The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq reversed from early session losses to close positive for a third straight session. The 10- and 21-DMA are both now curling higher and will act as near-term support in addition to their still declining 50- DMA (S&P 500: 3,920; Nasdaq: 11,495) should the market pull back. The distribution day count remains at four and three, respectively.
Author: Vidhya M
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 include GBL New
(GBLN.BE; GBLB:BB), Eiffage (FGR.FR; FGR:FP), Aena Sme (AENA.ES; AENA:SM), Mowi (MHG.NO; MOWI:NO), and
BE Semiconductor (BESI.NL; BESI:NA)
Won Europe Today
Yesterday,
- European markets declined after three consecutive days of closing in the green, reversing early gains ahead of the
ECB’s meeting on Thursday. This was driven by concerns about corporate earnings, energy issues with Russia,
and a looming economic slowdown. The market has priced in a 25bps price hike by the ECB, its first in over 11
years. U.K.’s inflation continues to persist, reaching a 40-year high of 9.4% y/y in June. As the ECB’s decision will
drive market sentiment, we recommend a cautious approach to adding risk but becoming more incremental with
risk is encouraged. Focus on high relative strength ideas that are part of leading and/or improving industry groups. - The Stoxx 600 corrected 21bps, recording a distribution day, while continuing to form the right side of a stage-one
14-week-long flat base. It is testing resistance at its declining 50-DMA and is 9% below the pivot. Performance
across sectors was mixed as some sectors such as Auto, Health Care, and Banking declined 95bps, 83bps, and
83bps, respectively, while other sectors such as Technology, Travel, and Oil gained 206bps, 86bps, and 54bps,
respectively. Among other major indices, France’s CAC, Germany’s DAX, and the U.K.’s FTSE all closed in the red,
retreating 27bps, 20bps, and 44bps, respectively. While the CAC and FTSE are testing support at their 50-DMA, the
DAX is still trading below its key support levels. - Among the 17 indices we track in Europe, five closed in the green while the remaining 12 closed in the red. With no
change in market condition, we currently have eight indices in a Confirmed Uptrend, four indices in an Uptrend
Under Pressure, and five in a Rally Attempt. The distribution day count currently stands at 2.4. - Actionable names in the Focus List are AstraZeneca (AZN.GB; AZN:LN), Compass Group (CPG.GB; CPG:LN), Edp
Renovaveis (EDPR.PT; EDPR:PL), Man Group (EMG.GB; EMG:LN), Neoen (NEOP.FR; NEOEN:FP), Novo Nordisk
(NON.DK; NOVOB:DC), Serco Group (SRP.GB; SRP:LN), and Wolters Kluwer (WSG.NL; WKL:NA)
Won Global View
The U.S. market has shifted back to a Confirmed Uptrend. The S&P 500 and Nasdaq tacked on gains above support at their declining 50-DMA (S&P 500: 3,919; Nasdaq: 11,486). We will monitor if indices can continue to consolidate above this new level of support. The distribution day count stands at four and three, respectively.
O’Neil Capital Equipment Sector Weekly
Iron Mountain (IRM) – $13B market cap; $74M ADV: We removed Iron Mountain from the U.S. Focus List as the stock has come under selling pressure in the past few weeks. It has
declined 23% from its 52-week high and is trading below its key moving averages. Iron Mountain is the global market leader in the physical ecosystem of information storage/retrieval and is
well-positioned to benefit from organic storage rental revenue, reflecting continued strength in pricing combined with positive volume trends. We would like to revisit the stock on technical
improvement. Fundamental & Technical note
Won Europe Today
We released our European Weekly Summary yesterday. Click here to access the report. Key points from it include:
- Softer energy prices are providing support to European markets. The Stoxx 600 was shifted to an Uptrend Under
Pressure following its Wednesday’s close. Friday’s move has brought major indices back to the upper end of the
consolidation range built in the last four weeks. Investors look ahead to upcoming earnings that will offer insight into
corporate resilience amid current economic headwinds. - We want to see major indices hold current levels and retake their short-term moving averages for a structural
change. There are many levels of overhead resistance going ahead. - The sectoral Rotation Charts howed improvement in their short-term momentum, while Energy, Basic Material, and
Transportation continue to lag in the short term (over four weeks).
Won Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq closed lower after staging a downside reversal and giving back early session gains. The S&P 500 faded off the ~3,900 level while the Nasdaq failed to sustain a brief intraday move above its 50-DMA. Both indices closed near session lows as the Nasdaq picked up a distribution day. The distribution count stands at four on the S&P 500 and three on the Nasdaq.
Won Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq rallied Friday to partially retrace early week losses and regain their respective 10- and 21-DMA. Despite the move, both indices remain below primary resistance at their rolling 50-DMA (S&P 500: 3,937; Nasdaq: 11,535). The distribution day count increased to four and two, respectively.
Won Europe Today
On Friday,
- European markets climbed higher ahead of the European Central Bank’s (ECB) policy meeting this week. Although
the ECB has not yet raised interest rates unlike its peers, persistent surging inflation in the region will likely push it
to increase rates by 25bps. It will be the first hike from the bank in nearly a decade. We continue to recommend a
cautious approach to adding risk. Remain defensive with a focus on high relative strength ideas that are part of
leading and/or improving industry groups. - The Stoxx 600 climbed 179bps while continuing to form the right side of a stage-one 13-week-long flat base, trading
below key support levels and 11% below the pivot. While the gains were broad across most sectors, Auto,
Technology, and Healthcare have led the rally with 398bps, 277bps, and 243bps, respectively. Among other major
indices, France’s CAC, Germany’s DAX, and the U.K.’s FTSE all closed sharply in the green, climbing 204bps,
276bps, and 169bps, respectively. - Among the 17 indices we track in Europe, all closed in the green. With three indices being upgraded to a Confirmed
Uptrend, we currently have five indices in a Confirmed Uptrend, six indices in an Uptrend Under Pressure, two in a
Rally Attempt and four in a Downtrend. The average distribution day count currently stands at 2.6. - Actionable names in the Focus List are AstraZeneca (AZN.GB; AZN:LN), Compass Group (CPG.GB; CPG:LN), Edp
Renovaveis (EDPR.PT; EDPR:PL), Man Group (EMG.GB; EMG:LN), Neoen (NEOP.FR; NEOEN:FP), and Novo
Nordisk (NON.DK; NOVOB:DC).
Won Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq staged upside reversals, closing relatively flat on the session. Both remain below all key moving averages, including the sharply rolling 50-DMA (S&P 500: 3,943; Nasdaq: 11,558). The distribution day count increased to four and two, respectively, with three in the last four sessions on the S&P 500.
