Category: Stock Markets

Analysis of major stock markets around the world.

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Footsie stalls, Sterling weakens

Political uncertainty, with a hung parliament, increased downward pressure on Sterling which is testing primary support at 1.13/1.14 against the Euro. Breach would signal a test of the 2016 low at 1.10.

GBPEUR

The FTSE 100 stalled at 7600, with bearish divergence on Twiggs Money Flow indicating medium-term selling pressure. Retracement that respects support at 7400 would re-affirm the target of 7700*. But breach of the rising trendline is as likely, which would warn of a test of primary support at 7100.

FTSE 100

* Target: 7400 + ( 7400 – 7100 ) = 7700

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DAX renews advance

Germany’s DAX is advancing after retracement respected its new support level at 12400/12500. Rising Twiggs Money Flow signals long-term buying pressure. Target for the advance is 13400*.

DAX

* Target calculation: 12400 + ( 12400 – 11400 ) = 13400

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S&P 500, Nasdaq, Fedex bull signal

Bellwether transport stock Fedex [FDX] broke resistance at $200, signaling an increase in economic activity.

Fedex

The S&P 500 followed through above 2400, offering an immediate target of 2500. Recovering Twiggs Money Flow signals medium-term buying pressure.

S&P 500

The Nasdaq 100 has gained more than 20% in the last 3 months, since breaking resistance at its Dotcom high of 4800. With Amazon breaking through $1000, I am concerned that tech stocks are over-heating.

Nasdaq 100

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Europe consolidates

Dow Jones Euro Stoxx 50 appears unruffled by Donald Trump’s visit and withdrawal from the Paris Accord, consolidating above support at 3500. Respect is likely and would signal a further advance to the 2015 high at 3800*.

DJ Euro Stoxx 50

* Target calculation: 3650 + ( 3650 – 3500 ) = 3800

An unintended consequence of Trump’s failure to re-affirm NATO’s Article V, may be that European states learn to rely less on an external party and draw closer together to support each other.

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Footsie stalls as Pound weakens

Sterling continues to test primary support at 1.140 Euro. Breach would signal a decline to the 2016 low at 1.100.

GBPEUR

The FTSE 100 advance stalled, signaled by a doji on the weekly chart, with bearish divergence on Twiggs Money Flow indicating medium-term selling pressure. Retracement that respects support at 7400 would re-affirm the target of 7700*.

FTSE 100

* Target: 7400 + ( 7400 – 7100 ) = 7700

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India: Sensex advance

India’s Sensex continues to advance, breaking resistance at 31000. Rising Twiggs Money Flow indicates long-term buying pressure. Target for the advance is 32000* but expect retracement to first test the new support level.

BSE Sensex

* Target: 29000 + ( 29000 – 26000 ) = 32000

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Shanghai retraces

The Shanghai Composite Index retraced to test support at 3100. The decline on Twiggs Money Flow indicates long-term selling pressure. Reversal below 3000 would confirm a primary down-trend.

Shanghai Composite Index

* Target medium-term: May 2016 low of 2800

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Australia: ASX rallies

Iron ore is falling.

Iron Ore

And the broader DJ-UBS Commodity Index is testing support at 82. Breach would signal a decline to test the 2015 low at 74.

DJ-UBS Commodity Index

But the Aussie Dollar rallied Friday, the large engulfing candle suggesting another test of resistance at 75 US cents.

AUDUSD

Miners finished strongly, with the ASX 300 Metals & Mining index reflecting short-term buying pressure. 13-Week Twiggs Money Flow recovered above zero.

ASX 300 Metals & Mining

The ASX 200 is testing resistance at 5800. A 21-day Twiggs Money Flow trough above zero indicates medium-term buying pressure. Breakout above 5800 is likely and would suggest another test of 5950/6000.

ASX 200

Banks also rallied, with the ASX 300 Banks index headed for a test of 8500. Expect strong resistance.

ASX 300 Banks

Perhaps this UBS report had something to do with it.

I believe that the latest rally is a secondary reaction and that the ASX is headed for a down-turn, with miners and banks leading the way. But it’s no use arguing with the (ticker) tape.

A prudent speculator never argues with the tape. Markets are never wrong, opinions often are.

~ Jesse Livermore

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UBS: Buy miners | Macrobusiness

By
Re-published with kind permission from Macrobusiness.

If you want to know why RIO is higher today than when iron ore was at $92 then check this out from UBS:

Hitting the Wall or Just a Wobble?

Australian equities performed poorly in May (falling 3%) despite global markets posting solid gains (rising 2%). The market weakness in May was overwhelmingly driven by the heavyweight banks sector. On balance we believe “hard landing” fears are overdone though we concede that the consumer outlook is lacklustre.

Staying Overweight Resources and Neutral Banks

We continue to overweight the resource sector on the basis of relative valuation, and benign (iron ore) to moderately constructive commodity expectations (copper, oil, mineral sands). With the bank sector off 10% (total return), we think the sector is once again looking “fair” in an absolute sense (12.8x and 5.9% yield) and notionally cheap in a relative sense. A constrained growth outlook and near-term capital uncertainty keep us neutral.

Other Favoured Themes

From a thematic standpoint two of our key themes remain 1) public infrastructure exposure (we continue to hold Boral and Lend Lease Group) and 2) domestic energy suppliers continue to be well supported by investors (we continue to hold AGL Energy, Origin Energy). We continue to overweight US$/US economy plays.

 

What can I say? That’s some crazy shit.

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Weekly Investment Commentary from Bob Doll | Nuveen

Key points from Bob Doll’s weekly investment summary:

  • We believe U.S. economic growth should rebound in the second quarter and corporate earnings will remain solid.
  • Investors remain uneasy about global macro conditions, but we believe the backdrop remains supportive for equities.
  • We may be seeing a transition in global equity leadership from the United States to Europe and select emerging markets.

Contrast this with Philip Parker’s outlook at Altair Investments.

Read more at: Weekly Investment Commentary from Bob Doll | Nuveen

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