Markets Hate Uncertainty In Short Run

Summary of content for the week of  Oct 23:

1. Week 43 major indexes performance;

2. Week 43 US sector indexes performance;

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

U.S

The SPX ended modestly lower after three consecutive week advances. Headlines focused news flow around the fiscal relief negoniation before the election, which is just around the corner. Market behaved in a somewhat oderly fashion for the week, fluctuating in a narrow band. However, do expect to brace for a bumpier ride as we approach to and through, the election. Based on historical experience, markets hate uncertainty in the short run, but are not partisan over the long run.

Major Events in Focus:

10-year Treasury yield rose to highest level in four monts, as expectations that a potential Biden win for a larger relief package to support the economy.

Housing market continued to be strong, and also improved jobless claims with supportive Fed policies, fiscal stimulus package after the election will lead to sustained economic expansion in the coming years. All these will support a bull market in our view.

Earnings Reporting season for the week and coming weeks. Major companies such as SNAP surged on surprised profits, provide a tailwind to Twitter(TWTR). Coming week, heavyweight such as AMZN, AAPL, MSFT, GOOGL, V, MA will report their earnings, click (HERE) for details.

Among 11 SPX major sector. Communication Services(XLC) outperformed for the week, helped by gains in internet giants FB and Alpharbet(GOOGL).  Technology stocks( XLK) performed worst, dragged lower by Apple(AAPL). Refer to below sector performance table for detail dates.

China/HK

Chinese stocks retreated for the week, but still within its three-month consolidation range. China reported its GDP expanded 4.9% in 3Q, along with other data, offered further evidence that China's economy recovery  gaining momentum. By comparison, U.S and EU remains below pre-pandemic levels for their industria activity. 

Alibaba(BABA) began promotions for "Single Day"-the largest shopping event on Nov 11 each year. Last year, Alibaba's GMV(gross merchandise value) totaled RMB 268.4 billion or about 38.3 USD billion. By comparison,2019 "Black Friday" online sales in U.S totaled 7.4 USD billion. 

Ant Group IPO is said will start application on Oct 27-30, and start trading on Nov 6. Will be the world largest IPO in history. 

Singpore 

STI appears found footing above 2500 level after having been closed above it for three-week in a row. Immediate technical support to watch 2520 and resistance at 2600. Refer to below major indexes weekly performance table and weekly charts.

Fiscal Stimulus Hopes Diminish Further

Summary of content for the week of  Oct 16:

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

The SPX finished slightly higher for 3rd week in a row as investors continue to hope for a fiscal stimulus package despite an up and down week of trading. The indicisive weekly candlestick is also a reflection of a tug-of-war between rising concerns and encouraging economic data. Technically, stocks still in uptrend and outlook is positive in our view, with support from economic growth, corporate earnings and interest rates.

Positives:

-Retail sales continue to be a bright spot, beat forcast in Sep despite the lack of renewed government aid, signaling some resiliency to the recovery.

-Pfizer was preparing to seek emergency use of its vaccine as soon as Nov lifted market for hoping of vaccine.

-Fed is likely to keep interest rate near zero through 2023. Also has committed to continued purchases of bond to keep borrowing costs low.

Negatives:

-Unemployment remains high; 

-Coronavirus worries dampen sentiment by continued rise in cases in the U.S and EU.

-Bipartison negotiations in stimulus lack of progress. 

Within the SPX 11 main sectors, Industrials(XLI) and Utilities(XLU) outperformed, while Financials(XLF), Energy(XLE) and Real Estate(XLRE) lagged with weekly losses. Refer to below SPY setor index weekly performance table.

China/HK

Chinese stocks rallied after returned from national Golden Week holiday. SSE index was the best performing index with 1.96% weekly return, refer to below major indexes weekly performance table. Technically, SSE index outlook is bullish, has been within its 3-month sideway consolidation range. China's trade data last month beat forcasts and grew for 4th straight month. HSI index rebouned for 3rd week in a row, immediate technical support at 24000 level. 

Singapore

STI closed flat after two-week up in a row. Immediate technical support is 2520. STI's YTD negative return of 21.4% make it the one of the worst performing index in the region. On the other hand, we believe outlook for Singapore economy still positive and it will catch up eventually, Singapore bluechips are offering attractive valuation at current price level. 

