Stocks Hit New Highs in Busiest Week of Earnings Season

Weekly Wrap Content for the week of Oct 29:

1. Week 43 major indexes performance;

2. Week 43 US sector indexes performance;

3. Major indexes monthly performance for Oct

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

U.S

For the week ended Oct 29, the major indexes recorded gains and reached new highs. The week was the busiest of the third-quarter earnings reporting season, with several technology and internet-related giants announcing results, helping to keep trading volumes elevated. After a 5.2% correction in Sep, markets were up nicely in October, with the SPX returning an impressive 6.9% for this month and up over 1.0% for the week. Refer to major indexes’ weekly performance and monthly performance tables below.

Key highlights for the week/coming week:

1.    Biden’s new social spending framework-about $1.75 trillion. While the proposal has not been endorsed by all factions of the Democratic party, policy makers are looking to get the bill passed in the weeks ahead, along with a vote on the $1.2 trillion infrastructure package in the House. 

2.    FOMC meetings scheduled in the coming week Nov 2-3. The Fed has indicated consistently that it plans to begin with tapering of asset purchases (which it will likely begin next week and conclude in mid-2022) and then pause before deciding on a rate hiking decision. Historically markets have performed reasonably well in periods of tapering and into the start of rate hiking. It is only towards the end of a rate-hiking cycle that we tend to see more severe volatility. 

3.    Supply chain problems appeared to remain at the forefront, with both Amazon.com and Apple falling back and dragging the indexes lower on Friday morning after reporting lower growth forecasts because of labor and input shortages.

For the week, among 11 SPX sectors, Consumer discretionary(XLY) shares fared best, boosted by a jump in Tesla shares—bringing the firm’s market capitalization above USD 1 trillion—following news that rental firm Hertz Global agreed to buy 100,000 of its electric vehicles. Energy(XLE) and Financial(XLF) shares underperformed as oil prices fell back from multi-year highs.

Technically, all three major indexes weekly are in nice uptrend. All three indexes hit new record highs.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

For the week, the Shanghai Composite Index (SSE weekly chart) lost around 1%. The property sector, which accounts for about one-third of China’s overall economy, has stirred investor anxiety in recent weeks following defaults, credit rating downgrades and, most recently, a proposed tax plan as authorities seek to reduce leverage among leading developers.

New tech regulations. On the regulatory front, Beijing’s clampdown on the tech sector continued as the country’s internet watchdog proposed restrictions on companies with more than 1 million users with a security review before they can send user-related data abroad. Also, the PBOC warned that online brokerages unlicensed in China are acting illegally if they serve Chinese clients via the internet. In a speech, a PBOC official compared cross-border online brokerages to “driving in China without a driver’s license.” Popular online brokers Tencent-backed FUTU(also called moomoo in Singapore and U.S) and Xiao-mi backed UP Fintech( tiger broker parent) both dropped 26% and 27% in the week.

Hang Kong(.HSI weekly chart) stocks closed first weekly lower after four-week up in a row. Dragged down by tech and developers.

Singapore

STI index(STI weekly chart) closed with modest loss this week after a three-week up streak, the index appears very resilient.  

Earning Season Starts, Stocks Post Third-Weekly Gains

Weekly Wrap Content for the week of Oct 22:

1. Week 42 major indexes performance;

2. Week 42 US sector indexes performance;

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

U.S

For the week ended Oct 22, U.S. SPX, DJI index all moved to record highs, seemingly helped by a series of positive earnings surprises. Further reflecting the strong investor sentiment, the Cboe Volatility Index (VIX) also fell to its lowest level since the beginning of the pandemic. Equities have gained almost 6% this month, fully recovering from last month's losses. Refer to major indexes’ weekly performance table below.

Key highlights for the week/coming week:

1.    The 10-year yield hit highest since May amid concerns around persisting inflation (market-implied inflation expectations hit decade highs last week). 

