Both, however, are still trading within the range of last Thursday’s severe decline and have yet to convincingly take out that level. Distribution held steady until Friday’s triple witching tacked on a fifth day for the S&P 500. The overall count now stands at five and two days, respectively, with one day expiring on the S&P 500 next week.
European Focus
Following a spike in volatility amidst increasing concerns over the second wave of COVID-19, the market is looking set to recover and has recorded steady gains. On Thursday, the Stoxx 600 had gained 2.64% from last Friday’s close.
Global Focus Developed
Australia’s ASX All Ordinaries Index bounced back from the support along its 21-DMA and gained 1.7% this week on above average volume. The index remains in a Confirmed Uptrend with five distribution days.
Global Focus Emerging
The CSI 300 rose 2.39% this week on higher volume and remains in a Confirmed Uptrend with four distribution days, as two expired. The CSI 300 broke above the lower bound of the previous gap-down of ~4,100, with next immediate resistance at March’s highs of ~4,210 (+2.7%). The market should hold above 200-DMA support at (3,925, -4.2%) to remain constructive.
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 0.05% this week on higher volume and was shifted to a Confirmed Uptrend from an Uptrend Under Pressure Tuesday as it broke above May resistance. The distribution day count remains at six. The CSI 300 faces resistance near March’s highs of ~4,215 (+5.3%). We would like the index to hold above 200-DMA support at ~3,918 (-2.1%) to remain constructive. In May, China’s CPI increased 2.4% y/y and PPI dropped 3.7% y/y, worse than the expected 3.2% decline. China’s social financing reported a stronger-than-expected increase of RMB 3.19T in May and broad money supply grew as expected at 11.1% y/y by the end of May. The global lockdown continues to devastate demand and we have yet to see confirmation of an economic turnaround. More macro data are expected in the following weeks and we will be watching closely. Our cautiousness has increased as market volatility picked up, and we could shift the market back to an Uptrend Under Pressure if it breaches its 200-DMA or if distribution days continue to cluster. We expect the market to be range-bound in the near term and recommend that investors stick with quality ideas breaking above key resistance. The consumer, retail, and health care sectors have showed strong momentum in the trailing four weeks.
