U.S. indices broke into all-time highs this week, gapping up Wednesday after consolidating
over the last several weeks. We are looking for the major averages to consolidate at current
levels, avoiding distribution while leadership continues to work itself higher. Distribution
currently stands at four days on the S&P 500 and five on the Nasdaq. One day is set to expire
on the S&P next week, while two days will fall off on the Nasdaq.
Tag: Confirmed Uptrend
US Focus Long
“The U.S. market remains in a Confirmed Uptrend as the major averages continue to trade
constructively. Distribution stands at four days for the S&P 500 and six for the Nasdaq,
with one set to fall off the Nasdaq next week. For both indices, support along the 50-DMA
continues to rise, as price looks poised to break higher toward resistance along the upper
channel line. We remain constructive on the market as long as the indices continue to hold
above short-term support levels and distribution stays relatively low.”
US Focus Long
“The U.S. market remains in a Confirmed Uptrend, aided by a strong rally in the FANG ideas
and a further jump in Financials. Distribution stands at four days for both the S&P 500 and
Nasdaq, with one day set to fall off the S&P next week. Q4 earnings season has begun and
will drive market direction over the next several weeks. We still view the upper channel line on
the S&P 500 as resistance, and a sharply rising 50-day moving average as support. “
US Focus Long
“The U.S. market remains in a Confirmed Uptrend, rallying off support levels to start the new
year. Distribution fell to three days on the S&P 500 and four on the Nasdaq. Our concern
now is that no further distribution days will expire for a few weeks, leading us to believe the
count may reach a concerning level heading into Q4 earnings season. Still, as of today, there
has been few signs of weakness across the major averages and leadership alike. We are looking
for the S&P 500 to hold support along its 50-day moving average, while finding resistance
along its upper channel line. “
US Focus Long
The U.S. market remains in a Confirmed Uptrend, despite significant divergence between the
S&P 500 and Nasdaq. Accumulation across value has supported the S&P 500, which remains
less than 1% off highs. Conversely, continued weakness across growth, specifically Technology,
has led to an intraweek 50-day moving average break by the Nasdaq. Ideas that have led since
the election continue to do well. We recommend focusing on high relative strength ideas
within Banks, Capital Equipment, Transportation, Energy, and pockets of Retail as they
continue to lead.
Global Focus Emerging Long
Mainland Chinese markets fell for the week, but remain in Confirmed
Uptrend. The Shanghai and Shenzhen pulled back 0.55% and 2.1%,
respectively, but both remain above moving averages with uptrend still
well intact. Market direction going forward could be directed by the
strength in the Shanghai. Since October, the market has outperformed
the Shenzhen, up 8.9% vs. 6.2%. The Shanghai has also accrued fewer
distribution days with only two vs. five for the Shenzhen, in the last five
trailing weeks. Currently, the Shanghai is extended from the 10-week
moving average at approximately 4%. We would not be surprised to
see the market take a pause in the coming week, which would allow
the average to catch up.
Global Focus Emerging Long
Mainland Chinese markets rallied higher this week. The Shenzhen was
up 0.9% while the Shanghai outperformed, up 2.2%. Markets remain
in a Confirmed Uptrend with five and three distribution days on the
Shenzhen and Shanghai, respectively.
Market View
The U.S. market condition was upgraded to a Confirmed Uptrend. Strong price action across multiple indices and sectors has led to a reemergence of breadth in leadership ideas. All risk-on sectors are showing strength over the short-term (trailing four weeks), led by Transports, Capital Equipment, and Financials. Looking ahead, we would like to see the S&P 500 and Nasdaq break through resistance and into all-time highs, joining the Rus-sell 2000 and Dow Jones Industrial Average indices.
Global Focus Emerging Long
Mainland Chinese markets traded mixed this week with the
Shenzhen up 0.15% and the Shanghai down 0.1%. Indices took
a pause after rising for consecutive weeks but continue to trade
positively. Both have trended above key moving averages for
several weeks, with above average volume, which is encouraging.
We continue to wait for a surge in volume on a weekly basis that
would provide more conviction in a prolonged change in trend, but
acknowledge markets could drift higher in the short-term. Markets
remain in a Confirmed Uptrend with three and five distribution
days for the Shanghai and Shenzhen, respectively.
US Focus Long
U.S. indices ended a choppy week slightly higher, managing to hold on to gains over the
last few weeks. The S&P 500 has made little progress since the July 8 follow-through day,
now trading right along its 50-day moving average. The Nasdaq remains the leading index,
currently holding its 21-day moving average, and looking to breakout again next week.
Leadership still looks strong, with many ideas making new highs despite consolidation in the
S&P 500. The market remains in a Confirmed Uptrend, with six distribution days on the
S&P 500 and three on the Nasdaq.
