Australia’s ASX All Ordinaries Index increased 0.64% this week. The index is trading 0.6% below its 40-WMA and is currently in a Rally Attempt.
Symbol: NXT.AU
Global Focus Developed Long
Australia’s ASX All Ordinaries Index increased 0.31% this week. The index is trading 1.17% below its 40-WMA and is currently in a Downtrend.
Global Focus Developed Long
Australia’s ASX All Ordinaries Index fell 1.01% from Monday
through Thursday. On March 26, the index breached its 200-
DMA, and we changed the market condition to a Confirmed
Downtrend. The index is trading 1.40% below its 40-WMA
Global Technology Sector — Hardware
Expect Growth to Moderate in 2018 After a Strong 2016–2017
Although the semiconductor industry will continue to experience growth on an absolute basis this year, it is expected to grow at a more moderate pace than in recent years. Global semiconductor revenue is forecast to hit $451B in 2018, an increase of 7.5% y/y. For reference, worldwide semiconductor sales advanced approximately 22% y/y in 2017, and were up 3% in 2016. The most recent 2018 forecast was significantly revised up from previous expectations of 4% y/y growth. An improved outlook for the memory sector accounted for 83% of this revision. According to Gartner, supply/demand imbalances in the memory market experienced in the latter part of 2016 and in 2017 will continue to drive semiconductor revenue higher this year, which is particularly true for DRAM memory chips. Excluding memory, the semiconductor industry is expected to grow 4.6% this year, versus 9.4% in 2017. Growth is forecasted to be driven by rising demand for field-programmable gate array (FPGA), application- specific integrated circuits (ASICs), opto-electronics, and sensors.
Global Focus Developed Long
Australia’s ASX All Ordinaries Index plunged 6.70% this week. The index is trading 0.37% below its 40-WMA. It is currently in an Uptrend Under Pressure.
APAC Weekly Summary
Despite downgrades of two Southeast Asian markets over the trailing week, the positives seem to still outweigh the negatives in the APAC region. Average distribution days have declined for the second week and pressure seems to be more narrow and specific to individual markets rather than the broader selloff we witnessed back in February. A majority of markets are also in Uptrend and the MSCI Asia is still holding above the 50‐DMA constructively. In the weaker major markets, specifically Japan and India, we are still noticing pockets of strength. Overall, we believe action remains mostly constructive and in the near term, we are waiting for accumulation volume to return which would be confirmation for a more bullish sentiment in our view.
This week, we reiterate the pressure we are noticing in Southeast Asian markets with the downgrade of the Philippines and Indonesia. In our Sector Rotation, much of what we mentioned in recent weeks has not changed. We continue to notice leadership in Health Care and a resurgence in Technology (mentioned last week). Elsewhere, we are noticing some improvement in Retail. While the Cyclical sector has lost some momentum in recent weeks, Retail has seemed to take its place and is rising in the short term. Last, we highlight Zhongsheng Group (ZSG.HK; 881: HK) which is actionable on our Focus List.
Market View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 remains above its 50-DMA, while the Nasdaq is still trad-ing just 2% off all-time highs. Leading ideas across Technology continue to act well, though the majority is now well extend-ed from ideal pivot points. We are looking for leadership to broaden over the next week as Technology consolidates these gains.
Stocks on our U.S. Focus List: Current Sentiment
By Sector
Technology continues to outperform, led by Software, Internet Content, and Semiconductors. Most USFL ideas are extended and will need to consolidate over the next several weeks, including RNG , GRUB , ADBE , CRM , RHT , NOW, and PAYC . Health Care ideas across the USFL remain strong, with five of our eight names ( ILMN , EW , VRTX , IDXX , ABMD ) hitting new all-time highs this week. Financial ideas are also acting well, led by Payment Processors SQ, PYPL , GPN , and WP. Banks ( MS , SIVB ) are also holding up well and Brokers ( SCHW ) remain under accumulation. Conversely, Energy ideas remain weak. NEP and CDEV are still trading well off highs, while FANG remains a leader within the sector, but still 7% off highs.
New Ideas or Deletions
We added Calavo Growers ( CVGW ) and removed Blue Buffalo Pet Prods ( BUFF ) , Essent Group ( ESNT ) , and Noble Midstream Prtns ( NBLX ) from the U.S. Focus List this week.
Global Focus Developed Long
Australia’s ASX All Ordinaries Index declined 0.23% this week. The index is trading 1.85% above its 40-WMA. It is currently in an Uptrend Under Pressure.
APAC Weekly Summary
Since last week the MSCI Asia has found its way back above the 50‐DMA, continuing to be volatile in both directions. The roller coaster ride continues. Despite this, there are more notable positives this week, including an upgrade of Hong Kong’s market to
Confirmed Uptrend on Monday. It joins South Korea, Taiwan, and Mainland China, which we upgraded the previous weeks. Also, distribution days have declined below 4 on average and are less elevated than last week. This is a relief. We are more cautious on Japan and India, which are both in a Rally Attempt but there are still pockets of strength. Overall, we are noticing more constructive action in APAC this week and are becoming less cautious. Going forward, we are looking for markets to trend higher above support levels to keep bullish momentum going.
This week, we review our market condition change in Hong Kong and point out the noticeable recovery in Technology. We added back a few names, including Sunny Optical and Tokyo Electron, to our Focus List. Lastly, we reiterate our BUY conviction in Nintendo.
Global Focus Developed Long
Australia’s ASX All-Ordinaries Index rose 0.68% this week. The
index is trading 2.23% above its 40-WMA. It is currently in an
Uptrend Under Pressure.