Hoping For Another Round of Fiscal Stimulus

Summary of content for the week of  Oct 9:

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

The SPX index had its best weekly gain in three-month, as investors seems to grow more optimistic about about a new round of fiscal stimulus, as well as vaccines for the coronavirus. Nasdaq(COMP) index had 4.56% gain in the week, was the best performer in my weekly indexes table below. YTD, COMP has been best performer with 29% return. In Asia, SSE index also recorded 7.3% return, but STI and HSI was the two laggers with -21.4% and -14.4% respectively. However, we see attractive value in STI and HSI, and believe they will catch up eventually.

Stimulus hopes boost sentiment despite conflicting signals. The off and on-again negotiations between Republican and the Dems over coronavirus relief package was in focus. 

Trump's seemingly rapid recovery following his Covid-19 diagnosis the previous week also seems boost sentiment. Hopes rise for a vaccine treatment soon. 

China/HK

China's stock markets rose on Friday after being closed from Oct 1-8 for the national Golden Week holiday. SSE index was in trading sideways within its three-month consolidation range. While HSI index rebounded for 2nd week, back above its 24,000 level. 

Singapore

STI had 2nd week up in a row. Recouped 2500 level which is a bullish sign. Immediate support to watch at 2520 and resistance at 2600.

Trump's COVID-19 Positive Test Hampers Stocks

 Summary of content for the week of  Oct 2:

1. Week 40 major indexes performance;
2. Week 40 US sector indexes performance;

3. Major indexes monthly performance for Sep

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

U.S

U.S stocks finished lower, but still managed to post weekly gains, amid ramped-up concerns about COVID-19 after President Trump and First Lady tested positive for the virus. Other major events including 1) Sep employment report shows that job recovery has slowed. 2) A new round of fiscal stimulus remains in limbo as Republicans and Democrats continue to negotiate a deal.

Major indexes posted first monthly decline in Sep since Mar rebound. U.S three major indexes closed first month down after 5-month up in a row since Mar low rebound. Refer to the below indexes monthly performance table for September. 

SPX sector performance. Most SPX sectors closed with modest positive returns, with the exception of energy stocks(XLE), which added to their sharp recent declines, down another 2.88% for the week. Financials(XLF) and smaller Real Estate sector(XLRE) among top performers for the week, with 3.45% and 5.08% gains respectively. Refer to below weekly sector performance table.

China/HK

China and HK stocks closed lagging behind in the holiday-shortened week. With China stocks closed from Oct 1-8 for National Day "Golden Week" holiday, and HK stocks closed Oct 1-2 and resume trading coming week.  

Ant Group IPO. Chinese fintech company Ant Group under billionaire Jack Ma, which could raise up to USD 30 billion in a HK and Shanghai dual listing set to happen in the coming weeks.

Singapore

STI rebounded this week and closed slightly below 2500 level, as it had a knee-jerk reaction after Trump's positive test on the virus, but it managed to recover most of its losses on Friday close. Going forward, watch immediate technical support at 2446 and resistance 2520 level. At the current level, it's expected the index should have limited downside risk and blue-chips such as the banks appear to be very attractive. 

SPX Bounced off a Bottom, US Dollar Rebounded

 Summary of content for the week of  Sep 25:

1. Week 39 major indexes performance;
2. Week 39 US sector indexes performance;

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

U.S

U.S stocks fell for the week, marking 4th-week decline in a row for S&P 500 (SPX) index-its longest weekly slide since 2019. Some selling pressure amid major negative headlines but the SPX closed on a positive note into the weekend. Technically, U.S stocks major uptrend still intact though the SPX into correction by definition after down more than 10% from its recent peak. 

The Negative Headlines. 

1. U.S-China trade tensions are rising. 
2. A coronavirus vaccine won't be widely available until Apr 2021. The resurgence of new COVID-19 cases in Europe to keep investors wary.
3. Jobs data came out worse than expected, and hopes for a new fiscal stimulus package fading.
4. The political battle ahead of Nov Presidential election could over shadowed economy recovery efforts.

