The U.S. market remains in a Rally Attempt. The S&P 500 and Nasdaq nearly staged a followthrough day Friday, before selling off sharply during the final few minutes to close in the lower half of the day’s session. Monday will now mark day eight of the attempted rally. A follow-through day should feel like an explosive rally, with indices preferably closing up 1.7% or more on heavier volume than the day before. We would recommend a gradual increase in risk should a follow-through day occur next week.
Author: Sandeeep N
European Focus
1. On Thursday, the Stoxx 600 was up 0.65%. Compared with last Friday’s close, the index was up 0.67% through Thursday. Today, its trading constructively along with other major markets in the region.
Global Focus Developed
Australia’s ASX All Ordinaries Index rose 1.28% this week. The index remains in an Uptrend Under Pressure and added one distribution day, taking its total to five.
Global Focus Emerging
The CSI 300 rose 2.6% for the week as the market reopened after the long holiday. The market remains in a Confirmed Uptrend with five distribution days. Our conviction increased as the index rebounded after hitting a new low and had a three-day gaining streak. We believe the 50- DMA is providing effective support. Even so, volume has been lower than average, indicating cautious sentiment due to uncertainties around Sino- U.S. trade talks that began Thursday; the market has been cautiously optimistic. As we approach Q3 earnings, investors are focusing more on the domestic. We see the CSI 300’s next support at its 50-DMA (~3,800) and immediate resistance at September highs (~4,000). We reiterate the importance of heavy trading volume to confirm a strong rally. Until then, investors are advised to stay patient and focus on leading stocks that have good earnings estimates and have recently broken out.
Global Focus Frontier
National Bank of Kuwait is the leading banking group in Kuwait in terms of assets, customer deposits, and customer loans and advances. Its strong leadership position across its product offerings will pave the way for its future growth.
China A Shares
The CSI 300 fell 0.9% for the week on slightly lower volume. The market remains in a Confirmed Uptrend with three distribution days. Disappointing industrial production, consumption, and fixed-asset investment data for August revealed pressure on China’s economy, which impacted market sentiment. The new one-year Loan Prime Rate was cut 5bps, in line with consensus and thus not a great boost to the market. The CSI 300 has immediate support at ~3,890 then at its 50-DMA (+3.2%). We look for immediate resistance at ~4,000 then at ~4,100. As global liquidity eases and positive domestic policies are introduced, risk appetite has increased. The electronics sector outperformed this week as Huawei and Apple unveiled new products. We expect the CSI 300 to continue consolidating in the short term, as sentiment may improve ahead of the National Day holiday, coupled with continued uncertainty surrounding trade talks. Investors are advised to be cautious and focus on quality growth leaders that have good prospects and benefit from recent policies. Avoid chasing extended ideas.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq are testing resistance at or near all-time highs with four and five distribution days, respectively. One distribution day expires on the S&P 500 next week and two expire on the Nasdaq. Support remains the rising 21- and 50-DMA on both indices.
European Focus
On Thursday, the Stoxx 600 was up 0.61%. Compared with last Friday’s close, the index was flat through Thursday after two negative days early in the week following news of attacks on Saudi Arabia’s oil production facilities. Today, the index is trading constructively along with other major markets in the region.
Global Focus Developed
Australia’s ASX All Ordinaries Index was up 0.91% this week. The index remains in a Confirmed Uptrend with two distribution days.
Global Focus Emerging
The CSI 300 fell 0.9% for the week on slightly lower volume. The market remains in a Confirmed Uptrend with three distribution days. Disappointing industrial production, consumption, and fixed-asset investment data for August revealed pressure on China’s economy, which impacted market sentiment. The new one-year Loan Prime Rate was cut 5bps, in line with consensus and thus not a great boost to the market. The CSI 300 has immediate support at ~3,890 then at its 50-DMA (+3.2%). We look for immediate resistance at ~4,000 then at ~4,100. As global liquidity eases and positive domestic policies are introduced, risk appetite has increased. The electronics sector outperformed this week as Huawei and Apple unveiled new products. We expect the CSI 300 to continue consolidating in the short term, as sentiment may improve ahead of the National Day holiday, coupled with continued uncertainty surrounding trade talks.
