The CSI 300 rose 0.44% this week on higher volume and remains in a Confirmed Uptrend
with four distribution days. Although U.S.-Iran tensions disturbed the market, stronger-thanexpected
December price data eased worries about the economy to some degree. News that
China is sending a team to the U.S. early next week to sign a phase-one trade deal also boosted
sentiment. We remain positive on the general market as the CSI 300 is holding well above
support at ~4,100, and we see the next level of resistance at ~4,403. Investors are advised to stay
patient as significant distribution could occur with the expiration of lockup periods of a large
number of shares approaching the end of January. We recommend focusing on ideas emerging
from solid bases or rebounding from key support levels with heavy volume. Also, be mindful of
companies’ announcements going into the season of preliminary FY19 earnings results.
Tag: Confirmed Uptrend
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq staged downside
reversals Friday but continue to hold trend with a low number of distribution days. Near-term
support remains the rising 10- and 21-DMA. Distribution stands at three days on the S&P 500
and two on the Nasdaq, with one day expiring on each Tuesday.
European Focus
On Thursday, the Stoxx 600 ended the day 0.31% above last Friday’s
close and remained in a Confirmed Uptrend. During the week, we
upgraded Germany to a Confirmed Uptrend. Of the 17 indices we cover,
14 are in a Confirmed Uptrend, two are in an Uptrend Under Pressure,
and one in a Rally attempt.
Market View
U.S. Market
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to trend constructively
into higher highs. Both indices found support off their respective 10-DMA on Friday, closing off session lows. The
distribution count remains low with two days expiring next week.
Leadership has begun to narrow from peak levels with growth ( SPYG ) outperforming value ( SPYV ) to start the
new year. Though all 11 sectors remain above their respective 50-DMA, Technology has extended gains while
Consumer Staple, Utility, and Basic Material have pulled back. 162 of 197 industry groups also remain above
their respective 50-DMA, however this is down from 178 groups last week. Leading industry groups over the
past week include Aerospace Defense ( NOC ), Software ( COUP ), Internet ( JD ), Data Storage ( MU ), Fiber Optics
( LITE ), Semiconductors ( AMD ), and Oil & Gas ( PSXP ). Lagging industry groups over the past week include Steel
( X ), Food ( GIS ), Personal Care ( CL ), Utilities ( ED ), Biotech ( INCY ), and Reits ( WELL )
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to trend constructively into higher highs. Both indices found support off their respective 10-DMA on Friday, closing off session lows. The distribution count remains low with two days expiring next week.
Market View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq remain constructive near all-time
highs despite being extended above their 21-DMA ( S&P 500: 3,169; Nasdaq: 8,752 ) and 50-DMA (S&P 500:
3,110; Nasdaq: 8,540). Distribution stands at three days on both indices.
All 11 sectors, 178 of 197 industry groups, and 81% of S&P 500 stocks are trading above their respective 50-
DMA. Commodities are under accumulation as Gold ( GLV ), Silver ( SLV ), and Oil ( USO ) each rose more than
+2% this week and outperformed all sectors. Leading groups over the past week include Mining (
), Oil &
Gas ( WPX ), Retail-Internet ( AMZN ), Auto Manufacturers ( TSLA ), Data Storage ( MU ), and Electronic Products
( OLED ).
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq remains constructive near all-time highs despite being extended above its 21-DMA (S&P 500: 3,169; Nasdaq: 8,753) and 50DMA (S&P 500: 3,110; Nasdaq: 8,541). Distribution stands at three days on both indices.
European Focus
On Thursday, the Stoxx 600 ended the day 0.11% above last Friday’s close and remained in a Confirmed Uptrend. Of the 17 indices we cover, 13 are in a Confirmed Uptrend, two are in an Uptrend Under Pressure, and two in a Rally attempt.
China A Shares
The CSI 300 rose 1.24% this week on higher volume and remains in a Confirmed Uptrend with three distribution days. The finalization of terms of a phase one China-U.S. trade deal significantly boosted market sentiment. China’s stronger-than-expected November economic data signaled that government’s policies seem to be taking effect, improving investors’ risk appetite. The CSI 300 was trading constructively after decisively breaking above the previous November’s high and is testing the next resistance at April’s high (~4,100). We are hopeful the index holds above support at ~3,925. Due to heavy selling pressure approaching April’s high, we expect the index to consolidate around ~4,020 in the near term. Investors need to remain disciplined and avoid extended ideas as volatility increases near the area of intense pressure. The Technology and Capital Equipment sectors were leading while Health Care stocks have been lagging our Focus List for a month. Health Care remains weak and we advise investors to trim positions. We recommend accumulating positions in stocks with decisive breakouts from solid bases or key support levels. Profits earned by China’s major industrial firms in November, another important economic indicator, are expected to be released next Friday.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq are trending into higher highs above all moving averages. Near-term support is at the 10-DMA (S&P 500: 3,181; Nasdaq: 8,785), followed by the 21-DMA (S&P 500: 3,153; Nasdaq: 8,689). Distribution remains at four days on both indices.
