As of Thursday this week, the Stoxx 600 was down 1.65% on a weekly basis. With no notable positive moves on high volume, the index has remained in a Rally Attempt since February 14, trading 1% from its 52-week low but more than 3% below its 50- and 200-DMA as of Thursday’s close. The bounce back in mid-February, post the low on February 9, has rapidly lost steam as volume has not been able to support this move. Another cause for this concern is the lack of new leadership, reflected by small number of stocks breaking out of constructive patterns.
Author: Vinaya Kumar
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index fell 1.26% this week. The index is trading 1.62% above its 40-WMA and is currently in an Uptrend Under Pressure.
Global Focus Emerging Long
Mainland China’s markets closed mixed this week. The Shenzhen ended the week with a 2.7% gain, compared with a 1.1% decline for the Shanghai. The markets continue to be in a Rally. The Shanghai is trading 1.5% below its 200-DMA (~3,298), while the Shenzhen closed 4.5% below its 200-DMA (~1,906). The 100- DMA (~1,922) continues to act as a strong resistance level for the Shenzhen.
Global Focus Frontier Long
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq moved back into all-time highs this week as distribution fell. There are now three distribution days on the S&P 500 and four on the Nasdaq. All three distribution days on the S&P 500 expire next week, while the Nasdaq loses one. The market continues to be led higher by value-oriented sectors, though Technology did retrace the majority of its pullback this week. We remain patient on new buys as quality leadership continues to consolidate. Most will enter their fourth week of consolidation next week.
European Focus Long
As of Thursday this week, the Stoxx 600 was down 0.09% compared with last Friday’s closing price. Following healthy gains on Tuesday, the index lost 0.24% on Wednesday and recorded an additional distribution day. At the end of the week, the index was down to four distribution days after two dropped off due to time. France and Germany were unable to hold above their respective 50-DMA, closing below them on Thursday. We moved Germany to an Uptrend Under Pressure after the index recorded its eighth distribution day Thursday. Switzerland, on the other hand, remains in a Confirmed Uptrend, and this week, the index reached its highest closing level since August 2015.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index gained 0.16% this week. The index is trading 3.99% above its 40-WMA at a 52-week high. It is in a Confirmed Uptrend.
Global Focus Emerging Long
After four consecutive weeks down, Mainland China markets gained about 0.5% this week. The market continues to be in an Uptrend Under Pressure. One new distribution day was added this week, taking the total count to six for the Shenzhen. Two distribution days are expected to drop off next week. The Shanghai Index has found support near its 40- WMA (~3,261), which it has not breached since June. For the Shenzhen, 1,845 should act as the next immediate support level. We recommend a cautious approach; avoid any fresh buying until market conditions improve.
Global Focus Frontier Long
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The Nasdaq and S&P 500 bounced back under heavy accumulation, after a minor sell-off to start the week, while the Russell 2000 jumped out of a nine-month consolidation. All indices broke out into all-time highs. Market strength is due to accumulation in Technology (Semis) and Transports and a re-emergence into Financials (Banks/Brokers). With the distribution day count falling to two days on the Nasdaq and S&P 500, we maintain a positive outlook as we head into Q4.
