Expecting Post-Vaccine Rebound

 Summary of content for the week of  Nov 27:

1. Week 48 major indexes performance;

2. Week 48 US sector indexes performance;

3.Major indexes weekly charts of support and resistance levels;

U.S

U.S major indexes closed higher in the holiday-shortened week. Most of the indexes hit record highs, with the DJI gaining the most attention by crossing the 30,000 threshold for the first time. 

The ascent to 30,000 was boosting by encouraging vaccine news amid rising cases and renewed shutdowns in certain regions in EU, Asia and the U.S, stock markets gains are reflecting expectations for a post-vaccine rebound next year and beyond.

Major vaccine and political events appeared supportive: 

1. The third announcement on the vaccine was from AstraZeneca(ANZ.O) in the partnership Oxford University that its vaccine  was up to 90% effective;

2. Joe Biden was preparing to nominate former Fed Chair Janet Yellen as Treasury Secretary. Yellen's appointment is welcomed by investors noted her dovish tenure while at the Fed.

3. General Services Administration(GSA) was formally beginning transition measures in preparing for a Biden administration. Trump tweeted that he was authorizing GSA's action "in the best interest of our country".

But Economic data appeared a negative sign. Initial jobless claims rose unexpectedly to their highest level in five weeks, while personal income fell in Oct. 

SPX 11 sector indexes performance. Reopening hopes boosted cyclical stocks, particularly Energy(XLE) and Financials(XLF), airlines and travel and leisure-related stocks also rebounded, while Health care(XLV), Utilities(XLU) and Real Estate(XLRE) lagged. Refer to the below table for SPX sector indexes ETF weekly performance. 

China/HK

Chinese stocks rose for the week as solid economic data outweighed concerns about rising defaults among domestic bond issuers. SSE index rose for 2nd week to near five-week highs, technically bullish bias. HSI index rose for 4th week in a row to just underneath 27,000 level. 

Singapore

Singapore STI rose 4th week in a row to a new high of 2920 since Mar 6, 2020 and off by profit-taking, as there is a gap resistance level at 2959-2892 area. The index appeared to be technically overbought, do expect profit-taking or sideway consolidation in coming week(s). 

                                     

Central Theme Now: Sector Rotation

 Summary of content for the week of  Nov 20:

1. Week 47 major indexes performance;

2. Week 47 US sector indexes performance;

3.Major indexes weekly charts of support and resistance levels;

U.S

U.S major indexes ended mixed for the week ended Nov 20, SPX and DJI finished lower after two-week up in a row but tech-heavy Nasdaq index(COMP) record slight weekly gain. As the incoming positive vaccine news and restriction measures resurface caused by the recent spike in virus cases and hospitalizations, we see this tug-of-war likely continuing between the leaders so far and the economically sensitive investments that have lagged. 

Sectors Rotate: Tech and growth stocks, and also stocks related to "stay-at-home" led the mark since Mar bottom. However, the recent vaccine developments acted as a catalyst for the shift in investment theme, as confidence in economic rebound a matter of time has been strengthened. In the previous two weeks, We see obvious rotation to cyclical sectors such as energy and financials which have been negatively impacted by the pandemic. 

Among 11 SPX sectors, Energy(XLE) outperformed as oil prices rose. Healthcare(XLV) and Utilities(XLU) lagged. Market starts to pay attention to travel and holiday leisure-related stocks such as airlines, cruise ships, and casino stocks. Refer to below weekly sector performance table. 

China/HK

Shanghai SSE index rose strongly to its two-month high after solid economic data, China also signs the Regional Comprehensive Economic Partnership(RCEP) with 14 other Asian countries. The free trade area is the world's biggest accounts for over 30% of the current global GDP. Technically, SSE still trading inside its four-month sideway price top range. 

HSI index also rose to its four-month high, 3rd week consecutive up, next resistance to watch out is at 27000 level. 

Singapore

STI has been exceptionally strong in the past three weeks, added a total of 15.3% as compared to its total loss of 25.7% from the beginning of the year till three weeks ago. Immediate technical resistance to watch at previous high 2839 hit in June. The badly hit airline and related stocks performed the best, such as SIA and SATS.

Vaccine Optismism Prompts Market Rotation

 Summary of content for the week of  Nov 13:

1. Week 46 major indexes performance;

2. Week 46 US sector indexes performance;

3.Major indexes weekly charts of support and resistance levels;

U.S

U.S stocks build on gains following vaccine news. All three major U.S indexes added to the previous week's sharp gains and hit new all-time new intra-week highs, DJI and SPX able to close at new high but Nasdaq closed lower as technology stocks trailed most other sectors. 

Stocks surged on Monday after Pfizer and BioNTech announced that their vaccine had 90% effectiveness, triggering a wave of hope that vaccines will address the coronavirus crisis and accelerate the economic recovery. It's expected mass production and widespread distribution of a vaccine will likely take at least months, and in the meantime the virus cases continue to surge to a new high in the States and many of E.U countries. Thus, do expect market volatility along the way of recovery. 

Market Rotation. The Pfizer news prompted a sharp rally in cyclical shares, especially those of travel and leisure-oriented firms. Energy and banks rebounded, conversely "stay-at-home" stocks such as Amazon and Netflix were sold out.

Among SPX 11 major sectors, Energy(XLE) and Financials(XLF) were the two top-performing sectors this week with 17% and 8% gains. Conversely, Technology(XLK) was the only sector closed underwater this week, losing 0.3%. Refer to below SPX sectors' weekly performance table.

China/HK

Shanghai stocks declined slightly for the week as unfavorable macro news outweighed generally positive corporate earnings. U.S-China relations suffered their latest setback when Trump announced prohibiting Americans from investing in Chinese firms that have ties to the country's military. The list of companies includes China Mobile and China Telecom, whose U.S listed shares fell sharply on Friday U.S trading hour.