2.    Hopes for additional fiscal stimulus also appeared to bolster sentiment. Negotiations continued between Democrats in the U.S. Senate over the size of the Biden administration’s proposed social infrastructure bill. 

3.    Earnings for big tech names in coming week will be watched closely, such as Facebook, Google, Microsoft, Macdonald’s Coca Cola, Apple, Amazon etc.

For the week, among 11 SPX sectors, Real Estate( XLRE) and Healthcare(XLV) led gains. Communication Services(XLC) were strong through much of the week, but social media stocks dropped sharply on Friday following downward guidance, which the company blamed on new privacy settings on Apple’s iPhones.

Technically, all three major indexes weekly in a well uptrend. DJI and SPX hit record new highs and Nasdaq just 2% below its all-time high.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

For the week, mainland Chinese stocks advanced as the Shanghai Composite Index (SSE weekly chart) added 0.3% after officials sought to calm fears about the property sector and China Evergrande Group made a delayed coupon payment, sparking a rally in the cash-strapped developer’s bonds and shares. Chinese stocks got off to a weak start after data released Monday showed that the country’s gross domestic product (GDP) rose a lower-than-expected 4.9% in the third quarter from a year ago as power shortages and property sector curbs reined in expansion. The latest quarterly growth was the weakest since the third quarter of 2020 and considerably slower than the second quarter’s 7.9% pace.

Hang Kong(.HSI weekly chart) stocks rebounded for fourth week, closed at six-week high.

Technically, .HSI index crossed and stayed well above its 20 and 50dma this week, which is a bullish sign for continuous recovery. .HSI index is the only index has a negative return YTD with 4.05% down(refer to the above index weekly performance table). Plenty of room to upside.

Singapore

STI index(STI weekly chart) ended at 3^rd weekly gain in a row, closed at 5 month high. Technical bullish with further upside move expected.  

Stocks Up On Economic and Earning Data

Weekly Wrap Content for the week of Oct 15:

1. Week 41 major indexes performance;

2. Week 41 US sector indexes performance;

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

U.S

For the week ended Oct 15, the three major U.S indexes rebounded, SPX closed at its four-week high, returning to within 2% of all-time highs, as earnings season kicked off into high gear, thanks to strong results from the big banks. Improving sentiment has favored cyclical assets, with value and small-caps, along with the energy and financial sectors, leading the way recently. Refer to major indexes’ weekly performance table below.

Key highlights for the week/coming week:

1.    Recent market focus: high energy prices and continued pressures from supply chain disruptions. Global oil prices continued their climb to a three-year high. Supply chain issues continue to grab headlines in the form of warnings from retailers struggling to fill shelves ahead of the holidays, while Apple scaled back its expectations for iPhone sales due to semiconductor chip shortages. 

2.    Fed policies amid rising inflation data continue to be under spotlight. It’s expected the Fed to begin tapering as early as next month, with gradual winddown in bond purchases by mid-2022. But actual near-zero interest rate should be maintained for at least another year or so. This means monetary policy will remain supportive for a bull market going forward for some time. 

3.    Initial jobless claims reported on Thursday rallied stocks with biggest gain since March, as the number had fallen to 293k, a new pandemic-era low. For perspective, initial claims peaked at a whopping 6.15million in early Apr 2020, when unemployment rate just below 15%.

For the week, among 11 SPX sectors, Materials(XLE) and the smaller Real Estate (XLRE) stocks led the gains as long-term bond yields fell, Consumer Discretionary(XLY) shares got a boost from Tesla, Communication Services(XLC) shares lagged. Refer to SPX sector indexes weekly performance below.

Technically, all three major indexes' weekly long-term uptrend remains well intact,  SPX index stood above all its 20 and 50dma, and within 2% to its all-time high.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

For the week, mainland Chinese stocks ended nearly unchanged ahead of next week’s quarterly GDP report. As the Shanghai Composite Index (SSEweekly chart) dipped 0.59%.  

