In this briefing:
- Samsung Bear Targets Coming into Focus
- 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
1. Samsung Bear Targets Coming into Focus
Samsung Electronics (005930 KS) bear call from 50k has rewarded with a series of short trades with the most recent short from 46k and has sliced through support at 39,500. Impulsive nature of the decline tell us a key low will take more time to take shape.
SEC is pressing on critical relative support versus the Kospi. A break would send ripples through the broader market in terms of the direction bias. Kospi has already spent far too much time below the macro pivot barrier at 272k for signs of any immediate recovery. Risk lies with a downside overshoot below 250 support for the Kospi.
SEC is completing a minute full wave count down that sets up a counter trend bounce which is tradable but the major low remains elusive. We outline probable downside targets in late Q1/Q2, upside cap into Q3 and the more strategic buy support.
2. 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.
3. 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.
4. 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.
5. 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.
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