Mouwasat Medical Services (MMS) is a private sector hospital operator in Saudi Arabia. The company is poised to benefit from capacity expansion and rapidly growing healthcare industry in Saudi Arabia.
Author: Sandeeep N
China A Shares
The CSI 300 rose 1.87% this week on higher but below average volume after falling 0.62% on low volume last Friday. The market remains in a Confirmed Uptrend with three distribution days. China’s GDP fell 6.8% y/y in Q1 2020, larger than the -6% forecast and reversing Q4 2019’s 6% expansion. This marks the first contraction on record in China. Factory production fell less than expected, -1.1% versus the -5.2% forecast. The market expects the economy to remain under pressure in the second quarter because consumption slumps and the pandemic is devastating demand from its major trading partners, so we would watch China’s further policy support. This week’s trading volume was higher than last week’s but remained under the 50-day moving average, so we believe it’s still too early to be aggressive. We recommend a disciplined and selective approach, focusing on stocks with high RS breaking out from a sound base. The CSI 300’s next support is at ~3,627 (-5.5%), followed by ~3,503 (-8.7%). Resistance is at the 50-/200-DMA at ~3,890 (+1.3%), followed by the 100-DMA at ~3,940 (+2.6%).
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to v-shape recover with both regaining their respective 50-DMA this week. We will be looking for this level to now act as support over the next week. Overall action remains constructive with strong and instant progress since the April 2 follow-through day leading to an increase in breakouts among high quality ideas over the last several days. The distribution day count remains a nonfactor at just one day on each index.
European Focus
On Thursday, the Stoxx 600 ended 2.69% below Tuesday’s close. All the 17 indices we cover are in a Confirmed Uptrend.
Global Focus Developed
Australia’s ASX All Ordinaries Index gained 1.9%. We moved the index to a Confirmed Uptrend after it had a follow-through day on Tuesday. It currently has one distribution day.
Global Focus Emerging
The CSI 300 rose 1.87% this week on higher but below average volume after falling 0.62% on low volume last Friday. The market remains in a Confirmed Uptrend with three distribution days. China’s GDP fell 6.8% y/y in Q1 2020, larger than the -6% forecast and reversing Q4 2019’s 6% expansion. This marks the first contraction on record in China. Factory production fell less than expected, -1.1% versus the -5.2% forecast. The market expects the economy to remain under pressure in the second quarter because consumption slumps and the pandemic is devastating demand from its major trading partners, so we would watch China’s further policy support. This week’s trading volume was higher than last week’s but remained under the 50-day moving average, so we believe it’s still too early to be aggressive. We recommend a disciplined and selective approach, focusing on stocks with high RS breaking out from a sound base. The CSI 300’s next support is at ~3,627 (-5.5%), followed by ~3,503 (-8.7%). Resistance is at the 50-/200- DMA at ~3,890 (+1.3%), followed by the 100-DMA at ~3,940 (+2.6%).
Global Focus Frontier
Mouwasat Medical Services (MMS) is a private sector hospital operator in Saudi Arabia. The company is poised to benefit from capacity expansion and rapidly growing healthcare industry in Saudi Arabia.
China A Shares
The CSI 300 rose 2.1% for the first three trading sessions this week and remains in a Confirmed Uptrend with two distribution days. Support is at the lower edge of the previous gap (~3,627, -4.3%), followed by March’s low (~3,503, -7.6%). Resistance is at the 200-DMA (~3,900, +2.8%). Global stocks gained on hopes the pandemic is peaking, boosting risk appetite in the domestic market. But as damage to economy remains highly uncertain, we advise staying patient. The consistent low trading volume confirms our cautiousness. As we expect the CSI 300 to consolidate sideways at 3,627–3,900 in the near term, we recommend a selective approach, focusing on stocks that have broken out of solid bases or bounced off key support with volume. In addition, as the market enters Q1 2020 earnings season, companies’ performance will become the focus. Pay attention to names with robust Q1 earnings growth (guidance) or that are expected to recover soon.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq traded sharply higher this week and are now both set to test resistance at their respective declining 50-DMA (S&P 500: 2,910; Nasdaq: 8,453). To remain constructive, we will be looking for indices to consolidate sharp gains off the lows, allowing high relative strength quality ideas to firm above individual levels of resistance. Conversely, any pickup in distribution that results in a break below the slowly rising 21-DMA would be concerning and result in a shift to Uptrend Under Pressure.
European Focus
In the face of the Covid-19 crisis, countries all over the world rolled out stimulus packages to shield their respective economies. Overall, markets have reacted well to the stimulus, and the Stoxx 600 gained 9.67% at Thursday’s close. Today, markets are erasing some of these gains, and the Stoxx 600 is losing 3.76% after its first three-day rally since mid-February.