Energy crunch. Investors have been spooked by a deepening energy crisis as cold weather swept into much of the country and power plants scrambled to stock up on coal, sending prices of the fuel to record highs. Oil and natural gas prices, which have also soared to multiyear highs, have also sent jitters across China, a net energy importer.

Property developer under stress. Despite continued concerns about China’s property sector, a central bank official said that the spillover effect of China Evergrande Group’s debt problems on the banking system is controllable and that risk exposures are not big. However, as China Evergrande failed to pay nearly USD 150 million worth of coupons on three bonds since Sep. Investors are now awaiting several key dates when Chinese property companies are due to make payments on their debt, with at least USD 92.3 billion of bonds coming up for payment in 2022, according to Refinitiv data.

Hang Kong(.HSI weekly chart) stocks rebounded for the 3^rd week, recoup most of its losses since mid-Sep.

Technically, .HSI index still trading under the downtrend channel, hitting its technical resistance at 50dma 25423 while also near its downtrend resistance at around the level. A break above its 50dma will be a positive sign for further rebound going forward.

Singapore

STI Index(STI weekly chart) ended the week nearly recouping its three-month high at around 3200 level. STI index has appeared very resilient recently despite that other regional key markets were quite volatile.  

Crude Oil Surged to Seven-Year High, Power Crunch in China, Earning Season Coming

Weekly Wrap Content for the week of Oct 8:

1. Week 40 major indexes performance;

2. Week 40 US sector indexes performance;

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

U.S

For the week ended Oct 8, the three major U.S indexes recorded gains, with the S&P 500 Index recovering a portion of the previous week’s losses. Nonfarm payroll report on Friday saw job growth figure missed but unemployment rate fell more than expected. The report seemed to preserve expectations that the Fed will still begin to rein in its monthly asset purchases later this year. Investors prepared for the unofficial kickoff of third-quarter earnings reporting season, set to begin with some major bank announcements the following week. Refer to major indexes’ weekly performance table below.

Key highlights for the week:

1.    The yield on the benchmark 10-year U.S. Treasury note briefly neared 1.62%, its highest level since early June, as latest nonfarm payroll missed way below expectation. 

2.    Debt ceiling agreement calms worries, if only temporary. Senate Republicans had agreed to take up a bill to raise the Treasury’s borrowing limit by USD 480 billion, which would allow the federal government to keep paying its bills through at least early December. Debt problems at another Chinese property developer also dampened sentiment. See below China section. 

3.    Energy crunch adding to supply-chain disruptions. Coal, Natural gas and oil prices all spiking up. The rocketing prices have triggered an energy crunch in Europe and China. Crude oil prices hit seven-year high in the week to close at 79.59, as major oil exporters decided not to increase production more than their modest previously agreed-upon amount.

Among 11 SPX sectors, Energy(XLE) stocks led the gains as natural gas prices and crude oil prices hit new highs. The small real estate sector(XLRE) lagged with modest losses. Refer to SPX sector indexes weekly performance below.

Technically, all three major indexes' weekly long-term uptrend remain well intact,  though SPX had its bearish cross in 20dma and 50dma. SPX currently just closed below its 50dma after the recent rebound.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland Chinese stocks rose Friday following the week-long Golden Week holiday as the Shanghai Composite Index (SSE weekly chart) added 0.67%, according to Reuters. Investors looked past the government’s regulatory crackdown, property sector turmoil, and a nationwide power crunch and focused on positive economic data. Data released Friday showed the Caixin/Markit services Purchasing Managers’ Index rose to 53.4 from 46.7 in August, rebounding from the lowest level seen since the height of the 2020 pandemic.

On Friday, Beijing ordered an immediate increase in coal output to fight the nationwide power crunch, Reuters reported. China has been gripped by power shortages, which hurt production in industries across several regions of the world’s second-largest economy.

