The Stoxx 600 closed 0.73% higher on a weekly basis on Thursday. We changed the market to a Rally Attempt on Tuesday after it remained above its first-day low of 371.89. The index is in positive territory as of this morning, but trading below its 50- and 200-DMA.
Tag: Rally Attempt
European Focus Long
As of Thursday’s close, the Stoxx 600 was up 0.47% on a weeklybasis, but it reversed this gain on Friday, when index lost 0.49% intraday. The index continues to hold above its 200-DMA and remains in a Rally Attempt. It has recovered from an August 15 low but we ahve little faith in the rebound. This is largely reflected in the historically low number of stocks on our European Focus List.Over the past month,we added only three stocks to our Focus List
China A Shares Long
The CSI 300 rose 3% for the week. The index made a new low this week but found support at ~3,209 and closed near the top of the week’s range. This is the third week in a row that the index has undercut its prior year-to-date low. Volume continues to be light. We upgraded the market to a Rally Attempt on Wednesday as it has kept above its recent low for three days. We are now looking for a follow-through day. However, the index is still 14% below its 200-DMA. If the CSI 300 could break through 50-DMA resistance, which is 3.3% higher currently, on volume, our conviction would increase. Until then, we recommend a defensive approach.
European Focus Long
As of Thursday this week, the Stoxx 600 was up 0.61%, rebounding slightly compared with last week’s 1.15% decline. The index remains in a Rally Attempt and we continue to have a cautious view of European equities, given the lack of clear leadership in the market. We moved the U.K., Spain, Italy, and Finland to a Rally Attempt this week.
Market View
Market Overview
The U.S. market is in a Rally Attempt. We are now looking for a follow-through day before shifting the market into a Confirmed Uptrend or, conversely, an undercut of Friday’s lows of 2,585 before shifting the market back into a Downtrend. The market attempted to follow-through Thursday, but was unable to close in convincing fashion, pulling back at the close. We have cut ~12% of our U.S. Focus List over the last quarter due to technical weakness. A further reduction in the list count would indicate a concerning technical breakdown in leadership. Our 70 ideas are currently trading 10% off YTD highs on average, indicating that most are forming new bases above longer-term support levels. We continue to recommend a cautious approach until a follow-through day occurs.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 70 ideas (one removal) gained 1% on average this week, underperforming the S&P 500 (2%) and in-line with the Nasdaq (1%).
By Sector
Retail ideas on the U.S. Focus List are showing strong relative strength over the past week. LULU broke out of a multi-year base post earnings, FND is trading at a new all-time high, and FIVE, OLLI, and WING continue to trade higher off their 50-DMAs. Health Care ideas are also acting well. ABMD, though extended, is consolidating sideways near all-time highs, EW has an RS line at new highs as the stock consolidates above its 50-DMA, and IDXX and ILMN are both holding support at their 50-DMAs. Conversely, Technology remains under selling
European Focus Long
For the third consecutive week, European markets gained, advancing
1.1% on average as only two markets, Ireland (-0.2%) and Switzerland
(-0.3%), closed lower. Five markets gained at least 1.3%, including
Austria (+1.3%), Italy (+1.3%), the Netherlands (+1.6%), Norway
(+1.8%), and Belgium (+1.9%). Two, Finland (+2.4%) and Luxembourg
(+3.2%), gained more than 2%.
US Focus Long
The U.S. market shifted into a Rally Attempt this week. The S&P 500 and Nasdaq are both now five days off their most recent bottom, however, a rotation out of Technology has weighed on the Nasdaq. The S&P 500 and Russell are benefitting from the surge in Financials and now, once again, testing resistance near all-time highs. We are looking for a breakout above 2180 on the S&P 500 as well as new quality leadership ideas to take the place of long term large cap Technology winners. This would be enough to shift the market back into a Confirmed Uptrend.
US Focus Long
The U.S. market shifted into a Rally Attempt this week. The S&P 500 and Nasdaq are
both now five days off their most recent bottom, however, a rotation out of Technology has
weighed on the Nasdaq. The S&P 500 and Russell are benefitting from the surge in Financials
and now, once again, testing resistance near all-time highs. We are looking for a breakout
above 2180 on the S&P 500 as well as new quality leadership ideas to take the place of long
term large cap Technology winners. This would be enough to shift the market back into a
Confirmed Uptrend.
Market View
The U.S. market shifted into a Rally Attempt this week. The S&P 500 and Nasdaq are both now five days off their most recent bottom, however, a rotation out of Technology has weighed on the Nasdaq. The S&P 500 and Rus-sell are benefitting from the surge in Financials and now, once again, testing resistance near all-time highs. We are looking for a breakout above 2180 on the S&P 500 as well as new quality leadership ideas to take the place of long term large cap Technology winners. This would be enough to shift the market back into a Confirmed Uptrend.
Market View
The U.S. market shifted into a Downtrend on Tuesday, following an eighth distribution day that resulted in a price break below short-term support. The S&P 500 is now testing its 200-day moving average for the first time since Brexit, while the Nasdaq is nearing support at 5000. We continue to advise a cautious approach until we see support come into the market. We need to see a Rally Attempt develop and then a new follow-through day to suggest a change in trend.
