In this briefing:
- Market Wrinkles Ahead of a US/China Deal Spike
- Global-Ex-U.S. Equity Strategy: Add Exposure To Technology, Communications
- U.S. Equity Strategy: Bullish Outlook Intact
- Golden Agri Bull Pivots to Get Involved
- SEC 47k Rejection Targets Base Case Support
1. Market Wrinkles Ahead of a US/China Deal Spike
Ftse China A50 Index (XIN9I INDEX) has been our top long bet in Asia from early January (10,800), outperforming both the HSCEI and HSI.
Key chart points that suggest the A share rise will be getting ahead of itself after the next rally phase out of bullish triangulation. Once this breakout terminates we see evidence of a harder decline unfolding ahead of a trade deal. This window allows for a pullback ahead of a trade deal spike that will put in place a key cycle peak just under shanghai composite resistance that goes back to highs from 2009, 2016 and 2018.
Keep in mind that China’s cycle exhibits a series of rally and fade cycles that form a multi-year basing process. The Shanghai composite longer term chart outlined rally and basing cycle correlations.
2. Global-Ex-U.S. Equity Strategy: Add Exposure To Technology, Communications
We view weakness in global equity markets over the past week as correcting a significant amount of the excess optimism. We recommend taking advantage of the pullback by adding exposure to our favorite areas – namely Technology. Our overall outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains positive and we continue to expect higher equity prices going forward. In today’s report we provide a technical appraisal of all major markets and highlight actionable stocks throughout the int’l Technology and Communications sectors.
3. U.S. Equity Strategy: Bullish Outlook Intact
Market activity, both bonds and stocks, has been all about realigning expectations. Wednesday’s Fed announcement was more dovish than expected, and the market is now pricing in roughly 25bps of cuts by the end of 2019. Stocks reacted positively on Thursday, but then reversed (and then some) on Friday as global growth concerns became a little more serious. We continue to maintain our positive outlook. In today’s report we recap our bullish investment thesis and highlight attractive Groups and stocks within Consumer Staples, Materials, and Services.
4. Golden Agri Bull Pivots to Get Involved
Golden Agri Resources (GGR SP) has started a basing process below pivot support at 0.30 as the daily MACD cycle has not been confirming recent lows for a case of underlying supportive bull divergence (sell pressure dwindling as downside momentum tapers off).
Bull divergence outlined in the MACD is supportive on a macro basis, however there is downside risk stemming from the micro rising wedge. A fresh diverging low is expected to market a price low to work into.
Immediate inflection levels at 0.30 and 0.26 will dictate near term direction out of the micro rising wedge. Ideal downside projections are noted along with a bullish resistance threshold.
5. SEC 47k Rejection Targets Base Case Support
Samsung Electronics (005930 KS) met our rally target outlined in 28 January insight SEC and SK Hynix Breakouts at 70.3k. In that insight we outlined the tactical rise would give way to a pullback toward ideal pocket support that would offer a better risk to reward intermediate entry point for SEC.
Multiple rejection at that 47.2-5k barrier call for fresh lows toward preferred pocket and buy support. Only external pressures would adjust our downside bias to lower pattern support that comes in at 35k.
MACD basing support is expected to create a solid support for price on weakness. Risk lies with the MACD slipping back within the pattern range.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
