In this briefing:
- Naver Bull Wedge to Trade Higher
- Japan Bank Index Bearish Head and Shoulders
- Global Equity Strategy: Bearish with the Exception of EM.
- Bearish U.S. Outlook Intact
- Apple Pain Trade Continues with Key Levels in Focus
1. Naver Bull Wedge to Trade Higher
After an impulsive rise from the 110.5k dual bottom, Naver Corp (035420 KS) has formed a bull wedge that is expected to see a nice rally and perform over the Korean market.
RSI also shows a compelling set up for a rise.
Buy volumes are starting to improve and supportive.
Targets are 8% and 14% higher from current levels.
Macro pivot resistance will cap rally attermpts in Q1.
2. Japan Bank Index Bearish Head and Shoulders
Japanese banks telegraphed the Nikkei plunge as did our insight on the USD/JPY Dollar Yen BIG Short/Inflection Level and Targets .
We flagged a bearish Nikkei cycle in Japan’s Crowded Long Faces Exodus Pressure.
Japan bank index exhibits are very clear bearish head and shoulder pattern that broke neckline support and will offer a great short into a bounce for further weakness. This warns of further deterioration in the Nikkei post uptick.
3. 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.
4. 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.
5. 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.
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