China's proposed antitrust laws were the second recent setback for China's top internet companies after fintech company Ant Group's IPO was pulled back on Nov 3. Alibaba(BABA) continued under selling pressure on Friday. 

Technically, SSE index still trading within its 4-month sideways price range, under consolidation with bullish bias as the index is well trading above its 50 and 200 weekly MA. HSI index closed 2nd week up, still in bullish momentum as it closed above 26000-level for the first time since early March this year.

On his keynote speech to Caixin Summit on Friday, the billionaire founder of the world's biggest hedge fund Bridgewater Ray Dalio believes now is "Special Moment" for Markets as China ascends. Foreign flows into China's stocks and bonds market seeing very strong. 

Singapore

STI index rallied for 2nd week, was the best performer for the week(refer to my major index performance table below). It has recorded 11.5% strong gains for the last two weeks, recovered some of its loss but the index still underwater 15.87% YTD, one of the worst-performing Asian indexes. Immediate technical resistance at 2733 level-50weekly MA for the coming week. 

Expected "Goldilocks" Election Result Drives Rally

Summary of content for the week of  Nov 6:

1. Week 45 major indexes performance;

2. Week 45 US sector indexes performance;

3.Major indexes weekly charts of support and resistance levels;

U.S

U.S stocks recorded their best weekly gain since early Apr as investors reacted to the increased possibility of a divided government, including a potential Biden win and continued Republican control in the Senate. The final results are still unknown as of Saturday. However, market began to price in the scenario of a SPLIT GOVERNMENT that potentially reduces the likelihood of immediate tax hikes and increased regulations, while not removing the potential for an agreement on some form of fiscal-aid package.

Jobs data released on Friday was better than expected in Oct, showed that economy recovery is still on track despite election uncertainties, rising virus cases.

A strong week globally, the SPX index had a V-shape rebound with 7.3% gain for the week, fully recovered its past three-week losses, and closed near its peak in one month. Tech heavy-weighted Nasdaq index(COMP) was the best weekly performer with a 9% gain. All major indexes except Shanghai (SSE) had a handsome gain of more than 6% for the week. Refer to the below major indexes weekly performance table below.

Among SPX sectors, Technology(XLK) was the best performer with 9.7% weekly gain, and Energy(XLE) recorded the least gain with 0.7%. Refer to the below sector indexes performance table.

China/HK

Chinese stocks advanced as a potential Biden win raised the outlook for improved U.S-China relations. A Biden win was widely expected as a positive sign for Asia as commented by DBS analyst- more predictable economic and political policies. As we emphasized in past posts, markets hate uncertainties. 

China PMI data reports also added evidence its economy's rapid recovery from the coronavirus. Technically, SSE index still trapped inside its multi-month sideway price range since Jul, and .HSI rebounded to its 4-month top, immediate technical resistance at 26000 level. 

Singapore

STI index had its best weekly gain since Jun, added 154.84pts or 6.4% this week. immediate technical support at the 2540-2520 gap support area.

U.S stocks Posted Biggest Drop Since March

 Summary of content for the week of  Oct 30:

1. Week 44 major indexes performance;

2. Week 44 US sector indexes performance;

3. Oct monthly major indexes performance;

4.Major indexes weekly charts of support and resistance levels;

U.S

As we emphasized in our week 43 weekly wrap- Markets hate uncertainty in the short-run. True enough, this week's market selloff became immediate evidence, the S&P 500 index fell almost 6%. its worst weekly decline since March 20, and volatility jumped 40% from prior weeks' level. The sell-off was largely driven by news that daily coronavirus cases have hit new record highs in U.S and EU, and less certainty that we will see another round of fiscal stimulus this year. 

The trifecta of worries: Days left before the U.S election; Coronavirus progress and the lack of progress on another fiscal stimulus package, weighed on stocks. Notably, the technology sector, which has been a leader for much of this bear-market rally, down 6.4%, making it one of the worst indexes this week.

Some good news. Strong 3Q GDP growth at an annualized rate of 33.1%, beat estimate of around 31%; jobless claims came in lowers than forecast, consumer spending increased for 5th straight month in Sep. Positive data showing the recovery well on its way. 

Major indexes performance for the month of Oct. Only Hong Kong and Shanghai indexes recorded a positive return of 2.8% and 0.2% respectively in Oct. The worst performer is Dow Jones which declined 4.6%. Refer to the below monthly index performance table for details.

Major indexes performance for the week. All major indexes underwater this week. The least loss was  Shanghai Index with 1.63% down, and Dow Jones was the worst performer with 6.47% down. Refer to below weekly index performance table for details.

S&P sector index performance for the week. All 11 sectors were underwater, utility(XLU) held up best and tech(XLK) and consumer discretionary( XLC) fell the most.

Technically, all three U.S major indexes still on uptrend on their weekly charts.

China/HK

China stocks fell in sympathy with the downturn on wall street, with SSE down 1.6%. Politics in focus as China's CCP held 5th plenum from Oct 26-29. Ant Group geared up for its mega IPO dual listing in Shanghai and HK, aims to raise around USD 35 billion in IPO sales. Technically, SSE immediate support level at 3200 its 3-month sideway bottom. HSI index immediate support at 24000 level. 

Singapore

STI becomes the worst Asia stock indexes with 25% loss this year so far, after logging its five-day losing streak this week. Valuation are proving attractive for some as the STI trades at 13x forecast PE. In comparison, the MSCI Asia Pacific Index is trading at 16x PE. Technically, STI immediate support at 2380 level.