The U.S. market remains in a Rally Attempt. The S&P 500 and Nasdaq bounced into resistance at their declining 21-
DMA (S&P 500: 4,394; Nasdaq: 13,756) before pulling back for the week. Price action continues to be volatile however the
Rally Attempt status remains once indices hold above February 24th lows (S&P 500: 4,288; Nasdaq: 13,473). While in a
Rally Attempt, the market status moves to a Confirmed Uptrend
Tag: Rally Attempt
Market View
The U.S. market remains in a Rally Attempt. Despite Friday’s strong rally, day-over-day volume was lower, negating a potential follow-through. Monday will mark day six of the attempted rally. We will upgrade the market status to Confirmed Uptrend should a follow-through day occur or shift back to Downtrend should Monday’s lows undercut. The S&P 500 is now sitting just under 200-DMA (4,435) resistance as the 10-, 21-, and 50-DMA are all now turning lower. Near-term support remains Monday’s low of 4,222. The Nasdaq is still trading 15% off highs with near-term resistance at the rolling 10-DMA (13,949) and support at 13,094.
US Focus
The U.S. market remains in a Rally Attempt. Despite Friday’s strong rally, day over day volume was lower negating a potential follow-through. Monday will mark day six of the attempted rally. We will upgrade the market status to Confirmed Uptrend should a follow-through day occur or shift back to Downtrend should Monday’s lows undercut. The S&P 500 is now sitting just under 200-DMA (4,435) resistance as the 10- 21- and 50-DMA are all now turning lower. Near-term support remains Monday’s low of 4,222. The Nasdaq is still trading 15% off highs with near-term resistance at the rolling 10-DMA (13,949) and support at 13,094.
China A Shares
The CSI 300 declined 5.46% on higher and above average volume this week. The market was shifted to a Rally Attempt Friday after being downgraded to a Downtrend on a sharp selloff Monday. The index remains pressed by its short- and long-term moving averages. Immediate resistance lies at the 5-DMA (4,820, +0.2%) followed by the 21-DMA (~5,041, +4.8%). January- June industrial profits increased 66.9% y/y (83.4% in May), up 45.5% compared with the same period in 2019 with two-year average growth of 20.6%. Investors were digesting the newlyreleased rules banning for-profit tutoring in core school subjects, and a resurgence of domestic COVID cases also dampened risk appetite. Consumer stocks remained weak, dragged by liquor producers and COVID-affected tourism companies and hotels. Real estate and financial stocks were also among the top losers. Semiconductor and clean energy (solar and wind power) led the gains on robust outlook and consistent policy support. Telecommunication, steel, and EV-related non-ferrous stocks were also strong. The index rallied off weekly session lows but was still weak. We advise investors to stay cautious before more positive signs. Watch signals from key policy meetings and major economic data. Adopt a selective approach ahead of Q2 earnings. Focus on stocks with sound fundamentals and avoid chasing highs.
China A Shares
The CSI 300 fell 1.37% on higher but lower-than-average volume. The market remains in a Rally Attempt. The index was testing support at its 200-DMA (4,950, -0.3%), with next support at the previous low of March 25 (4,884, -1.66%). Immediate resistance lies at the declining 21-DMA (5035, +1.4%). Q1 GDP rose 18.3% y/y, hitting a record high for the 21st century and a CAGR of 5% from Q1 2019. Industrial production, fixed asset investment, and social retail sales came in mixed but improving m/m (q/q). March’s social financing and M2 missed consensus but incremental RMB loans were stronger than expected. Auto stocks led the gains, boosted by Huawei’s driverless car initiative. Energy, food & beverage, and real estate outperformed while the leisure & services sector lagged, dragged by CTS.CN’s lower-than-expected Q1 2021 earnings. Sector rotation remained swift without consistent themes despite healthy FY20 and Q1 2021 earnings reported by many sectors. We recommend staying cautious as the index challenges 200-DMA support amid the highly volatile market. Be selective and focus on companies with strong earnings and improving technical profiles.
