Mainland China’s markets continued to trend downward after breaking its 200-DMA in late March. The CSI 300 Index (
) fell 0.7% over last week and continues to remain in an Uptrend Under Pressure with eight distribution days. The index is trading 14% off its 52-week high. We view ~3,700 as its key support. We want to see the CSI 300 rise and hold above its 200- DMA (~ 3,970) to become bullish. We recommend a conservative approach for any fresh additions.
The MSCI Asia has yet to break out of a flat trend and continues to be stuck in a tight range near the 200-DMA. Overall, our stance remains unchanged; we continue to be cautious on the region until we see a definitive change in trend. Despite this, there are markets that look relatively more favorable. Japan and India are examples. Both markets are setting up constructively after finding support off the 200-DMA. In our note, we go over the unbiased technical similarities of each market as we wait for confirmation.
In sector rotation, Indian Financials and Japanese Health Care have both shifted positively in relative performance recently. Lastly, we highlight Asahi Intecc (AS@H.JP, 7747:JP) on our Focus List.
The U.S. market is in a Confirmed Uptrend. The S&P 500 broke out of a four-week trading range this week and is now set to test resistance at ~2,800, while the Nasdaq broke into a new all-time high. Distribution stands at five days on each index with no expiration next week. Leadership, despite a big pullback on Thursday, remains healthy as the majority continues to hold above prior pivots or key moving-average support. We maintain our positive view on the general market and continue to recommend buying high quality ideas at exact pivot points or areas of support, and avoid chasing ideas that become too far extended from risk-optimal entry points.
Stocks on our U.S. Focus List: Current Sentiment
By Sector
Retail ideas on the U.S. Focus List led this week. FIVE gapped up more than 20% on earnings following a similar move from LULU last week. OLLI and HOME also reported good quarters and both moved back into new highs. HD continues to con-structively form the right side of a new base and remains actionable. WING, AMZN, and BABA are also trading at or near new highs. Financial ideas also rallied this week, with Regional Banks TCBI, ZION, and WAL at new pivot points and Pay-ment Processors MA, V, and SQ all hitting new highs. PYPL and GPN both remain actionable as they approach prior highs. Conversely, Technology ideas, after leading over the last two weeks, pulled back on Thursday. MKSI gapped down below its 200-DMA, while software ideas RP, NOW, RNG, TYL, VEEV, and TEAM pulled back off recent new highs but remain intact as they hold above 50-DMA support.
New Ideas or Deletions
No changes were made to the U.S. Focus List this week.
Mainland China’s markets closed higher over the last week, led by the Shenzhen index, which gained 0.3%. The CSI 300 index (
) gained 0.2% and continues to remain in an Uptrend Under Pressure with six distribution days. We view ~3,700 as its key support. We would like to see the CSI 300 rise and hold above its 200-DMA (~ 3,969) to become bullish. We recommend a conservative approach for any fresh additions.
