The CSI 300 rose 3.41% on higher but below average volume this week. The market was shifted to a Confirmed Uptrend Monday as the index rose 2.43% on much higher volume and broke above the 21-DMA. The index managed to hold above its 21-DMA (~5,050, -1.7%) for the following four sessions, with next support at the 200-DMA (4,975, -3.1%). The next level of resistance lies at the declining 50-DMA (~5,200, +1.3%). China’s central bank kept its benchmark lending rate LPR (loan prime rate) unchanged as expected. The New Energy, Health Care, and Food & Beverage sectors led the market. The Electronics sector followed the gains due to expectations of semiconductor price increases. We noticed that those stocks started to trend upward after retreating 30% or more from highs. Our conviction increases but we still advise investors to take a cautious approach before the index retakes the 100-DMA and 50-DMA and holds above these levels. Be selective and focus on companies with strong earnings and improving technical profiles.
Author: Midhun Parameswaran
European Focus
On Thursday, the Stoxx 600 closed 0.64% below last Friday’s close. Of the 17 indices that we cover, 15 are in a Confirmed Uptrend, including the Stoxx 600, while the remaining are in an Uptrend Under Pressure. Denmark, Ireland, and Norway were upgraded to a Confirmed Uptrend after they reclaimed their prior rally highs.
Global Focus Developed
Australia’s ASX All Ordinaries Index declined 0.1% this week. The index is trading near its 52-week high and is in a Confirmed Uptrend with five distribution days. It added two distribution days this week and two distribution days are set to expire next week.
Global Focus Emerging
The CSI 300 rose 3.41% on higher but below average volume this week. The market was shifted to a Confirmed Uptrend Monday as the index rose 2.43% on much higher volume and broke above the 21-DMA. The index managed to hold above its 21-DMA (~5,050, -1.7%) for the following four sessions, with next support at the 200-DMA (4,975, -3.1%). The next level of resistance lies at the declining 50-DMA (~5,200, +1.3%).
Global Focus Frontier
Ho Chi Minh City Development Joint Stock Commercial Bank (HD Bank) is one of the top banks in Vietnam and is a constituent of the VN30 Index. Its industry-leading growth and key financial ratios, along with its exposure to the consumer finance industry, will drive its growth.
China A Shares
The CSI 300 fell 1.39% on lower volume. The market remains in an Uptrend Under Pressure; the number of distribution days increased to seven. The index traded around the 50-DMA (~5,400, +2.6%), with immediate support at the 100-DMA (5,143, -2.3%). China’s Banking and Insurance Regulatory Commission warned of financial market risk and said it was studying measures to manage domestic market turbulence caused by capital inflows Tuesday, triggering downside pressure. Market sentiment was soothed a bit Friday as investors digested the modest 2021 GDP growth target (above 6%) set in the premier’s annual work report. February’s official and Caixin PMI were 50.6 and 50.9, respectively, both down three consecutive months though in expansion. The Caixin services PMI fell to 51.5 in February, the lowest reading since April 2020, but also remained in expansion. The index is still facing downside risk due to recent harsh selling. We recommend a cautious and selective approach and advise investors to focus on stocks with solid fundamental and strong technical profiles as well as good relative strength.
US Focus
The U.S. market has been downgraded to a Downtrend. The S&P 500 added four distribution days over five sessions, resulting in its first break of the 50-DMA since November. Despite a snap back rally on Friday, the index now faces multiple layers of resistance including its rolling 21- DMA (3,855). Near-term support is now ~3,700, which may coincide with a rising 100-DMA. The support range below the 100-DMA is 3,500-3,600, the top of the prior Q4 consolidation which may coincide with a rising 200-DMA. The Nasdaq also broke its 50-DMA this week in rising distribution. This index added back to back distribution days on Wednesday and Thursday, resulting in a 10% decline off highs to near-term support at its 100-DMA (~12,600). Should this level break, the next level is ~12,000, which may coincide with the rising 200-DMA.
European Focus
On Thursday, the Stoxx 600 ended 1.71% above last Friday’s close. Of the 17 indices that we cover, four are in a Confirmed Uptrend and 13 in an Uptrend Under Pressure. This week, we downgraded the Stoxx 600, Finland, Italy, Belgium, the Netherlands, and Luxembourg to an Uptrend Under Pressure. Sweden was upgraded to a Confirmed Uptrend after it reached a new high.
Global Focus Developed
Australia’s ASX All Ordinaries Index was flat this week. It is testing support along its 50-DMA. The index is in a Confirmed Uptrend with six distribution days. It added three distribution days this week.
Global Focus Emerging
The CSI 300 fell 1.39% on lower volume. The market remains in an Uptrend Under Pressure; the number of distribution days increased to seven. The index traded around the 50-DMA (~5,400, +2.6%), with immediate support at the 100-DMA (5,143, -2.3%).
