The U.S. market remains in a Rally Attempt.The S&P 500 and Nasdaq closed near the lows of yesterday’s session after failing to hold above their respective 50-DMA on Friday. Despite very poor technical action, both indices remain above the August 5 low (S&P 500: 2,822; Nasdaq: 7,662) 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 will result in the count resetting and the market status moving back to a Downtrend.
Author: Veera Manju
Won Europe Today
Yesterday,
- European markets closed in the red amid increasing U.S.-China trade war concerns after President Donald Trump dampened investors’ hopes of a possible resolution to the conflict. Investors also continue to keep a tab on the political developments in Italy.
- The Stoxx 600 opened strong but reversed early gains to end 0.31% down, amid concerns about slowing global economic growth. It breached its 200-DMA and has been downgraded to a Downtrend.
- Most of the sectors traded in the red, with Banks, Automobiles, and Financial Services among notable poor performers, while Chemicals led the gains.
- Among other major indices, France’s CAC and the U.K.’s FTSE were down more than 30bps on lower volume, while Germany’s DAX traded flat.
- Sweden was the only country to close in positive territory. There was a status change for six countries. Spain and Portugal were downgraded to a Downtrend while Finland, Norway, Austria, and Luxembourg were upgraded to a Rally Attempt.
Won Europe Today
We released our European Weekly summary on Friday (please click here to access the report).
Key points:
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Since we moved the Stoxx 600 (
) to an Uptrend Under Pressure on July 19, weakness has intensified. Several markets were downgraded this week after their key indices breached prior lows or undercut their main moving averages (50- and 200-DMA) with a rising number of distribution days. We now have a majority of markets in Europe in a Downtrend (13 out of 18) and the remaining in an Uptrend under Pressure.
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We do not recommend aggressively building positions in new names until the market resumes its uptrend. Momentum in Transportation, Staple, Technology, and Health Care continues to improve this week, while short-term momentum in Capital Equipment, Financial, and Energy has deteriorated further.
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Among focus list stocks Neoen (NEOP.FR; NEOEN:FP), Lonza Group (LONN.CH; LONN:SW), Cellnex Telecom (CLNX.ES; CLNX:SM), Elekta (ELKB.SE; EKTAB:SS), ASML (ASML.NL; ASML:NA), Edenred (EDEN.FR; EDEN:FP), and Mowi (MHG.NO; MOWI:NO) remain actionable.
Won Global View
The U.S. market is in a Rally Attempt.The S&P 500 and Nasdaq have held above the August 5 intraday low for four sessions. We are now looking for a follow-through day before shifting the market back into a Confirmed Uptrend or, conversely, an undercut of the lows (S&P 500: 2,822; Nasdaq: 7,662) before shifting the market back into a Downtrend. A follow-through day should feel like an explosive rally, with indices preferably 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. Positively, both indices closed off their lows Friday after finding support at their respective 100-DMA.
Won Global View
The U.S. market is now in a Rally Attempt. The S&P 500 and Nasdaq held Monday’s low for three sessions and are now testing their respective 50-DMA. It’s possible that Monday’s selloff was a shakeout rather than the beginning of a new sustained correction. However, before upgrading to a Confirmed Uptrend, we would like to see either index stage a follow-through day, which can occur as early as today. Looking back at recent action this year, we regained the 50-DMA on May 16 but did not stage a follow-through day and eventually rolled back over to new lows. A few weeks later, on June 7, we staged a follow-through day, regained the 50-DMA, held that level for several sessions, and eventually pushed back into all-time highs.
Won Europe Today
We 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 Ucb (UCB.BE; UCB:BB), Iss (ISS.DK; ISS:DC), Publicis Groupe (PUB.FR; PUB:FP), and Kingfisher (KGF.GB; KGF:LN).
Won Global View
The U.S. market is in a Downtrend. The S&P 500 and Nasdaq have now held above the August 5 intraday low (S&P 500: 2,822; Nasdaq: 7,662) for two sessions. Should these lows hold again today, the market status will move to a Rally Attempt and we will begin looking for a follow-through day as early as tomorrow. Conversely, if we undercut Monday’s lows, we stay or move back into a Downtrend, and both indices likely test support at their respective 200-DMA (S&P 500: 2,790; Nasdaq: 7,552).
Won Europe Today
Yesterday, most European markets closed in the green, after a three-day losing streak. Bayer (BAYNX.DE; BAYN:GR) and Lanxess’ (LXSX.DE; LXS:GR) deal to sell Currenta for $3.9B acted as a tailwind for markets, with the former jumping 6%. France’s CAC and Germany’s DAX were up 0.61% and 0.71%, respectively, on higher volume. The U.K.’s FTSE 100 gained 0.38% on lower volume.
- The Stoxx 600 gained 0.16%, with higher volume.
- Sectors that gained the most include Financial Services, Construction & Materials, and Travel & Leisure.
- Countries that closed in negative territory include Norway, Finland, Switzerland, Austria, Italy, and Luxembourg.
- We added a distribution day to Italy after it fell 0.45% with higher volume.
Won Global View
The U.S. market is in a Downtrend. The S&P 500 and Nasdaq bounced higher, albeit on lower than average volume, for the first time in seven sessions. Indices are poised to consolidate in a wide and loose fashion between resistance at the 50-DMA (S&P 500: 2,929; Nasdaq: 7,977) and support at the 200-DMA (S&P 500: 2,790; Nasdaq: 7,553).
Won Europe Today
Yesterday, European markets closed in the red, amid trade worries. Upbeat German data and a steady yuan were not enough to pull the market up. France’s CAC, Germany’s DAX, and the U.K.’s FTSE 100 were down 0.13%, 0.78%, and 0.72%, respectively, on lower volume.
- The Stoxx 600 dropped 0.42%, with lower volume.
- Sectors that lost the most include Financial Services, Chemicals, and Travel & Leisure.
- All countries except Denmark and Norway closed in negative territory.
- We changed the market status for the U.K., Sweden, Finland, Norway, Austria, Belgium, the Netherlands, and Luxembourg to a Downtrend after they breached all their respective DMAs with corresponding distribution days.
- We changed the status of Germany to a Downtrend after it breached its 200-DMA.
