The Australia ASX All Ordinaries Index gained 4.2% this week.
After pausing last week, it has now gained nearly 7% over the past
three weeks. It surged above initial resistance at its 10-week moving
average. Volume was well above average for a fifth consecutive week. The
index is in a Confirmed Uptrend for a third week.
Author: Neeraj Khanna
Global Focus Emerging Long
Mainland Chinese markets were mixed with the Shenzhen falling 1.7%
and the Shanghai rising 3.9% this week. Indices were mixed due to an
intervention by the government to support state-owned companies in
effort to stabilize the market while the National People’s Congress meets
over the next 10 days. Markets continue to consolidate at lows for the
year and we continue to watch closely if crucial support is held.
Global Focus Frontier Long
Economic Summary
Strong consumer spending, housing sector, and job data favor healthy GDP growth in Q1.
Economic growth rate revised upwards.
The Q4 GDP increased by 1.0%, higher than the earlier estimate of 0.7%, and well above the economists’
consensus estimate of 0.4%. Lower than expected deceleration in inventory and imports helped in GDP
growth.
US Focus Long
U.S. indices continued to rally higher this week, with the S&P 500 breaking through
resistance at the 50-day moving average. Although the move came on light volume, without
much quality growth leadership, consolidation at these levels could bode well moving
forward. We are now looking for prior resistance at the 50-day to act as support. If the market
calms, it will allow new leadership to develop and emerge within the next few weeks. Patience
remains imperative here, as we look for the expansion in breadth needed to confirm our
conviction in this current move. The S&P 500 and Nasdaq remain in a Confirmed Uptrend,
up 1-2% from the February 17, 2016 follow-through day, with no distribution.
European Focus Long
European markets ended the week with gains, driven by a rally in
commodity prices and an upward revision in fourth quarter U.S.
GDP growth. Indices in Italy (+3.1%), Norway (+3%), the U.K.
(+2.4%), Denmark (+2.6%), Netherlands (+2.9%), France (+2.5%),
Spain (+2.2%), Sweden (+1.3%), and Germany (+1.4%) gained more
than 1% for the week.
Global Focus Developed Long
The Australia ASX All Ordinaries Index lost 1.3% this week. After
4% gains in the prior week, it met resistance at its 10-week moving
average before selling off mid-week. Volume was well above average for
a fourth consecutive week. The index is in a Confirmed Uptrend for a
second week.
Global Focus Emerging Long
The Philippines market traded flat this week as the trend continues to be
the same over four consecutive weeks. The market continues to trade at
resistance near the 10-week moving average and about 5% below the
40-week. The market remains in a Confirmed Uptrend with only one
distribution day in the last four to five weeks.
Global Focus Frontier Long
US Focus Long
U.S. Indices rallied this week after undercutting previous lows. The reason for this sharp
rally can be attributed to broken former leaders rallying from extreme sell-offs over the past
two weeks. The vast majority are now trading more than 20% off their highs, and most
were able to outperform the major averages this week. These bear market rallies can be quite
strong, however, many of these ideas carry a tremendous amount of overhead supply and will
likely run into their own individual areas of resistance. Resistance on the S&P 500 remains
the same – Approximately 1950 as well as the downward trending 50 and 200 day moving
averages. 1950 and the 50 dma are still 2% above current levels.
• On Wednesday, there was a Day 4 follow-through on the Nasdaq, which we currently have
little conviction in due to the lack of leadership. Nevertheless, if the indices are able to hold
their lows, it is possible new ideas could surface in the coming weeks. We are monitoring the
action of new ideas, and if we begin to see a rotation back into quality growth, our confidence
in the market will build. Currently, we still recommend remaining patient on any new buys.
