The U.S. market has been moved to an Uptrend Under Pressure. The S&P 500 and Nasdaq gapped down on Thursday, closing at the lows of the day and down more than 5% each in heavy volume. The S&P 500 distribution day count increased to five days in the last five weeks, with three in six sessions. The Nasdaq count remains relatively low at three days. The S&P 500 is testing support at ~3,000, while the Nasdaq is trading at its 21-DMA. The next logical level of support should these levels break is the sharply rising 50-DMA (S&P 500: 2,903; Nasdaq: 8,921).
Author: Sandeeep N
European Focus
On Thursday, the Stoxx 600 ended 5.63% below last Friday’s close. Of the 17 indices that we cover, 13 are in a Confirmed Uptrend, and four are in an Uptrend Under pressure.
Global Focus Developed
Australia’s ASX All Ordinaries Index declined 2.6% this week and recorded two distribution days on Thursday and Friday and breached its 100-DMA support. The index remains in a Confirmed Uptrend with four distribution days.
Global Focus Emerging
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.
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 gained 3.47% this week on higher-than-average volume. The market remains in an Uptrend Under Pressure with five distribution days. The CSI 300 is consolidating after it surged 2.7% on significantly heavier volume Monday. The index retook its 200-DMA and is now trading above all key moving averages, testing resistance near 4,000–4,200. The lower bound of the previous down-gap at ~4,100 (+2.5%) acts as immediate resistance. The market should hold above 200-DMA support to remain constructive. China’s business activity rebounded sharply in May. The Caixin manufacturing PMI rose to 50.7 in May from April’s 49.4 and beat consensus of 49.6. Caixin service PMI rose to 55 in May from April’s 44. Our conviction has improved as the CSI 300 rallied to two-month highs and trading volume increased above the 50-day average this week. We recommend that investors continue to accumulate positions in fundamentally sound stocks breaking above key resistance or pivot. China is expected to report May’s macro data next week.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq gapped higher on Friday, closing up 4.9% and 3.4%, respectively for the week. The S&P 500 now faces resistance at ~3,214, while the Nasdaq is testing new highs at 9,838. Distribution remains a non-factor at three days and one day, respectively.
European Focus
The Stoxx 600 continued to tread along last week’s recovery path and is now forming a cup base. The index gained 4.54% over the last four sessions in the week. Today, the index is up about 1% and looks set to close in the green.
Global Focus Developed
Australia’s ASX All Ordinaries Index gained 4.2% this week and retook its 100-DMA. It is trading 5% below its 200-DMA. The index remains in a Confirmed Uptrend with three distribution days.
Global Focus Emerging
The CSI 300 gained 3.47% this week on higher-than-average volume. The market remains in an Uptrend Under Pressure with five distribution days. The CSI 300 is consolidating after it surged 2.7% on significantly heavier volume Monday. The index retook its 200-DMA and is now trading above all key moving averages, testing resistance near 4,000–4,200. The lower bound of the previous down-gap at ~4,100 (+2.5%) acts as immediate resistance. The market should hold above 200-DMA support to remain constructive. China’s business activity rebounded sharply in May. The Caixin manufacturing PMI rose to 50.7 in May from April’s 49.4 and beat consensus of 49.6. Caixin service PMI rose to 55 in May from April’s 44.
