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 under weighted as they may be
vulnerable to further downside risk and underperformance. European names highlighted this week include Ferrovial
(FERC.ES; FER:SM), Abb (ABBN.CH; ABBN:SW), WPP (WPP.GB; WPP:LN), Boss (Hugo) (Xet) (BOSSX.DE;
BOSS:GR), Whitbread (WTB.GB; WTB:LN), Davide Campari Milano (CPR.IT; CPR:IM), Investor AB (ISBF.SE;
INVEB:SS), Orion B (ORNB.FI; ORNBV:FH), and Scout24 (G24X.DE; G24:GR).
Author: Vidhya M
Won Global View
The U.S. market has shifted to an Uptrend Under Pressure. Indices gapped down ~4%, undercutting the low of Tuesday’s followthrough day (S&P 500: 4,033, Nasdaq:11,754) and closing at the bottom of the session’s range. The next level of support is the low of the rally (S&P 500: 3,858, Nasdaq:11,108) and, if breached, would cause us to shift the status to a Downtrend.
WON Europe Today
We released our European Weekly Summary yesterday. Click here to access the report. Key points from it include:
- The Stoxx 600 was shifted to a Rally Attempt on Tuesday. The index has held above last week’s lows for more than
three days. While the index did not stage a follow-through day so far, price progression since May 9 lows has been
very constructive with momentum rising toward growth sectors (Transportation, Retail, Technology, and Consumer
Cyclical). - While several markets, including France, Germany, Spain, Austria, and Finland, had a follow-through day yesterday
and thus were moved to a Confirmed Uptrend, we continue to recommend taking a patient approach to add risk as
the breadth remains very narrow. And given the severe correction across growth stocks, few ideas are currently in
a position to buy. - Rising short-term momentum continues to be concentrated in defensive sectors (Staple and Utility).
Focus List Update: Verbio Ver. (Xet) Bioenergie (VBKX.DE; VBK:GR) and Verbund (VERB.AT; VER:AV) were
removed last week.
O’Neil Capital Equipment Sector Weekly
Honeywell (HON; $133B market cap; $669M ADV) develops and commercializes technologies for applications in the commercial aerospace, defense, industrial, energy, automation, and other markets. Its products and services include significant technology and software content and are organized in four segments: aerospace (32% of revenue), Honeywell building technologies (16%), performance materials and technologies (29%), and safety and productivity solutions (23%).
Won Global View
The U.S. market has been upgraded to a Confirmed Uptrend. The S&P 500 and Nasdaq staged a day four follow-through, rising 2% and 2.7%, respectively, in higher day/day volume. Both cleared above their respective 10-DMA (S&P 500: 4,059; Nasdaq: 11,917), which will now serve as near-term support before year-to-date lows. The 21-DMA (S&P 500: 4,146; Nasdaq: 12,321) is the next level of logical resistance before the sharply falling 50-DMA.
WON Europe Today
Yesterday,
- European markets advanced amid cheap valuations and optimism over China’s easing of lockdowns. We
recommend a cautious view on the overall market. With leadership still narrow, focusing on relative strength
remains the core strategy in the current environment. Continue to focus on ideas showing high relative strength
while reducing exposure to lagging ideas. - The Stoxx 600 ended in the green, advancing 1.2% on average volume. After retaking its 10-DMA, it is facing
resistance at its 21- and 50-DMA. It sits10% off highs and 4.6% below its 200-DMA. Most sectors were in the green.
Tech and Miners outperformed. - Among major indices, France’s CAC is finding resistance at its 50-DMA after retaking its 21-DMA while Germany’s
DAX has retaken its 21- and 50-DMA. The U.K.’s FTSE is trading above its key moving averages. - Among the 17 indices we cover, all closed in the green with Austria advancing the most, up 2.3%. Austria, Finland,
France, Germany, Ireland, and Spain were shifted to a Confirmed Uptrend after their follow-through days. Norway,
Switzerland, and the U.K. were shifted to a Rally Attempt from a Downtrend. One index is in an Uptrend Under
Pressure, six in a Confirmed Uptrend, nine in a Rally Attempt, and one in a Downtrend. - Actionable names in the Focus List include Aker Bp (AKEP.NO; AKRBP:NO), GlaxoSmithKline (GSK.GB; GSK:LN),
Ipsos (IPS.FR; IPS:FP), Novo Nordisk (NON.DK; NOVOB:DC), and Compass Group (CPG.GB; CPG:LN).
Won Europe Today
Yesterday,
- European markets managed to hold their recent lows made on May 12 for the third consecutive day. Hence, most of the major indices have been shifted to a Rally Attempt. The indices have multiple levels of resistance to clear before we can turn constructive on the markets. Thus, we continue to recommend that investors be cautious and avoid adding any new risk.
- The Stoxx 600, France’s CAC, and Germany’s DAX have been shifted to a Rally Attempt while the U.K.’s FTSE 100 is awaiting a follow-through day. DAX is finding supply at its declining 50-DMA while the U.K.’s FTSE 100 is facing supply at its declining 21-DMA. Among sectors, Basic Resources led the bulls, gaining 1.5%, while Technology stocks lost more than 1%.
- Among the 17 major indices that we track in Europe, France, Germany, Sweden, Ireland, and Italy closed in the red. Actionable names in the Focus List include Aker Bp (AKEP.NO; AKRBP:NO), Glaxosmithkline (GSK.GB; GSK:LN), Ipsos (IPS.FR; IPS:FP),and Compass Group (CPG.GB; CPG:LN).
Won Global View
The U.S. market has shifted to a Rally Attempt. The S&P 500 and Nasdaq have held above last week’s lows (S&P 500: 3,858; Nasdaq: 11,108) for three days. A follow-through day (+1.7% in volume above the prior day) above these lows will lead us to upgrade the market back to a Confirmed Uptrend. Near-term resistance is at the 10-DMA (S&P 500: 4,057, Nasdaq: 11,927) and 21-DMA (S&P 500: 4,154, Nasdaq: 12,366). Conversely, an undercut of Thursday’s lows and the market status moves back to a Downtrend.
U.S. Economic Summary
Q1 cDP contracted 1.5%, missing consensus: The UsSs economy contracted 1s5% in Q1, according to the
second estimate, missing consensus of a decline of 1s3% and 10bps below preliminary estimatess The
decrease in real GDP reflected decreases in private inventory investments, exports, federal government
spending, and state and local government spending, while imports, which are deducted to calculate GDP, increaseds Personal consumption expenditures (PCE), nonresidential fixed investments, and
residential fixed investments increaseds
Won Global View
The U.S. market remains in a Downtrend. The S&P 500 and Nasdaq closed relatively flat after making new lows earlier in the session. Though both indices have become near-term extended versus short- and long-term moving averages, neither has been able to sustain a move higher. Support on the S&P 500 is ~3,850, while support on the Nasdaq is ~10,800. Resistance remains the sharply falling 10-DMA (S&P 500: 4,070; Nasdaq: 11,996) and 21-DMA (S&P 500: 4,180; Nasdaq: 12,488).
