The CSI 300 rose 3% this week on higher volume. The market remains in a Confirmed Uptrend with two distribution days. Boosted by better-than-expected factory activity in December and signs of easing monetary policy, the A-share market rallied strongly for the first three trading sessions. We remain positive on the general market, however, given the strong move higher over the last several weeks, a correction would not be unexpected. Since the Chinese economy still faces great downturn pressure and global market volatility could increase due to tensions in the Middle East, we advise remaining patient and focusing on quality ideas emerging from solid bases or rallying off key levels of support. Also consider trimming positions in ideas that are extended 20% or more above buy points. The CSI 300 broke above 2019’s high of 4,126 and is expected to consolidate. We are looking for the next level of resistance at 2018’s high of ~4,403 and the next level of support at the 50-DMA (~3,940) if immediate support at ~4,120 fails.
Author: Midhun Parameswaran
Global Focus Frontier
National Bank of Kuwait is the leading banking group in Kuwait in terms of assets, customer deposits, and customer loans and advances. Its strong leadership position across its product offerings will pave the way for its future growth.
China A Shares
The CSI 300 rose 0.12% this week on lower volume and remains in a Confirmed Uptrend with two distribution days. China’s infrastructure investment plans for 2020 and possible stimulus measures to boost the economy lifted market sentiment. Profits earned by China’s major industrial firms in November broke a three-month declining streak and grew at an eightmonth high. The CSI 300 index was trading constructively above its 50-DMA with resistance at its previous high of ~4,067. We expect the index to consolidate around ~4,020, and the next support level lies at ~3,919. Nonferrous metals and building materials stocks (CMT.CN and BOY.CN on our Focus List) were leading this week. We advise investors to stay cautious and patient and wait for more details on the stimulus or further progress on the U.S.-China trade deal. Focus on stocks with decisive breakouts from solid bases or that bounce off key levels of support on volume
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq remains constructive near all-time highs despite being extended above its 21-DMA (S&P 500: 3,169; Nasdaq: 8,753) and 50DMA (S&P 500: 3,110; Nasdaq: 8,541). Distribution stands at three days on both indices.
European Focus
On Thursday, the Stoxx 600 ended the day 0.11% above last Friday’s close and remained in a Confirmed Uptrend. Of the 17 indices we cover, 13 are in a Confirmed Uptrend, two are in an Uptrend Under Pressure, and two in a Rally attempt.
Global Focus Developed
Australia’s ASX All Ordinaries Index is consolidating above its 50- DMA. The index was up 0.17% this week and remains in a Confirmed Uptrend with six distribution days.
Global Focus Emerging
The CSI 300 rose 0.12% this week on lower volume and remains in a Confirmed Uptrend with two distribution days. China’s infrastructure investment plans for 2020 and possible stimulus measures to boost the economy lifted market sentiment. Profits earned by China’s major industrial firms in November broke a three-month declining streak and grew at an eight-month high. The CSI 300 index was trading constructively above its 50-DMA with resistance at its previous high of ~4,067. We expect the index to consolidate around ~4,020, and the next support level lies at ~3,919. Nonferrous metals and building materials stocks (CMT.CN and BOY.CN on our Focus List) were leading this week. We advise investors to stay cautious and patient and wait for more details on the stimulus or further progress on the U.S.-China trade deal. Focus on stocks with decisive breakouts from solid bases or that bounce off key levels of support on volume.
Global Focus Frontier
National Bank of Kuwait is the leading banking group in Kuwait in terms of assets, customer deposits, and customer loans and advances. Its strong leadership position across its product offerings will pave the way for its future growth.
China A Shares
The CSI 300 rose 1.69% this week on higher volume. We upgraded the market to a Confirmed Uptrend after Friday’s close as the CSI 300 broke above its 50-DMA and surged 1.98% on heavy volume. The distribution day count fell to three. After four days trending flat, the index surged Friday on news that the U.S. agreed to a phase-one trade deal with China and to delay tariffs that were slated to go into effect on December 15. China’s Annual Central Economic Work Conference concluded Thursday with signals of a looser economic policy, boosting sentiment. Most sectors gained this week, with Technology outperforming. Our conviction has increased and we recommend gradually adding positions in names with strong fundamentals and a good technical profile. Avoid chasing extended ideas. The CSI 300’s next support is at the 50-DMA at ~3,900 (-1.7%) and resistance is at 3,970–4,030.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq made new alltime highs this week, continuing to trend higher above all major moving averages. Distribution stands at four days each with no expiration for two weeks.
