U.S. indices traded higher this week, with the Nasdaq breaking out into 15-year highs in heavy volume on Thursday. The S&P 500 also performed well, clearing back above its 10-week moving average, but still trading below the brief highs achieved in May. With the majority of leadership ideas following through, this new breakout in the Nasdaq could signal the end of range-bound action. But breakout attempts have fizzled in the recent past, so we are looking for higher highs in the coming days. Regardless, our U.S. Focus List ideas have been outperforming and should continue to be held or added to as they emerge from areas of consolidation. The market remains in a Confirmed Uptrend, now up 9% on the S&P 500 and 16% on the Nasdaq, since the October 21 follow-through day.
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.
Global Markets Under Increasing Distribution
Twenty-two developed markets lost 1.1% on average. Eighteen markets fell, led by declines of at least 1% including France, Germany, the U.K. and Hong Kong. Australia was the only market to gain close to 1%, while Ireland, Israel, and Japan were relatively flat to slightly up.
Global Market Health Update
Twenty-three developed markets lost 0.2% on average. Sixteen markets fell, but only two, Norway (-1.5%) and Finland (-1.1%), by over 1%. Ireland was the only market to gain substantially (2.4%). Despite the tight closing range across markets, most markets traded in relatively wide ranges with several daily swings of at least 1% in either direction.
Market View
U.S. indices traded flat again this week, still able to catch support at the lower end of a range, but also unable to break higher. This continues to be a stock pickers type market, with a select number of leadership ideas work-ing well, while the majority continue to trade in tandem with the major averages. We continue to recommend focusing on those ideas that have been rallying, trading with little to no overhead supply, a high relative strength rating, and making higher highs despite the sideways market. The market remains in a Confirmed Uptrend de-spite being range bound, with now only three distribution days on the NASDAQ and four on the S&P 500.
Markets Fall for a Second Week
Twenty-three developed markets lost 1.1% on average, for a second week of broadbased losses. Seventeen markets fell, including 11 by at least 1%, and five
(Australia, Ireland, Netherlands, U.K., Sweden) by at least 2.5%. Five markets rose, led by Italy (2.8%) and Norway (0.9%).
Market View
U.S. indices traded relatively flat this week, still about 1-2% off highs and within the same range. A handful of leadership ideas were able to make higher highs, while the majority continued to trade sideways. Most ideas, however, do look constructive and could eventually break out, if we see some type of move higher in the aver-ages. The market remains in a Confirmed Uptrend, with five distribution days on the NASDAQ and six on the S&P 500.
Most Markets Fall, Emerging Worse on Average
Twenty-three developed markets lost 1.2% on average, failing to build on the prior week’s gains. Twenty markets fell, including 16 by at least 1%, eight by at least 2%, and five (Germany, France, Finland, Portugal, and Spain) by at least 2.5%. Australia, New Zealand, and Japan each rose by 1-1.9% apiece.
Market View
U.S. indices continued to chop up and down, pulling back off the highs of a three-month range, but ultimately not moving much for the week. Without a decisive break in either direction, more of the same can be expected. Despite the lack of movement in the averages, a select group of leadership ideas continues to work well and should remain an area of focus until we see something new occur in the market. Currently, we are in a con-firmed uptrend, although the trend is actually more flat than up, and the distribution day count remains elevat-ed, with seven on the S&P 500 and five on the NASDAQ.
Developed Markets Rise, Emerging Markets Mixed
Twenty-three developed markets gained 1.4% on average, widely resuming gains after two weeks of mixed performance. Seventeen markets gained, including 14 by at least 1%, 10 by at least 2%, and six (Germany, France, Denmark, Finland, Switzerland, and Israel) by at least 3%. Of the five markets that fell, Australia and Austria lost over 1%.
Market View
U.S. indices crept higher this week, holding near record-level highs, despite a very lackluster environment. The major averages haven’t been able to break out in a convincing fashion. Arguably they are still caught in a long, drawn-out trading range that dates back to February. Although action in the indexes has been mild, a handful of leadership ideas have been working very well behind the scenes. We continue to recommend focusing on ideas with high Relative Strength and solid recent earnings results. Without any potentially positive near-term catalysts on the horizon, the market may continue to move sideways, as we approach the light-volume summer months.
