The U.S. market is in an Uptrend Under Pressure. The S&P 500 and Nasdaq broke sharply below a two-week trading range and 21- DMA support (S&P 500: 4,073; Nasdaq: 11,930) Thursday, before gapping down below the May 26 follow-through day low Friday. The distribution day count increased to three each. The market will be downgraded to a Downtrend should year-to-date lows (S&P 500: 3,810; Nasdaq: 11,035) undercut.
Author: Vidhya M
Won Europe Today
On Friday,
European markets declined significantly with almost all indices recording a distribution day. The rally since May 10
seems to have faded after hitting resistance at key resistance levels. We recommend that investors be very
cautious while adding any new risk.
The Stoxx 600 declined 2.7%, recording its sixth distribution day. The index continues to slide after finding supply at
its declining 50-DMA. Next major support is at its May lows (1.2% from the current price level). Almost all sectors
closed in negative territory.
Among other major bourses, France’s CAC and Germany’s DAX recorded their fifth and seventh distribution day,
respectively. Both indices continue to slide after finding resistance at their respective 100-DMA price levels. DAX
was shifted to an Uptrend Under Pressure after yesterday’s move. The U.K.’s FTSE was shifted to a Downtrend
after the index breached all its key support levels.
All the 17 indices that we track in Europe closed in the red, with 11 recording a distribution day. Italy, Spain, and
Norway were shifted to an Uptrend Under Pressure, while Belgium and the U.K. were shifted to a Downtrend.
Actionable names in the Focus List include the Compass Group (CPG.GB; CPG:LN), Man Group (EMG.GB;
EMG:LN), and RWE (Xet) (RWEX.DE; RWE:GR).
Won Global View
The U.S. market has shifted to an Uptrend Under Pressure. The S&P 500 and Nasdaq broke the lows of a two-week trading range in higher volume, closing below 21-DMA support (S&P 500: 4,091; Nasdaq: 11,989), which now act as near-term resistance. The distribution day count increased to two and three, respectively, with the Nasdaq picking up back-to-back days.
Won Europe Today
We released our Weekly Global Laggards Report today. 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 Relx (REL.GB;
REL:LN), Smith & Nephew (SN.GB; SN/:LN), Tesco (TSCO.GB; TSCO:LN), Sage Group (SGE.GB; SGE:LN),
and Rightmove (RMV.GB; RMV:LN).
Won Global View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq pulled back but held above 21-DMA support (S&P 500: 4,097; Nasdaq: 12,012). The Nasdaq picked up a distribution day in the process, increasing the count to two days, while the S&P 500remains at one.
Won Europe Today
Yesterday,
- European markets closed in the red ahead of the European Central Bank’s possible rate hike announcement to control inflation during its meeting on Thursday. Concerns remain around the U.S. inflation data, which will be released on Friday along with University of Michigan’s consumer sentiment index. As breakouts are limited and technicals are weak outside of top names in Energy, Transportation, and Utility, we recommend that investors remain cautious, focus on relative strength when adding names breaking out of bases, and reduce risk in ideas breaking below their logical levels of support.
- The Stoxx 600 declined 57 bps with Utility, Banking, and Mining declining 1.2%, 0.9%, and 1.2%, respectively, while Technology, Auto, and Oil & Gas gained by 0.7%, 0.6%, and 0.6%, respectively. The index is forming the right side of a stage one 23-week-long consolidation and is trading 10% below the pivot and off highs, testing support at its 21-DMA. Among other major indices, France’s CAC declined 80bps, breached its 50-DMA and is testing support at its 21-DMA. Germany’s DAX declined 76bps and breached its 100-DMA while the U.K.’s FTSE is trading above its key support levels after declining slightly by 8bps.
- Among the 17 indices we track in Europe, three closed in the green while the remaining fourteen closed in the red. Fifteen indices continue in a Confirmed Uptrend while Belgium and Luxembourg are in a Rally Attempt. With Europe, France, Germany, and Switzerland each recording a distribution day, the average count has increased to 2.3.
- Actionable names in the Focus List include the Compass Group (CPG.GB; CPG:LN), Man Group (EMG.GB; EMG:LN), Rwe (Xet) (RWEX.DE; RWE:GR), and Solaria Energia (SEM.ES; SLR:SM).
Won Global View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq staged upside reversals from 21-DMA support (S&P 500: 4,096; Nasdaq: 12,005) in below average volume, remaining within a seven-day range. Resistance remains the rolling 50-DMA (S&P 500: 4,234; Nasdaq: 12,690), which is steadily falling toward current prices. The distribution day count remains at one day each.
Won Europe Today
Yesterday,
European markets closed in the red on concerns regarding economic slowdown in Germany, Europe’s largest
economy, and rising oil prices. The European central bank might announce rate hikes to control inflation during its
meeting on Thursday. Concerns remain around the U.S. inflation data, which will be released on Friday, and
investors continue to monitor the reopening in China. As breakouts are limited and technicals are weak outside of
top names in Energy, Transportation, and Utilities, we recommend that investors remain cautious, focus on relative
strength when adding names breaking out of bases, and reduce risk in ideas breaking below their logical levels of
support.
The Stoxx 600 fell 28bps, with Oil and Mining gaining 1.3% each, while Technology, Auto, and Banking sectors
declined 1.1%, 0.8%, and 0.7%, respectively. The index is forming the right side of a stage-one 23-week
consolidation and trading 9% below the pivot and off highs. Among other major indices, France’s CAC gained
74bps and is testing support at its declining 50-DMA. Germany’s DAX and the U.K.’s FTSE are trading above their
key support levels, with the DAX and FTSE declining 66bps and 12bps, respectively.
Among the 17 indices we track in Europe, six closed in the green, while the remaining 11 closed in the red. Fifteen
indices continue in a Confirmed Uptrend, while Belgium and Luxembourg are in a Rally Attempt. With seven indices
recording a distribution day, the average distribution day count has increased to 2.
Actionable names in the Focus List include the Compass Group (CPG.GB; CPG:LN), Man Group (EMG.GB;
EMG:LN), and Rwe (Xet) (RWEX.DE; RWE:GR).
Won Global View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq closed near the bottom of the session’s range after a strong open. Indices continue to consolidate above 21-DMA support (S&P 500: 4,089; Nasdaq: 11,988). The distribution day count remains low, with one day on each index.
Won Europe Today
We released our European Weekly Summary yesterday. Click here to access the report. Key points from it include:
The Stoxx 600 is in a Confirmed Uptrend after having a follow-through day (FTD) on May 24. The majors initially
climbed higher but continued to face selling pressure during the latter part of the week.
The concerns regarding high inflation, economic health, and war remain in the backdrop. Sectors were mixed last
week, with beaten-down sectors such as Retail and Consumer Cyclical leading the gains.
On our rotation chart, Utility and Energy showed improving short-term momentum (over four weeks). Technology,
Consumer Cyclical, and Retail stocks continue to show weak trends in short-term momentum (over four weeks).