U.S stocks major trend still up despite all the above negative headlines. Technology(XLK) stocks led the way rebound after being at the head of the pack in the pullback. Nasdaq index was the only index closed with a 1.1% weekly gain. Energy(XLE) stocks suffered the biggest declines in the SPX sectors. 

U.S dollar(DXY) rebounded to a 9-week high. As a result, Gold price declined to its 9-week low. 

China/HK

China Shanghai stocks (SSE) fell in tandem with the global correction. SSE and HSI indexes were among the two worst performing indexes with 3.56% and 4.99% loss this week. SSE index major support at 3200-3150, and HSI index major support at 23000-22500 level.

Singapore

STI index continued drifting lower this week and closed a new low since Apr. Immediate technical support at 2446-2450.

SPX Closed at Six-Week Low, Tech stocks Led the Weakness

 Summary of content for the week of  Sep 18:

1. Week 38 major indexes performance;
2. Week 38 US sector indexes performance;

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

U.S

U.S stocks closed 3rd week down in a row, SPX hit a six-week low, driven by weakness in tech stocks. Stocks had risen by 60% from March low to early September in nearly straight-line fashion. Tech stocks gained 80% during the stretch, including an average gain of 91% from the big five(Apple, Microsoft, Google, Amazon, and Facebook). The decline in tech stocks appears still in control and a healthy breather. Technically, SPX uptrend is well intact but do expect short-term volatility in the market ahead. 

Value stocks and small-caps outperformed.  As investors continued to reduce bets on tech stocks giants. Energy stocks(XLE) led the gains within the SPX index, helped by a large and unexpected drawdown in domestic oil inventories and Saudi Arabia's efforts on production cuts. Communication services(XLC) stocks were among the worst performers, dragged by FB shares. Refer to the SPX sector indexes weekly performance table below.

China/HK

Mainland China(SSE) stocks were the best performer for the week, added 2.38%. As a batch of indicators highlighted the country's economic momentum and expected more fiscal stimulus to boost its economy. 

Only China's economy will grow this year, says OECD. Organisation for Economic Cooperation and Development(OECD) raised its 2020 growth outlook for China to 1.8% from -3.7%.

HK's "Old economy" stocks dragging down the HSI index. HK's HSI rebounded this week from 24300 support level, after a two-week decline. HSI has been underperforming this year so far as the "old-economy" stocks which have heavy weightage in the index such as HSBC(5.HK) continue sliding, adding downward pressure on the index. 

Singapore

STI index continues wandering 2500 level for months, the blue chips hardly made any significant direction movement. Continue to watch technical support 2477-2502 gap support level for the time being.

Major Indexes Fell Further For 2nd Week Without Specific Catalyst

 Summary of content for the week of  Sep 11:

1. Week 37 major indexes performance;
2. Week 37 US sector indexes performance;

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

U.S

U.S stocks declined for 2nd straight week, as technology stocks had their worst pullback since March low, which left the Nasdaq index about 10% below its all-time high reached just six trading days ago. In my focused major indexes table below, all indexes closed in red for the week with Nasdaq(COMP) closed down 4.06%.

Tech and Energy stocks suffered.  Tech shares were among the weakest within the SPX index, while energy stocks also suffered as oil price sank below USD 40 per barrel for the first time since Jul, partly caused by the cutting of oil price for some customers by Saudi Arabia. Among SPX 11 major sectors, Materials(XLB) was the only sector closed positive with 0.98% up, while Energy(XLE) declined 6.45%. Refer to below weekly sector performance table for details.

China/HK

China''s SSE index shed roughly 3% this week, in 2nd week decline taking thier cue from the U.S selloff. In addition to U.S tech sell down, news that the White House was considering adding SMIC(981.HK), China's top chipmaker to U.S blacklist for Chinese companies dealt a blow to investor sentiment. Hong Kong's HSI index dropped 2nd week as well immediate technical support at 24300 level. 

Singapore

STI drifted down below 2500 following other regional peers. Has been the weakest index in Asia after philippine stock index. Immediate technical support at 2477-2502 gap area. Blue chips such as the three local banks appear attractive in the mid-long term given its sound fundamentals and attractive dividend yield.