Chinese markets were mixed this week with the Shenzhen rising 0.3%
and the Shanghai sliding 0.7%. Markets traded relatively flat for the
week after coming down hard the prior week, but remain holding key
support at the 10-week moving average. One distribution day was added
this week bringing the total to three each over the last five weeks. We
continue to watch markets closely as they trade around support
levels. Market remains in a Confirmed Uptrend.
Author: Neeraj Khanna
Global Focus Frontier Long
US Focus Long
A slew of disappointing earnings from multiple mega-cap bellwethers led to some divergence
in the major U.S. averages. The S&P 500 ended the week up half a percent, while the Nasdaq
fell 0.6%. Alphabet, Visa, Microsoft, and Starbucks all underwhelmed, resulting in a 1.5%
decline for the Nasdaq 100 on Friday. Earnings are now beginning to play a critical role in the
overall action of the indices. Currently, we remain above support levels and are still holding
trend.
Going forward, we will need a better reaction to earnings in order for the market to continue
its march towards new highs. We view 2117 on the S&P 500 index as a significant technical
level to break and hold above in the coming days and weeks. The market is still up about 8%
since the February 17 follow-through day.
European Focus Long
European markets were, on average, down slightly Friday, but
finished the week with solid gains, increasing 1.5% on average.
The European Central Bank left rates and purchases unchanged, as
expected, after aggressive moves in March. ECB President Mario Draghi
emphasized the need for patience to allow the bank’s policies to work.
Four markets, Spain (+4.5%), Germany (+3%), Austria (+2.3%), and
Italy (+2.3%) were up more than 2% for the week. Only two markets,
the U.K. (-0.8%) and the Netherlands (-0.1%), were in negative territory,
and Finland was flat. The U.K. market is currently Under Pressure, the
only developed European market not in a Confirmed Uptrend.
Global Focus Developed Long
The Australia ASX All-Ordinaries Index gained 1.4% this week,
building on the prior week’s gains and closing solidly above its 40-
week moving average. It nearly reached year-to-date highs before pulling
back to end the week. The index is in a Confirmed Uptrend for the ninth
consecutive week, and has just two distribution days over the past five
weeks.
Global Focus Emerging Long
Chinese markets sold off hard this week with the Shenzhen plunging
5.6% and the Shanghai falling 3.9%. For the Shenzhen specifically,
this week’s loss was the first in the last six trading sessions. Despite the
significant move, it is important to keep it in perspective. Only one
distribution day was added to both indices bringing the total to two for
the Shenzhen and three for the Shanghai – not yet at an elevated level
in our opinion. Both indices still remain in a Confirmed Uptrend while
continuing to trade above the 10-week moving average where we think
key short-term support resides. We are watching intently in the coming
week to see if markets hold 10-week support. Our concern for market
conditions would increase should support fail and coincide with a
pickup in high volume distribution.
Global Focus Frontier Long
US Focus Long
U.S. indices rose nearly 2% this week on the back of better-than-anticipated earnings results from
the big money center banks. After consolidating for about a month, the market was able to move
higher on slightly better volume than we have seen over the past month. The S&P 500 is now
attempting to make a higher high, despite this largely negative macro backdrop.
• Beneath the surface, broken charts from earlier this year have risen sharply off their lows and
are now setting up for potential earnings breakouts. We have slowly begun adding to our U.S.
Focus List, patiently waiting for fundamentally sound companies to present ideal technical
action. Q1 earnings will play a major role in the number of overall buy recommendations – a
large increase in ideas will bode well for the general market going forward. We recommend
slowly testing the waters with our growth ideas as they begin to emerge from consolidation.
The U.S Indices are now up ~8-9% since the February 17 follow-through day.
European Focus Long
European markets continued the momentum that began at the end
of last week, gaining over 3% on average. Positive news of Chinese
exports rising in March for the first time in nine months, accompanied
by increasing commodities prices and better-than-expected results from
U.S. banks, contributed to the indices rallying. All the major European
markets were positive for the week except for Denmark, which was down
0.1%. The best-performing markets with growth of over 4% were Spain
(+5.1%), France (+4.5%), Germany (+4.5%), and Italy (4.2%). Most
European indices had follow-through days during the week and are now
in an uptrend. Denmark, Finland, and Norway are the only indices that
remain in a downtrend.
Global Focus Developed Long
The Australia ASX All-Ordinaries Index gained 4.1% this week.
It retook both its 10- and 40-week moving averages after falling the
previous three weeks. The market is in a Confirmed Uptrend with three
distribution days over the past five weeks.
