Author: Neeraj Khanna
US Focus Long
U.S. Indices traded relatively flat this week, inching into all-time highs on Thursday. The S&P
500 did pick up its fourth distribution day on Wednesday, though volume has been well below
average throughout August. Leadership continues to act well, with multiple U.S. Focus List ideas
beginning to hit new highs each day in conjunction with a handful of new quality breakouts.
This positive technical action keeps us bullish on the general market. We will watch for a further
rise in distribution as well as deteriorating price action in leadership and the major averages alike
before taking a more cautious approach in the market. We remain in a Confirmed Uptrend, now
up 2.5% on the S&P 500 and 5.6% on the Nasdaq since the July 8 follow-through day.
European Focus Long
European markets rallied strongly this week. Almost all developed
European indices were up more than 1% on a weekly basis, while
on average, European markets gained 1.9% over the week as of
Friday morning. Germany performed the strongest, thanks to favorable
economic data and corporate earnings. The DAX posted a weekly gain of
3.3% as of Friday morning. Denmark underperformed, with the index
down -2.3% on a weekly basis. Portugal, Sweden, Finland, and Austria
were also top performers, with weekly gains of more than 2% as of Friday
morning.
Global Focus Developed Long
The Australia ASX All-Ordinaries Index gained 0.7%, bouncing back
after last week’s losses and closing within 1% of 52-week highs. It
picked up two distribution days last week and has three over the past five
weeks. The next key level to the upside is AUD 5,700, the highs before
the sharp breakdown in August 2015. If it corrects, the AUD 5,500 level
will likely be the first level of support, close to its rising 10-week moving
average.
Global Focus Emerging Long
Chinese markets continue to consolidate near moving averages.
One distribution day was recorded during week bringing the total
to four in the last five weeks. Markets remain Under Pressure.
Global Focus Frontier Long
US Focus Long
U.S. Indices traded relatively flat all week before breaking out Friday on the back of another
strong non-farm payrolls number. This is the second beat in a row that has resulted in sharp
gains for the market. Leadership ideas continue to surface each week, making a strong
case for additional gains going forward. There remain very few signs of weakness, so any
lighter volume pullback should currently be viewed as a buying opportunity. The market
remains in a Confirmed Uptrend, with three distribution days each on the S&P 500 and
Nasdaq.
European Focus Long
European markets rallied strongly the last two days of the week, following
the Bank of England’s aggressive stimulus measures to bolster the
economy and U.S. July job data that well exceeded estimates. The indices
were able to trim their losses to 0.5% on average for the week after
being down 1.4% through Thursday. Four countries, the U.K. (+1%),
Switzerland (+0.9%), Germany (+0.3%), and Luxembourg (+0.2%), were
able to close with gains. Denmark (-4.9%), Italy (-1.5%), and Portugal
(-1.4%) were the worst-performing countries, with losses exceeding 1%.
Global Focus Developed Long
The Australia ASX All-Ordinaries Index lost 1.0%, falling for the first
week in four after rising about 6% over the previous three weeks to
within 1% of 52-week highs. It picked up two distribution days this
week and now has three over the past five weeks.
Global Focus Emerging Long
Chinese markets traded flat for the week as both markets remain
trading at or near support levels. The Shenzhen continues to sit on
the 40- and 10-week moving averages while the Shanghai is trading
at the 10-week moving average. Markets are under pressure with
one distribution day recorded, bringing the total to three in the last
five weeks. Going forward, to remain constructive, we need to see
distribution continue to slowdown and markets to hold support.
