The U.S. market remains in a Rally Attempt. The S&P 500 and Nasdaq traded relatively flat in lower volume yesterday, consolidating Friday’s gains ahead of earnings. Today is now day nine of the attempted rally and we continue to wait for a follow-through day coupled with new leadership before advising a meaningful increase in risk.
Author: Veera Manju
Won Europe Today
Yesterday,
- European markets closed decisively lower, with only Denmark in the positive territory. The investors remained cautious of the U.S.-China trade negotiations as no clear details emerged over the deal from the Chinese delegation. The Market was also influenced by weak Chinese data and uncertainty around Brexit.
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The Stoxx 600 lost half a percentage with the trade-sensitive Basic Resources sector losing about 2%. Other sectors also closed in the red.
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Among other major bourses, Germany’s DAX closed 0.20% lower, France’s CAC 40 lost 0.40%, while the U.K.’s FTSE 100 was down 0.46%.
Won Global View
The U.S. market remains in a Rally Attempt.The S&P 500 and Nasdaq nearly staged a follow-through day Friday, before selling off sharply during the final few minutes to close in the lower half of the day’s session. Today 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 this week.
Won Europe Today
On Friday,
European markets performed exceptionally well on the back of encouraging news from the U.S.-China trade negotiations. President Donald Trump announced on Friday that the U.S. and China have reached an agreement on phase one of trade negotiations.
- The Stoxx 600 climbed more than 2% with most of the sectors closing in the green. Banks (+4%), Automobiles, and Construction & Materials were the sectors that led gains on the index.
- Among other major indices, France’s CAC and Germany’s DAX climbed 2.86% and 1.73% respectively, on higher volume. However, the U.K.’s export-sensitive FTSE settled for gains of 0.84% as continued optimism on Brexit talks sent the pound sterling higher.
- All the indices that we track closed in positive territory. Germany, Portugal, and the Netherlands were upgraded to a Confirmed Uptrend after they witnessed follow-through days.
Won Global View
The U.S. market remains in a Rally Attempt.The S&P 500 and Nasdaq rallied for a second straight session, retracing the entirety of Tuesday’s gap lower. Both indices, however, remain rangebound, trading around their respective 50-DMA and 2–3% above their respective 200-DMA. The spread between these two major moving averages is narrowing as the majority of ideas continue to chop in sideways fashion over the last several months.
Won Europe Today
We also released our weekly Global Laggards report yesterday (please click here to access the report). The stocks highlighted in this report are laggards relative to their own domestic markets. We recommend that they be underweighted as they may be vulnerable to further downside risk and underperformance. European names highlighted this week include Continental AG (CONX.DE; CON:GR) and Evotec (EVTX.DE; EVT:GR).
Won Global View
The U.S. market is in a Rally Attempt. The S&P 500 and Nasdaq rebounded from Tuesday’s sharp decline, however, both remain below 50-DMA resistance, chopping back and forth with no real trend yet to develop. Today is now day six off the October 3 lows and we continue to wait for a follow-through day coupled with quality ideas set up to buy before advising an increase in risk.
Breadth remains poor. Utility is still the only sector trading meaningfully above its 50-DMA, while four sectors, including Energy and Transportation, are trading ~2% or more below that level. Stocks within the S&P 500 are trading a median of 12% off 52-week highs and just 39% are trading above their respective 50-DMA.
Won Europe Today
Yesterday,
European markets closed higher following reports that China is open to a partial trade deal with the U.S. and offered to increase agricultural purchases, before high level talks between the two parties. France’s CAC and Germany’s DAX were up 0.78% and 1.04%, respectively, on lower volume. The U.K.’s FTSE 100 rose 0.33% on lower volume.
- The Stoxx 600 was up 0.42%, on lower volume.
- Sectors that gained the most include trade‐sensitive Automobile & Parts, Technology, and Luxury Goods.
- All countries, except Norway and Austria, closed in positive territory.
Won Europe Today
Yesterday,
- European markets closed lower amid escalating U.S.‐China tensions, as the U.S. Commerce Department blacklisted 28 Chinese firms over the treatment of ethnic minorities in Xinjiang.
- The Stoxx 600 closed 1.10% lower, with all major sectors in negative territory. Construction and Retail sectors lost more than 1.7%.
- Among major bourses, the U.K.’s FTSE 100 lost 0.76%, while Germany’s DAX and France’s CAC 40 fell 1.05% and 1.18%, respectively, on higher volume.
- All indices closed in the red.
- We upgraded the U.K. to a Rally Attempt from a Downtrend as it held above its previous low for the third consecutive day.
Won Global View
The U.S. market is in a Rally Attempt. The S&P 500 and Nasdaq gapped down below their respective 50-DMA, closing at the lows of the session. Despite very poor technical action, both indices remain above the October 3 low (S&P 500: 2,855; Nasdaq: 7,700), which keeps the current Rally Attempt intact. Therefore, a follow-through day can still shift the market into a Confirmed Uptrend, however, an undercut below those lows would result in the count resetting and the market moving back to a Downtrend.