China A Shares
The CSI 300 fell 2.45% on lower volume and remains in Rally Attempt. The index trended down and breached the 21-DMA (5,069, +0.7%). The next level of support is the 200-DMA (4,927, -2.1%) and the next level of resistance is the 100-DMA (5,207, +3.4%). Caixin services PMI rose to three-month highs of 54.3 (from 51.5 in February) and has remained in expansion for 11 months. March’s PPI and CPI rose 4.4% and 0.4%, y/y, respectively, stronger than expectations and February’s reading due to commodity price increases. Steel companies surged as the industry is expected to reduce production to reach the peak of carbon emissions by 2030. The defense sector also showed good gains as military stocks’ earnings beat consensus, indicating strong demand in the 14th five-year period (2021‒2025). Consumer Staple, new Energy, and Heath Care underperformed and have been very volatile this week. We’ve noticed very quick sector rotation. Market sentiment was dampened by concerns over inflation and policy tightening. Entering earnings season, we recommend investors focus on companies with strong earnings. Stay patient and selective on stocks with improving technical profiles.
China A Shares
The CSI 300 rose 1.44% on lower volume in the first four trading sessions of the week. The market was shifted to a Rally Attempt Monday. The index consolidated and broke above its declining 21- DMA (5,071, -0.8%) Thursday, with next support at the 200-DMA (4,900, -4.1%). Immediate resistance lies at the 100-DMA (~5,200, +1.7%). January-February industrial profits increased 179% y/y and 72% from the same period in 2019. March’s official manufacturing PMI rose to 51.9 from 50.6 in February, rebounding from the previous three months’ declines. The Caixin manufacturing PMI for small companies declined to 50.6 from 50.9 in February, the lowest since May 2020 but still in expansion for 11 consecutive months. The correction of large-cap expensive stocks in New Energy, Health Care, and Consumer abated somewhat, supported by strong corporate earnings. Market sentiment was supported by strong manufacturing data and we expect the index to trade around ~5,000 in the near future. We advise investors to stay cautious in the volatile market and focus on stocks with solid fundamental and technical profiles. Watch April’s earnings season closely. There will be no Northbound trading via the HK-China Stock Connect from April 1‒April 6.
China A Shares
The CSI 300 fell 2.71% on lower volume and remains in a Rally Attempt. The index was rangebound throughout the week and challenging resistance at the 100-DMA (~5,170, +3.3%), with next support at the 200-DMA (4,850, -3.1%). Economic data for the first two months of the year indicated strong growth. Retail sales and value-added industrial profit were higher than expectations. Property investment and property sales area grew 38.3% and 105%, respectively, from January to February. Fix-asset investment was slightly lower than the consensus but grew 3.5% y/y over the same period in 2019. The U.S. 10-year Treasury yield hit one-year new high of 1.7% on Thursday despite the U.S. Federal Reserve’s policy of not raising interest rates until 2023. U.S.- China bilateral talks were held March 18–19. Selling pressure on large-cap leading stocks in sectors such as Consumer Staple and Health Care was relieved. Consumer Cyclical led the market this week on the recovery of tourism and consumption of furniture. Utility followed the gains due to carbon neutrality. Financial, Technology, and Energy lagged. We expect the index to trade around ~5,000 in the near future. We advise investors to stay cautious in the volatile market and focus on stocks with solid fundamental and technical profiles.
Market View
The U.S. market is in a Rally Attempt. We will upgrade the market to Confirmed Uptrend should either the S&P
500 close above 3,950 or the Nasdaq stage a follow-through day. Support on the S&P 500 is again the rising
10- and 21-DMA (3,873). The Nasdaq faces resistance at its 50-DMA (13,368), with support at ~13,000 before
the rising 100-DMA (~12,700). Though the Nasdaq is still trading 6% off highs, multiple other indices are trad-
ing at all-time highs including the Dow and the Russell 2000.
China A Shares
The CSI 300 fell 2.21% on slightly higher and above average volume. The market was shifted to a Downtrend Monday then to a Rally Attempt Friday. The index breached its 100-DMA Monday, reached a near-three-month low Tuesday, and rebounded for the last three sessions. The index was challenging resistance at the 100-DMA (5,157, +0.2%), with next support at the 200-DMA (4,821, -6.3%). February’s CPI fell 0.2%, stronger than the expected 0.5% decline and previous 0.3% drop. PPI rose 1.7% y/y, higher than the expected 1.5% and the highest growth since November 2018. Social financing was RMB 1.71T while incremental RMB loans were 1.36T, both lower than January’s readings but higher than market consensus. M2 rose 10.1%, higher than expectations (+9.57%) and January’s reading (+9.4%). Previously leading names in Consumer, new Energy, and Health Care rebounded strongly for two consecutive days, supporting the CSI’s gains. However, on a weekly basis, these three sectors still lagged the market while Utility and Energy led the gains. We expect the index to trade around the 100-DMA in the near future due to tightening liquidity. We advise investors to stay cautious in the volatile market and focus on stocks with solid fundamental and technical profiles.
