Technical Analysis

In this briefing:

1. Smartkarma Webinar

1. Smartkarma Webinar

In this Smartkarma Webinar, Thomas Schroeder will provide his technical outlook for markets. After the recent melt-up, markets are up against renewed concerns from: 

• A second wave of COVID-19 cases in the US
• Unexpected lockdowns in Beijing
• Diminished short-base after extensive covering
• Oversold levels on the Dollar Index (DXY) (DXY CURNCY), as well as,
• An acceleration in new capital raising

The webinar will be held on 17 June 2020 at 1700hrs Singapore/Hong Kong time.

In this briefing:

1. WTI Turn Inflection for Demand Downturn
2. SPX Buy Summer Weakness – 3,220 and 3,080 Direction Break Points – 3,200 Short Target
3. Softbank Reverse from Long to Short Target
4. U.S. Equity Strategy: Buy The Dips
5. Ping An Rally Fuel to Challenge the 95 Macro Hurdle

1. WTI Turn Inflection for Demand Downturn

Crude Oil (CRUDE OIL COMDTY) rise off the April low with June new highs are are not being confirmed by the RSI for a case of bear divergence as the overlapping price has formed a rising wedge. Wedge patterns have a 70% probability of breaking lower with odds increasing on the back of divergence.

Divergence forms when momentum, buy volume and conviction deteriorate.

As virus cases climb, questions linked to demand will resurface.

42 resistance is a pivotal level; a rejection would set in motion a pullback to test and break the 38 near support and lower wedge level that will open up the downside.

2. SPX Buy Summer Weakness – 3,220 and 3,080 Direction Break Points – 3,200 Short Target

S&P 500 (SPX INDEX) is teetering on a more bullish break point that will define a wave 5 thrust higher or secondary pullback within the summer flat corrective range with support near 2,950.

3,220 and 3,080 will act as key break points for a continued rally or second part of a summer pullback cycle (the later is the favored sequence for a pullback from 3,200).

July cycle peak should align with increased virus cases/concerns and overshadow liquidity over the summer.

ISM, demand and growth data spikes have come off of low bases but due to deteriorate as US re opening faces significant speed bumps.

Macro remains bullish on weakness until liquidly support fades.

3. Softbank Reverse from Long to Short Target

Softbank Group (9984 JP) has witnessed a sharp rise from our recent 4,400 long entry and nearing the ideal 6,600 target representing the top end of the intermediate expanding wedge range. We made a bull call near lower wedge support at 2,800.

Recent breakout point at 5,900 will act as pivot support that will induce a reaction back upward.

RSI shows synergy with dual tops in this zone to mark key cycle tops which fits with a top near 6,600. RSI is also forming a rising wedge that has a better than 70% probability of breaking down amid bear divergence.

Macro pivots are 6,800 and 4,900 as the expanding wedge defines a clear range (6,800 and 2,500).

4. U.S. Equity Strategy: Buy The Dips

New developments outlined in today’s report are of the bullish variety. The way we see it, the positives continue to heavily outweigh the negatives. With positive new developments and essentially nothing new to be worried about, our view remains bullish. Buy the dips. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Materials: CD-46 Retailers, Home Improvement, CD-30 Internet Retailers, CD-55 Lawn & Garden, and MA-27 Gold, Western Hemisphere, Small-Cap.

5. Ping An Rally Fuel to Challenge the 95 Macro Hurdle

Ping An Insurance (H) (2318 HK) has exploded higher off of the strong 70 macro base line support. We see a fresh rally opportunity after a July give back to pocket support (83) to challenge the bigger 95 macro barrier with longer term scope to finally break the 70 to 95 range that has held Ping An captive since late 2017.

Given the breakout in A shares and H shares, attention now turns to tier two names that show catch up potential behind the likes of BABA and Tencent.

Macro base support is now firm at the 70 level that will hold up in coming years.

