The Stoxx Europe 600 index traded relatively flat this week, with a loss of 0.02% through Thursday. The index continues to trade below its 50- DMA and, at this stage, we continue to believe that an Uptrend Under Pressure is appropriate. Also this week, Italy and Luxembourg saw a status downgrade to Uptrend Under Pressure from the earlier Confirmed Uptrend.
Author: Vinaya Kumar
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index lost 0.9%, falling from 10-WMA resistance. The index failed to build on a strong bounce from its 40-WMA last week, instead picking up back-to-back distribution days early in the week. The index is Under Pressure, 4% off 52-week highs, and has five distribution days in the past five weeks.
Global Focus Emerging Long
Mainland Chinese markets retook their respective 50-DMA, moving slightly higher this week, continuing strength after a shift back into a Confirmed Uptrend two weeks ago. The Shenzhen Composite picked up one distribution day, however, has just two over the past five weeks. If it is able to continue holding above the 50-DMA, the next level of resistance is the 200-DMA (1,977), which is still about 6% higher from weekly closing levels.
Global Focus Frontier Long
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The S&P 500 held its 21-DMA Friday avoiding distribution. The Nasdaq, however, picked up its third distribution day after multiple Technology ideas came under severe selling pressure. We will be looking for the Nasdaq and for individual Tech ideas to hold above Friday’s lows next week. Further downside in the Nasdaq will result in the index testing its 50-DMA at ~6057. We will remain positive on the market as long as the major averages and the majority of leadership ideas hold above their respective 50-DMAs.
European Focus Long
Solid gains across European markets on Friday helped them avoid closing lower for the week. On average the markets were flat. The central banks of France, Germany, and Italy raised their growth expectations for their respective countries for 2017 and 2018, igniting the rally. In addition, the fall in the pound following the U.K. elections caused the country to increase 1% on Friday, limiting the week’s loss to 0.3%. Switzerland lost 2.2% for the week and we changed its status to Under Pressure as it broke through the 50-DMA.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index lost 1.8%, closing just above 40-WMA support. The index is Under Pressure with four distribution days, and will likely be moved into a Downtrend if it breaks the long-term moving average next week. Energy and Financial sectors are weighing on the market, while smaller sectors including Consumer Cyclical and Health Care remain standouts.
Global Focus Emerging Long
Mainland Chinese markets had a follow-through day as the Shenzhen rose over 2% on Wednesday on heavy volume. The index is trading above the first level of resistance at the 21-DMA. Next level of resistance is the 50-DMA, 2% above current levels or near 1,900. The Shanghai also had a good week and is testing both the 50-DMA and 200-DMA. In the coming week we will be looking to monitor the Shenzhen closely as it makes it way to the 50-DMA. We believe a break above the 50-DMA would be a more significant sign of a change in trend.
Global Focus Frontier Long
US Focus Long
The U.S. market has been moved back into a Confirmed Uptrend. The S&P 500 broke into new highs Thursday after consolidating since March 1. Volume has been below average likely due to the holiday weekend, however, price action has been strong and leadership continues to act very well. Distribution also fell this week to just two days on the S&P 500. We will be looking for the rising 21-DMA to act as a shorter-term level of support should the market pull back.
