The CSI 300 rose 0.12% this week on lower volume and remains in a Confirmed Uptrend with two distribution days. China’s infrastructure investment plans for 2020 and possible stimulus measures to boost the economy lifted market sentiment. Profits earned by China’s major industrial firms in November broke a three-month declining streak and grew at an eight-month high. The CSI 300 index was trading constructively above its 50-DMA with resistance at its previous high of ~4,067. We expect the index to consolidate around ~4,020, and the next support level lies at ~3,919. Nonferrous metals and building materials stocks (CMT.CN and BOY.CN on our Focus List) were leading this week. We advise investors to stay cautious and patient and wait for more details on the stimulus or further progress on the U.S.-China trade deal. Focus on stocks with decisive breakouts from solid bases or that bounce off key levels of support on volume.
Symbol: COM7.TH
Global Focus Emerging
The CSI 300 rose 1.69% this week on higher volume. We upgraded the market to a Confirmed Uptrend after Friday’s close as the CSI 300 broke above its 50-DMA and surged 1.98% on heavy volume. The distribution day count fell to three. After four days trending flat, the index surged Friday on news that the U.S. agreed to a phase-one trade deal with China and to delay tariffs that were slated to go into effect on December 15. China’s Annual Central Economic Work Conference concluded Thursday with signals of a looser economic policy, boosting sentiment. Most sectors gained this week, with Technology outperforming. Our conviction has increased and we recommend gradually adding positions in names with strong fundamentals and a good technical profile. Avoid chasing extended ideas. The CSI 300’s next support is at the 50-DMA at ~3,900 (-1.7%) and resistance is at 3,970–4,030.
Global Focus Emerging
The CSI 300 rose 1.9% this week on lower volume. The market remains in an Uptrend Under Pressure with four distribution days. China’s stronger-than-expected manufacturing November PMI data lifted investor sentiment and drove the rise this week. Most sectors gained and Technology stocks outperformed, which increases our conviction that the market could continue to rebound. However, Sino-U.S. trade talks remain volatile and the market is pausing as December 15 approaches, when the U.S. will impose more tariffs on Chinese goods. We advise investors to stay cautious and patient, waiting for more signals. The CSI 300 retook its 50- and 100-DMA. We see immediate support at ~3,850 (-1.3%), followed by 200-DMA support at ~3,800 (-2.6%). The index faces immediate resistance at the gap above (3,950, +1.2%). We expect the index to continue consolidating within the box and recommend focusing on leading names with strong growth outlook and potential benefits from policy stimulus. Avoid chasing extended ideas.
Market View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq made new all-time highs this week
as both continue to trend higher off their respective 10-DMA. Distribution remains low at two days each, with
one expiring on the S&P 500 next week. We expect the market to consolidate gains in the coming days given the
sharp move higher over this past week. Should that occur, look for underlying action among quality growth
ideas to remain constructive.
Nine of 11 sectors are trading above their respective 50-DMA, led by Health Care which was up 1.7% this week
after recently breaking into new all-time highs. Technology is also leading, trending into all-time highs similar to
the major averages. Energy and Utility continue to lag, both trading relatively flat on the week and still ~1% be-
low their 50-DMA. 159 of 197 industry groups and 72% of S&P 500 stocks are trading above their respective
50-DMA, improving from 141 and 67% last week, respectively. The best performing industry groups this week
include Biotech (
), Software (
), Internet Retail (
), Lodging (
), Apparel (
), and Home Fur-
nishings (
).
Global Focus Emerging
The CSI 300 dropped 0.55% this week on higher volume and added one distribution day, taking its total to four. The market remains in an Uptrend Under Pressure. China’s November industrial profit, announced Wednesday, widened to a record decline, dampening market sentiment. Ongoing China-U.S. trade negotiations also increased market volatility. Health Care and Staple stocks continued their weakness this week. Longtime leader Kweichow Moutai (
) incurred heavy selling pressure, raising concerns that the market trend may shift. Investors are advised to trim positions in the most extended ideas and watch stocks that are construction-related and could benefit from China’s fiscal and monetary stimulus. The CSI 300 broke below its 100-DMA and is testing immediate support at the 200-DMA (~3,800, +0.7%). If 200- DMA support fails, the next support is at August lows of ~3,575 (+7%). Investors may want to pay attention to China’s November manufacturing PMI, to be released Saturday.
Global Focus Emerging
The CSI 300 dropped 0.7% for the week on lower volume. The market was downgraded to an Uptrend Under Pressure with four distribution days. It rallied for the first two sessions of the week, boosted by China’s cut of its reverse repo rate, and then reversed course for a three-day losing streak, erasing previous gains. About 65% of stocks were below their 200- DMA and previously leading sectors now lag the market. The market is still very weak and faces pressure from factors like the U.S.-China trade deal uncertainty and a possible economic downturn. Furthermore, fund managers tend to cash in profits as the end of the year approaches, which we believe caused leading sectors such as Consumer Staple and Health Care to plunge. In our view, Friday’s correction was more technical. Investors are advised to take a wait-and-see approach, staying cautious and patient. Don’t be too pessimistic and avoid chasing highs. Trim positions on extended ideas. We see the CSI 300’s next support at the 200-DMA (~3,780) following its break of 100-DMA support. Consistent resistance lies at the gap above (~3,950).
Won Global View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq gapped up and sustained strength throughout Friday’s session as both indices are poised to trend higher. Short-term support is at the rising 21-DMA (S&P 500: 3,054; Nasdaq: 8,339).
Global Focus Emerging
The CSI 300 dropped 2.4% for the week on lower volume and remains in a Confirmed Uptrend with three distribution days. Disappointing economic and financial data released this week significantly subdued market confidence, and five consecutive sessions of below-average volume indicate very cautious sentiment. However, we have not seen a large-scale selloff, so we recommend a wait-and-see approach. The China-U.S. trade deal still remains uncertain. We expect the index to continue consolidating around 3,820–4,000. The CSI 300 lost 50-DMA support, with the next support at the 100-DMA (~3,850) and the next resistance at the gap above ~3,970. We will be watching to see if the Chinese government introduces more policies to boost the domestic economy. Investors are advised to stay patient and focus on ideas that have recently broken out with strong fundamentals. Avoid chasing highs.
Market View
U.S. Market
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to display constructive
technical action, consolidating near all-time highs with just one distribution day each. Support along the 21- and
50-DMA continues to rise toward current prices.
Global Focus Emerging
The CSI 300 rose 0.5% for the week on increased volume and remains in a Confirmed Uptrend with three distribution days. The market is in a weak rally, boosted by a surprising rate cut to medium-term lending facilities and new signs of progress on the Sino-U.S. trade deal. The CSI 300 tested the high of its previous rally (~4,000) but retreated due to uncertainty surrounding the tariff rollback. Recent disappointing economic data also deflated market confidence. Unless a significant catalyst emerges, we expect the index to continue consolidating around consistent resistance at 4,000. We hope it holds above Monday’s gap (~3,964), which serves as immediate support. The next strong support is at the 50-DMA. We remain cautiously optimistic. Investors are advised to stay patient and focus on selecting stocks that have recently broken out with strong fundamentals. Keep an eye on key economic and financial data to be released next week, including October CPI/PPI, industrial value added, and fixed asset investment growth.
