The Australia ASX All-Ordinaries Index traded flat for the week, up
0.3%. The market took a pause this week, continuing to trade near
resistance at the 40-week moving average. The Australian market
continues to be strong among APAC markets. We have added four
names (TNE.AU, CTD.AU, COH.AU, and ORA.AU) since November
2015, the highest number of all APAC markets. The index is in a
Confirmed Uptrend for a fifth week.
Author: Neeraj Khanna
Global Focus Emerging Long
Mainland Chinese markets rebounded strongly this week led by the
Shenzhen, up 9% while the Shanghai finished up 5%. Both markets
traded on above average volume for the week and are also now trading
above the 10-week moving average. In the coming days, we look to see
whether markets can rise above prior short-term peaks. We view 1,900
(3% away) for the Shenzhen and approximately 3,050 (3% away) for
the Shanghai, as the next short term resistance hurdle. Markets have not
traded above these levels since January this year and a break above would
indicate a positive shift to the rally. If this should happen, we would then
shift our attention to resistance at the 40-week moving average. Until
then, the market condition will continue to remain Under Pressure.
Global Focus Frontier Long
US Focus Long
U.S. indices continued their move higher this week, extending gains for a fourth straight
week. The major averages have maintained this squeeze higher with a tremendous amount of
support from commodity-related equities. The S&P 500 is now trading just above its 200-day
moving average, but will need actual buying, not just short covering, to push this rally back
into new highs. The list of quality ideas showing strong earnings and revenue growth has
continued to consolidate over the last few weeks, but remains thin. We are especially watchful
for ideas emerging from early-stage bases, because ideas with actual top- and bottom-line
growth will be needed for a sustainable rally. The market remains in a Confirmed Uptrend, up
~4% from the follow-through day on February 17, 2016.
European Focus Long
The European Central Bank surprised markets with the magnitude
of its rate changes and its repurchase program, leading to an initially
strong positive response. But ECB President Mario Draghi later
stated he didn’t expect further interest rate cuts, causing markets to
reverse lower. Most of the indices finished the week in positive territory
after strong rallyies on Friday. Italy (+3.6%), Spain (+3.2%), Austria
(+2.8%), and Sweden (+1%) were each up over 1%.
Global Focus Developed Long
The Australia ASX All-Ordinaries Index gained 1.4% this week. It
has now gained more than 8% over the past four weeks. It closed just
below its 40-week moving average. Volume was well above average for a
sixth consecutive week. The index is in a Confirmed Uptrend for a fourth
week.
Global Focus Emerging Long
Mainland Chinese markets finished down this week with the Shenzhen
and Shanghai declining 1.3% and 2.2%, respectively. Same as last week,
the markets continue to consolidate near critical support levels near year
lows as the market condition remains Under Pressure.
Global Focus Frontier Long
US Focus Long
U.S. indices remain in a rally, led by a strong move in the Material and Energy sectors. The
strength in commodities persist as stocks with exposure to steel, oil and gold, are under very
heavy accumulation. In addition, slightly better than expected economic data points over the
last few weeks, including a positive February Jobs report today, could force the Fed’s hand to
raise rates at the mid-March FOMC meeting. Despite the strength in broken sectors coming
off the bottom, we continue to advise patience as we are looking for fundamentally strong
stocks to continue build constructive bases. Multiple indices and sectors face up-resistance at
their respective 200 dma in the coming days/weeks. We are encouraged by the improvement
in the general market but remain very selective of security allocation. The market is in
confirmed uptrend, up 4% since the follow –through day.
European Focus Long
European markets performed well this week, up over 3% on average,
as a commodity prices rally from last week continued and the chances
of further easing by the European Central Bank appears likely
next week. The indices exceeding the average gain of 3% for the week
included Spain (+5.5%), Denmark (+5.4%), Portugal (+5.1%), Italy
(+4.3%), Norway (+4.2%), Austria (+3.9%), Netherlands (+3.7%), and
Germany (+3.2%).
