The Stoxx Europe 600 index continues to look weak, with losses on Thursday and Friday negating the positive momentum seen on Tuesday and Wednesday. The index was largely driven by corporate earnings announcements for Q2 2017, as the bulk of corporate earnings for the June quarter were announced this week. We moved the Stoxx 600 index to a Rally Attempt this week but reversed it back to a Confirmed Downtrend following Friday’s weakness. We also moved Finland to a Confirmed Downtrend from the earlier Under Pressure. Ireland and Spain were moved to a Rally Attempt.
Author: Vinaya Kumar
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index fell 0.3%, continuing to consolidate about 3% below 52-week highs. The index was up for the bulk of the week but fell 1.3% on Friday, failing to hold a retake of its 50-DMA. The index remains in an Uptrend Under Pressure and has five distribution days in the past five weeks. We will continue watching the 50-DMA closely as the stock has failed to hold the level three times after breaking above it.
Global Focus Emerging Long
The market is testing resistance at the 10-WMA. The Shanghai continues to trade more constructively than the Shenzhen, trading 1% from 52- week highs. Chinese markets are in a Rally Attempt and we are now waiting to see if they have a follow-through day.
Global Focus Frontier Long
US Focus Long
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.
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.
