On Thursday, the Stoxx 600 was up 1.7%, showing signs of a continued recovery from earlier in the week. However, compared with last Friday’s close, the index was down 0.91% through Thursday. Today, the index was trading in the red along with other major markets in the region.
Tag: Rally Attempt
European Focus
On Thursday, the Stoxx 600 was down 0.17% despite suggestions of a rate cut by the European Central Bank. Compared with last Friday’s close, the index lost 0.26% through Thursday. Today it was trading positive along with other major markets in the region.
European Focus
On Thursday, the Stoxx 600 was down 0.12%, marking a week of losses. Compared with last Friday’s close, the index has lost 6.44% through Thursday. Today the index inched up along with other major markets in the region, as the eurozone’s industrial output beat expectations.
European Focus
On Thursday, the Stoxx 600 was up 0.01%, doing little to erase losses from earlier in the week. The index was down 0.65% from last Friday’s close through Thursday. Today, the index is trading constructively along with other major markets in the region, with hopes pinned on the U.S.-China meeting at the G20 summit.
European Focus
On Thursday, the Stoxx 600 closed 1% above last Friday’s close and is
in a Rally Attempt. Of the 17 indices we cover, five are in an Uptrend
Under Pressure and 12 are in a Rally Attempt.
Market View
Strategy View
The U.S. equity market was under pressure this week due to an increase in rhetoric from the U.S. and China regarding trade discussions. Importantly, the current U.S. administration singled out Chinese technology company Huawei for inclusion on the U.S. government’s Entities List. This list comprises foreign companies that U.S. firms are forbidden to do business with unless they have received approval by the U.S. government. In response to this, China threatened to completely halt further trade negotiations. As a result, the stocks of many U.S. technology companies, particularly semiconductor and semiconductor equipment suppliers, fell sharply.
This negative stock action was further exacerbated by two negative economic readings in the U.S. First, the U.S. Composite PMI fell from 53 last month to 50.9 this month, the worst reading in 36 months. In addition, U.S. durable goods orders for April fell 2.1% versus a gain of 1.7% in March. When combined with the previously mentioned trade issues, this caused investors to reconsider forward GDP estimates and corporate profit growth for U.S. public companies.
US Focus
The U.S. market is in a Rally Attempt. The Nasdaq undercut its May 13 low of 7,627 on Thursday, however, the S&P 500 narrowly held its low of 2,801, keeping the Rally Attempt intact. A follow-through day is still possible as long as this low continues to hold. Our primary expectation, however, is that the S&P 500 will undercut and both major averages will test support along their respective 200-DMAs (S&P 500: 2,777; Nasdaq: 7,530).
Market View
Strategy View
A better-than-expected earnings season and a slight increase to full-year 2019 EPS estimates have eased some
growth concerns.
Median S&P 500 sales and EPS growth of 4% and 7% outpaced consensus by 0.3% and 4.2%, respectively.
The EPS beat was the best in four quarters.
Over the past 30 days, median full-year EPS estimates have been revised slightly higher, the first bump in
at least two quarters.
After a 5–6% pullback in the S&P 500 and Nasdaq indices, we moved the market to a Downtrend. It is possible the
quick downside was just a brief shakeout, and we are encouraged by the indices’ quick retake of their 50-DMA.
Still, we need to see a couple more days of healthy action to upgrade conditions.
Leadership has also acted very well despite the pullback. Trends of secular growth (payments, software) leaders
remain largely intact, although most of these stocks are extended.
US Focus
The U.S. market is in a Rally Attempt. The S&P 500 and Nasdaq have now held above Monday’s low for four sessions. We are now looking for a follow-through day before shifting the market into a Confirmed Uptrend or, conversely, an undercut of Monday’s lows (S&P 500: 2,801; Nasdaq: 7,627) before shifting the market back into a Downtrend. A follow-through day should feel like an explosive rally, with indices preferably up 1.7% or more, on heavier volume than the day before.
European Focus
On Thursday, the Stoxx 600 closed 1.6% above last Friday’s close. The index is in a Confirmed Uptrend and has been trending upward since the January 4 follow-through day. Of the 17 indices we cover, 14 are in a Confirmed Uptrend and three are in a Rally Attempt.
