Twenty-three developed markets gained 4.3% on average this week. Every market was up, including seven by at least 5% and four (Norway, Singapore, Spain, and the U.K.) by at least 6%. Spain and Singapore gained the most for the week, increasing 7.3% and 7.4%, respectively. Ireland and New Zealand were the two lagging markets, gaining less than 0.6%
Author: Kenley Scott
Kenley Scott is a senior equity analyst and sector strategist covering the APAC region and the Energy sector. He is a member of the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets. Kenley also writes the Global Sector Summary, part of the Sector Strategy service, which identifies emerging sector strength and weakness across 46 countries every week. After working as a commodities broker, Kenley joined the firm in July 2006. He has a B.S. in Statistics from the University of California, Riverside and also holds a Series 65 securities license.
Markets Down Slightly, Follow-Through Days Needed for New Uptrend
Twenty-three developed markets lost 0.4% on average this week. Fourteen markets fell including nine by at least 1% and five (Canada, Denmark, Ireland, Israel, and New Zealand) by at least 1.5%. Hong Kong and Portugal gained 1.5% and 1.9%, respectively, to lead the gainers.
Market View
The major indices accumulated two more days of institutional selling, as the S&P 500 and Nasdaq declined by 1.5% and 3.1%, respectively. The Health Care sector, primarily drug-related industries, led the market lower, which put pressure on many of the sector’s leaders from the prior uptrend. Indices and many stocks on the U.S. Focus List are trading at or near their moving averages and testing prior support levels.
Markets Fall Again, but Pockets of Strength Exist
Twenty-three developed markets lost 1.5% on average this week. Most markets were down much more sharply until Friday, when gains averaged nearly 2%. All markets except the U.K. (0.6%) and Denmark (0.5%) fell, including 10 by at least 2% and four (Hong Kong, Spain, Sweden, and Israel) by at least 2.5%.
Emerging Leads for the Week, but Markets Remain in Limbo
Twenty-three developed markets lost 0.3% on average this week, trading higher for most of the week before broadly selling off on Friday. Eight markets gained, including Canada, Australia, and Hong Kong, which gained at least 1.5% apiece. Of the 14 markets that fell, nine lost at least 1%, and four (Germany, Sweden, the Netherlands, Finland) lost at least 1.5%.
Market View
The market gave back most of this week’s gains, after the Fed left interest rates unchanged, and concerns over
low domestic inflation and a global economic slowdown prevailed. The uncertainty has presented another challenge
for the young rally: the S&P 500 has accumulated two distribution days, and the Nasdaq is facing upside
resistance at its moving averages. The conviction the market is looking for mostly likely won’t be revealed until
earning season or the next fed meeting, both of which are at least a month away
Markets Follow-Through, but Stocks Signals Still Weak
Twenty-three developed markets gained 1.0% this week, bouncing a bit after relatively sharp losses last week. Seventeen markets gained, including 14 by at least 1%, and five (the U.S., Japan, Hong Kong, Finland, and Ireland) by at least 1.8%. Norway and Spain were among five markets that posted moderate losses.
Market View
U.S. indices rallied over 2% on Tuesday, on volume greater than the previous day, signaling a Day 9 follow-through day. There are multiple things we are looking for subsequent to this new rally confirmation. The most important thing is newly actionable ideas from fundamentally sound companies. Currently, the majority of big price moves have been coming from beaten down sectors that still need quite a bit of work before becoming ac-tionable again. Most critical is to see ideas that participated during the last cycle firm up and retake resistance levels, while new ideas also begin to emerge.
Global Sell-Off Resumes
Twenty-three developed markets lost 2.6% this week, failing to build on strong mid- to late-week gains in the prior week. All markets fell, except Ireland, which gained 1.3%. Sixteen markets lost at least 2%, 10 lost at least 3%, and four (Australia, Japan, Portugal, and Spain) lost at least 4%.
Market View
The U.S. market continues to chop around with high volatility. Leadership ideas are forming new bases, with the majority trading below resistance at their respective 10-week or even 40-week moving averages. This justifies a defensive approach that avoids any new buys at the moment. The indices remain above last Wednesday’s low, so we are monitoring for new leadership ideas to emerge, especially ones that did not participate in the prior uptrend. A new follow-through day, combined with multiple actionable ideas, would give us confidence that this correction is over. Now we are on Day 8 of a Rally Attempt, with no actionable ideas.
