In this briefing:
- Global Equity Strategy: Bearish with the Exception of EM.
- Bearish U.S. Outlook Intact
- Apple Pain Trade Continues with Key Levels in Focus
- SPX and Asia Bear Kick Off
1. Global Equity Strategy: Bearish with the Exception of EM.
Our cautious outlook and expectation for continued downward consolidation for global equities remains intact. Broad global indexes (MSCI ACWI, ACWI ex-U.S., EAFE, and EM) are all trading within patterns of lower highs and lower lows, leading us to believe the most likely scenario is that this near-term bounce is likely nothing more than a countertrend rally before longer-term downtrends reassert themselves. The one bright spot is EM. In this report we highlight a number of attractive set-ups within the Financial, Communication, Engineering & Construction, and Transportation Sectors.
2. Bearish U.S. Outlook Intact
Wednesday’s rally in U.S. equities was likely nothing more than a brief bear market rally, as confirmed by Thursday’s sell-off. All the major averages remain in downtrends and there continues to be an absence of bottoming patterns. Concerns that we have highlighted over the past several months continue to lead us to our intact cautious outlook. In this report we highlight important technical levels and indicators, and highlight a bright spot for investors within the Consumer Staples Sector.
3. Apple Pain Trade Continues with Key Levels in Focus
Following up on our August 2018 AAPL sell call and our insight Apple Trend Fractures but Nearing Tactical Buy Support with a Bumpy Road Ahead. Our core bear thesis for tech from the summer of 2018 is playing out and still has more pain left until we reach key target levels in late Q1 2019.
Sell rally attempts was the bet/call.
Break below 160 support was pivotal.
Core macro bear bias remains toward the higher degree 50% retracement.
Near term down cycle looking increasingly oversold and reaching for our target support outlined in charts and in the previous insight.
Will be watching sell volume on today’s miss.
4. SPX and Asia Bear Kick Off
A brief positioning sequence update as trade kicks off for 2019. Our S&P bounce sequence outlined after Christmas met our C wave target and now set for some tactical ranging before reach for new lows in Q1.
The fact that Asia could not must a rally on the back of the US 5% move higher on December 26th shed light on the bias this is resuming today after flat range patterns are breaking down.
Sell rallies remains our macro bias, however we see a tactical low shaping up next week in part of a range bounce flat pattern ahead of the bigger bear cycle due into late Q1.
Asia base case downside targets are outlined as well as fresh short resistance levels.
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