News from the property sector continued to dominate investor concerns after developers reported sharply lower sales for September, with more announcements of missed debt payments. Fantasia Holdings, a small developer, said that it failed to pay a USD 206 million debt shortly after a subsidiary missed paying a RMB 700 million loan on the due date.

Hang Kong(HSI weekly chart) stocks rebounded for 2^nd week, reversing its losses in early of the week and closed at a three-week high.

Technically, we remain the same stance for .HSI index as the previous week. .HSI index rebounded from its major support level at around 24,000, going forward, it’s expected the index downside is limited. SSE index trading in its three-week consolidation range.

Singapore

STI index(STI weekly chart) ended the week hit a five-week high, rebounded after a three-week down streak. For the coming week, continues to watch out major support level around 3060-3050, upside immediate target at 3180.

Stocks Retreated on Inflation and Interest Rate Fears

 Weekly Wrap Content for the week of Oct 1:

1. Week 39 major indexes performance;

2. Week 39 US sector indexes performance;

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

4. Major indexes monthly performance for Sep

U.S

For the week ended Oct 1, U.S stocks experienced their first noticeable dent in some time, as a jump in interest rates reflected inflation concerns and expectations for the Fed to begin tapering this year. The return of rising-rate anxiety spurred the first 5% market drop in a year since Sep. A Friday rally moderated the losses with SPX ended with a 2.2% decline for the whole week. Refer to major indexes’ weekly performance table below.

Historical data shows Sep month has been the weakest month of the year for the stock market. This trend appears to have held well for this year. Refer to below major indexes monthly performance for Sep. All in red except for STI and SSE.

Key highlights for the week:

1.     Rising U.S Treasury yields seemed overhang sentiment throughout the week. 10-year rates have jumped from 1.30% on September 15 to as high as 1.54% last week, reflecting a renewed concern over inflation pressures and reduced Fed-stimulus expectations.

    2.   Debt ceiling and stimulus uncertainty also weigh sentiment. A short-term spending bill was passed to avert another partial shutdown of the U.S government. No progress was made in raising the fed debt limit. 

    3. Supply chain constraints feed inflation worries. Shares in Nike, Bed Bath & Beyond, and Kohl’s fell sharply after the companies reported stressed supply chains and higher labor costs ahead of the holiday shopping season. The recent surge in oil prices, which benefited energy stocks, also raised broader inflation worries.

Among 11 SPX sectors, growth stocks fared worse than value shares. Energy(XLE) and Financials (XLF) outperformed, while Healthcare(XLV) and Technology(XLK) stocks lagged. Refer to SPX sector indexes weekly performance below.

Technically, all three major indexes' weekly candlesticks appear bearish but while their long-term uptrend remain well intact. SPX has its 20dma crossing down 50dma which is bearish in short term.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland Chinese stocks (SSE weekly chart) ended a holiday-shortened week lower. China’s markets were closed Friday for the weeklong National Day holiday starting on October 1 and will resume trading on next Friday.

Positive news concerning indebted property developer China Evergrande Group supported investor sentiment. On Wednesday, Evergrande said that one of its units would sell roughly 20% of its stake in Shengjing Bank Co. to a state-owned enterprise for USD 1.5 billion to help reduce its debt load. News of the asset sale came as Beijing is prodding government-owned companies and state-backed property developers to buy some of Evergrande’s assets, Reuters reported.

Separately, the People’s Bank of China (PBOC) pledged to ensure a “healthy property market” and to protect homebuyers’ rights in a statement following the central bank’s quarterly monetary policy committee meeting.

Hang Kong(.HSI weekly chart) stocks rebounded in the holiday-shortened week, following two-week sharp decline. HK closed for China National Day holiday on Friday and will resume trading on Monday.

Technically, .HSI index rebounded from its major support level at around 24,000 as we expected last week, going forward, it’s expected the index downside is limited.

Singapore

STI Index (STI weekly chart) ended the week with moderate loss, recorded 3^rd week down in a row but it appears the selling pressure is under control. The coming week, continues to watch out for major support level around 3060-3050.