Symbol: CMT.CN

The CSI 300 gained 1.43% for the week on higher volume. The market remains in a Confirmed Uptrend with four distribution days. The block-chain stimuli did not last long and market sentiment was still impacted by increased downward pressure on the economy. China’s manufacturing PMI declined to 49.3% in October, the sixth straight month that factory activities shrank. As Q3 earnings season ends, we expect market volatility to subside in the near term. The decreasing distribution day count has also boosted our conviction. We are cautiously optimistic and expect the CSI 300 to continue trading sideways above its 50-DMA, which serves as strong support. We look for the next resistance at previous highs of ~3,980. Investors are advised to stay patient and focus on ideas that have recently broken out with strong fundamentals.

The CSI 300 rose 0.7% for the week on lower volume and remains in a Confirmed Uptrend with six distribution days. The market is struggling and risk preference remains low. As Sino-U.S. trade tensions ease and the market gradually reaches a consensus about economic slowdown, Q3 earnings have come into focus. Ideas that reported stronger-than-expected earnings generally outperformed its index or sector, such as Focus List name Jiangsu Hengrui Medicine (JHM.CN, 600276.CH) and Luxshare Precision Industry (SLP.CN, 002475.CH), not on our Focus List. As the market enters the final earnings week, we advise focusing on individual ideas with strong earnings performance and less on index direction. We see the CSI 300’s next immediate support at the 50-DMA with strong resistance at ~3,980. With the important party meeting next week, we will watch for any favorable signals. Investors are advised to stay patient.

The CSI 300 declined 1.1% for the week on above 10-week average volume. The market remains in a Confirmed Uptrend. Its distribution day count increased by one, taking its total count to six. Market volatility increased with a crowd of important news or data this week. Bullish news that trade negotiations had made substantial progress was not enough to boost the market up. China’s better-than-expected September financial data pulled the index up temporarily before it extended losses on disappointing economic data, including Friday’s news of lower-than-expected Q3 GDP growth. The cautious and risk averse sentiment has largely risen as it is believed that downward pressure on China’s economy has increased. The beginning of corporate third quarter results also hit optimism overall to some degree. We expect the CSI 300 to consolidate in the near term and face next support at its 50-DMA (+1.0%). We would like to see an increase in distribution days or an undercut of key support before downgrading the market condition. We continue to recommend a selective approach to increasing risk while staying cautious. Earnings are the key catalyst in individual ideas, therefore investors are advised to focus on stocks whose earnings may beat expectations. Avoid chasing highs.

The CSI 300 rose 2.6% for the week as market reopened after the long holiday. The market remains in a Confirmed Uptrend with five distribution days. Our conviction increased as the index rebounded after hitting a new low and had a three-day gaining streak. We believe the 50-DMA is providing effective support. Even so, volume has been lower than average, indicating cautious sentiment due to uncertainties around Sino-U.S. trade talks that began Thursday; the market has been cautiously optimistic. As we approach Q3 earnings, investors are focusing more on the domestic. We see the CSI 300’s next support at its 50-DMA (~3,800) and immediate resistance at September highs (~4,000). We reiterate the importance of heavy trading volume to confirm a strong rally. Until then, investors are advised to stay patient and focus on leading stocks that have good earnings estimates and have recently broken out.