The U.S. market remains in a Confirmed Uptrend. Volume remains light, but leadership continues to act well and distribution remains muted. There is a heavy dose of earnings hitting the market next week that will drive market direction going forward. We are looking for short-term support along the 21-DMA to hold on both the S&P 500 and Nasdaq should we get a pullback.
Author: Vinaya Kumar
European Focus Long
The Stoxx Europe 600 index is finding resistance near its 50- DMA. It failed to hold on to last week’s momentum and, as of Thursday’s close, it had lost 0.72% for the week. This week also saw a few status downgrades: Ireland, Spain, and Sweden were moved to a Confirmed Downtrend. While we have France in a Confirmed Uptrend, the index looks unable to retake its 50-DMA, and we would advise caution at this stage.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index fell 0.6%, continuing to consolidate about 3% below 52-week highs. The index remains in an Uptrend Under Pressure and has six distribution days in the past five weeks. We will continue watching the 50-DMA level closely as the index has failed in its two previous attempts to retake it. It closed just slightly under it to end this week.
Global Focus Emerging Long
Mainland Chinese markets finished mixed this week. The Shanghai closed up 0.5% due to a capital injection by the government, while the Shenzhen fell 1.9%. Markets fell on Monday on news that the government will continue to crack down on violations of security laws/ regulations and rein in excessive debt. We believe this is good for longterm stability, but we downgraded the Chinese market to Downtrend. We believe constructive APAC markets such as Hong Kong should be focused on.
Global Focus Frontier Long
US Focus Long
The U.S. market remains in an Uptrend Under Pressure. Distribution stands at four and seven days on the S&P 500 and Nasdaq, respectively. One day will expire on the S&P 500 and two on the Nasdaq next week. The Nasdaq continues to show concerning technical action, now living beneath its 50-DMA for six straight sessions. In order to get more constructive, we will need a sustained close above this level of resistance as distribution falls to a less concerning level. Until then, we maintain our cautious stance on the general market.
European Focus Long
After a volatile week last week, the Stoxx Europe 600 index is heading for a relatively flat week, with a gain of 0.28% as of Thursday’s close. A Rally Attempt for the index failed on Thursday as it breached July 3’s low. The index continues to trade below its 50-DMA and remains in a Confirmed Downtrend. We moved Norway from a Confirmed Downtrend to a Rally Attempt.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index lost 0.3%, continuing to trade in a back-and-forth fashion. The index rose through Thursday but fell 0.9% on Friday, picking up its seventh distribution day in the past five weeks. The index remains Under Pressure, unable to break above 50-DMA resistance (5,814). Support is 0.6% lower at its 200-DMA (5,704).
Global Focus Emerging Long
Mainland Chinese markets continued higher for another consecutive week as both the Shenzhen and Shanghai are trading above their respective 10-WMA. The Shanghai is also trading above the 40-WMA while the Shenzhen is about 2% below it. Next resistance for the Shenzhen could be at the 40-WMA, suggesting more upside in the near-term. Both indices remain in a Confirmed Uptrend with two distribution days each in the trailing five weeks.
