The U.S. market remains in an Uptrend Under Pressure. Next week, three distribution days will expire on the Nasdaq and two on the S&P 500. We are still looking for a heavy volume break into new highs before upgrading the market status. Conversely, if the market trades lower, we view the 100-DMA as a key level of support.
Author: Vinaya Kumar
European Focus Long
The Stoxx 600 index remains in a Rally Attempt and is headed for a weekly loss of about 0.18%. The index continues to be unable to break above its 10-WMA at this time. We see the index as at a critical level, where it could have a follow-through day and a break above resistance or it could continue its downward trend. We saw a number of distribution days this week, notably for Italy, Denmark, and the U.K., which saw two distribution days each. We also downgraded Spain, Portugal, and Luxembourg to a Confirmed Downtrend this week.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index declined 0.81% this week. It breached its 50-DMA and is currently trading 4% below its 52-week high. Two distribution days were added this week, increasing the total to six. The index remains Under Pressure.
Global Focus Emerging Long
Mainland Chinese markets advanced for a fourth consecutive week led by the Shenzhen index, which gained 1% this week. The Shanghai index continues to trade more constructively than the Shenzhen index, trading near 52-week highs and 3% above its 10-WMA. The strength of the index is evident from just one distribution day in the last five weeks. Both the indices are trading above their 10-WMA and 40-WMA and remain in a Confirmed Rally.
Global Focus Frontier Long
US Focus Long
The U.S. market has been downgraded to an Uptrend Under Pressure. On Thursday, the Nasdaq closed below its 50-DMA, picking up its sixth distribution day in 11 sessions. By comparison, when we downgraded the market on June 29, the Nasdaq had six distribution days in 18 sessions. We recommend a cautious approach as multiple leading ideas are now trading below their respective 50-DMAs, and no distribution will expire for over three weeks.
European Focus Long
It was a rough week for the European markets, with the Stoxx 600 down 1.69% on a weekly basis at Thursday’s close and heading toward further losses on Friday. We moved the index back to a Confirmed Downtrend on Thursday. We also moved Ireland and Sweden to a Confirmed Downtrend and Portugal to a Rally Attempt. We may also be moving Austria to an Uptrend Under Pressure after the close today.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index declined 0.52% this week. Today it plunged 1.15%, breaching its 50-DMA and marking its fifth distribution day. It is trading about 4.5% below 52-week highs and remains Under Pressure.
Global Focus Emerging Long
Mainland Chinese markets fell for a second consecutive week. The benchmark indices lost nearly 1.6% on Friday due to growing geopolitical tensions. The Shenzhen index is finding resistance at the 100-DMA (~1,891), while the Shanghai is holding above the 100-DMA (~3,202). The Shenzhen has continued to look weak this year, failing to break its downward trend since December 2016, down nearly 6% YTD. Near-term support could be 3% lower from current levels or 1,784. Both indices remain in a Rally Attempt.
