Twenty-three developed markets lost 1.4% this week, consolidating after 3%+average gains last week. Twenty markets fell, including 17 by at least 1% and six
(Australia, Finland, Germany, the Netherlands, U.K., Canada) by at least 2%.
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.
Market View
U.S. indices pulled back about 2% this week, dropping four days in a row due to a handful of poor earnings re-sults. The S&P 500 also printed three straight distribution days, as the index ran into heavy resistance near new high ground. Despite a pullback in the general market, leadership, especially from our U.S. Focus List, remains strong. Growth ideas have continued to outperform, with many breaking into new highs. We continue to rec-ommend buying growth at proper pivots and avoiding lagging ideas. The market remains in a Confirmed Uptrend.
Markets Rebounded Sharply for Largest Overall Average Gain of the Year
Twenty-three developed markets gained 3.1%, building on gains in the latter part of last week. Markets have gained about 5% on average in the past seven days of trading. All 23 markets gained, including 15 by at least 3%, and eight (Japan, France, Netherlands, Finland, Belgium, Denmark, Italy, Spain) by at least 4%. Canada and the U.K. were the only two markets to gain less than 2%.
Market View
U.S. indices traded sharply higher this week, led by the Nasdaq, which rose over 3% into all-time highs. Positive global news combined with solid earnings results sent the vast majority of leadership ideas into new highs as well, creating a marketplace with multiple actionable ideas. With the major averages now trading back above support levels, we again recommend adding to or initiating new positions into ideas emerging from consolida-tion or bouncing off key support levels. The market’s Confirmed Uptrend has resumed.
Weakness Persists as Volatility Spikes
Twenty-two developed markets gained 0.3%, rebounding to close positive on average after falling sharply through Wednesday. Sixteen markets gained, including 11 by at least 1%, and four (Germany, Denmark, Spain, Belgium) by at least 2%. Hong Kong (-4.5%) and Japan (-3.7%) fell sharply, while Canada, Singapore, Australia, and New Zealand lost 0.9-2%.
Market View
U.S. indices traded down early in the week, continuing to chop around in tandem with global events. Though
this type of action is concerning, the major averages still have yet to break to the downside in convincing fashion,
remaining just 2-3% off their highs. Additionally, leadership ideas, specifically from the U.S. Focus List, continue
to hold up well, seemingly waiting for any positive news (Greece/China/earnings) to take them higher.
With that said, the S&P 500 closed below its 40-week moving average on Wednesday, which automatically
switched the market condition to a correction. Despite this, the story continues to be about our select number of
leadership ideas and not the major averages. If the indices are able to shake off this three-week sell-off and
close back above their respective 10-week moving averages, the uptrend will likely resume. Until then, we still
recommend remaining patient before adding to the current leadership.
Markets Fall on Average for a Fifth Time in Six Weeks
Twenty-three developed markets lost 2% on average through Thursday of this week, giving back most of last week’s gains. Twenty markets fell, including 10 by at least 2%, and seven (Germany, France, Spain, Netherlands, Italy, Finland, Portugal) by at least 3%. Australia (0.9%), New Zealand (1.3%), anD ingapore (0.2%) gained.
Market View
The market sold off over 2% on Monday, dropping in heavy volume and eliminating the small gains seen over the last few months. Since Monday, both the S&P 500 and Nasdaq have been able to hold their lows, despite feeling very fragile. This type of action has occurred numerous times throughout the year, with the market even-tually recovering and moving back higher at a very slow pace. If this occurs again, the action of leadership ideas will need to remain constructive. A breakdown in just a handful of these ideas will lead to a further breakdown in the overall market, likely resulting in the first correction since last year. Currently, the majority of leaders are holding up well, trading constructively despite pressure from the general market. We still, however, recommend avoiding new buys and remaining cautious, as the status of the market has moved back to Under Pressure.
Most Markets Bounce, China Falls Sharply
Twenty-three developed markets gained 2.3% on average, sharply rebounding after falling by over 2.5% on average over the past three weeks. Eighteen markets gained, including 11 by at least 3%, and seven (Germany, France, Netherlands, Belgium, Portugal, Italy, and Spain) by at least 4%. Israel was the only market to fall significantly. Other laggards included the U.S., Australia, and Hong Kong.
Market View
U.S. indices pulled back this week, unable to move higher after promising action the week prior. Both the
Nasdaq and S&P 500 are still only about 1% off their highs, despite very little progress being made over the last
several months. The story continues to be about a select number of leadership ideas and not the major averages.
Many have continued to hit higher highs, and should continue to do so as long as the general market maintains
this consolidation or inches higher. We believe these ideas should still be held as the market remains in a
Confirmed Uptrend.
