The Stoxx 600 made a clean break above resistance levels on Monday and continued to gain for the rest of week, except for a slight pullback on Wednesday. It was also trading lower Friday morning. As a result of Monday’s follow-through day, we recognize the start of a new uptrend. The index was up 1.67% this week as of Thursday’s closing price. There was strength across European markets, and we moved Portugal and Spain to a Rally Attempt on Tuesday and Luxembourg to a Rally Attempt on Wednesday. France and Germany are not far from changing to a Confirmed Uptrend. Notably, the U.K. has not been participating in this rally, and we moved the market to a Confirmed Downtrend on Thursday as it pulled back sharply after the Bank of England’s (BoE) monetary policy decision was announced.
Author: Vinaya Kumar
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index rose 0.29% this week and breached its 100-DMA. It is currently trading about 4% below 52- week highs. One distribution day was added this week. The index remains in Under Pressure.
Global Focus Emerging Long
Mainland Chinese markets advanced for a fifth consecutive week, led by the Shenzhen index, which gained 0.6% this week. The Shanghai index is trading near 52-week highs and 2% above its 10-WMA. One new distribution day was added this week, bringing the total count to two over the last five weeks. Both indices are trading above their 10- and 40- WMAs and remain in a Confirmed Uptrend.
Global Focus Frontier Long
US Focus Long
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.
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.