MACD is attempting to clear noted trendline resistance and may need more than one attempt for a successful breakout.

The buy volumes spike is supportive looking forward but does run the risk of a sharp give back in price and a pullback we want to buy.

In this briefing:

1. SPX Buy Summer Weakness – 3,220 and 3,080 Direction Break Points – 3,200 Short Target
2. Softbank Reverse from Long to Short Target
3. U.S. Equity Strategy: Buy The Dips
4. Ping An Rally Fuel to Challenge the 95 Macro Hurdle
5. Sell USD Rally Attempts

1. SPX Buy Summer Weakness – 3,220 and 3,080 Direction Break Points – 3,200 Short Target

S&P 500 (SPX INDEX) is teetering on a more bullish break point that will define a wave 5 thrust higher or secondary pullback within the summer flat corrective range with support near 2,950.

3,220 and 3,080 will act as key break points for a continued rally or second part of a summer pullback cycle (the later is the favored sequence for a pullback from 3,200).

July cycle peak should align with increased virus cases/concerns and overshadow liquidity over the summer.

ISM, demand and growth data spikes have come off of low bases but due to deteriorate as US re opening faces significant speed bumps.

Macro remains bullish on weakness until liquidly support fades.

2. Softbank Reverse from Long to Short Target

Softbank Group (9984 JP) has witnessed a sharp rise from our recent 4,400 long entry and nearing the ideal 6,600 target representing the top end of the intermediate expanding wedge range. We made a bull call near lower wedge support at 2,800.

Recent breakout point at 5,900 will act as pivot support that will induce a reaction back upward.

RSI shows synergy with dual tops in this zone to mark key cycle tops which fits with a top near 6,600. RSI is also forming a rising wedge that has a better than 70% probability of breaking down amid bear divergence.

Macro pivots are 6,800 and 4,900 as the expanding wedge defines a clear range (6,800 and 2,500).

3. U.S. Equity Strategy: Buy The Dips

New developments outlined in today’s report are of the bullish variety. The way we see it, the positives continue to heavily outweigh the negatives. With positive new developments and essentially nothing new to be worried about, our view remains bullish. Buy the dips. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Materials: CD-46 Retailers, Home Improvement, CD-30 Internet Retailers, CD-55 Lawn & Garden, and MA-27 Gold, Western Hemisphere, Small-Cap.

4. Ping An Rally Fuel to Challenge the 95 Macro Hurdle

Ping An Insurance (H) (2318 HK) has exploded higher off of the strong 70 macro base line support. We see a fresh rally opportunity after a July give back to pocket support (83) to challenge the bigger 95 macro barrier with longer term scope to finally break the 70 to 95 range that has held Ping An captive since late 2017.

Given the breakout in A shares and H shares, attention now turns to tier two names that show catch up potential behind the likes of BABA and Tencent.

Macro base support is now firm at the 70 level that will hold up in coming years.

MACD is attempting to clear noted trendline resistance and may need more than one attempt for a successful breakout.

The buy volumes spike is supportive looking forward but does run the risk of a sharp give back in price and a pullback we want to buy.

5. Sell USD Rally Attempts

Dollar Index (DXY) (DXY CURNCY) sell strength near 98.00-50 in line with the Euro near 1.1120 (between 1.12 and 1.1120). Macro conviction is to sell near 98.50-99 for a decline to 95.10 with 94 attracting. Rising wedge support crack is in focus.

Sell rally attempts in July but by late July the dollar will form a better tactical or intermediate low.

Short USD bets remains in Sterling (short from 1.28) and USD/JPY from 109 area and at USD/KRW base. USD/IDR and USD/THB are moving into oversold cycle lows. 

In this briefing:

1. Nintendo New Chart High Targets
2. Asia’s Rally into Sell Zones
3. SPX Trendline Breach and 2,950 Risk Pivot This Week
4. Smartkarma Webinar

1. Nintendo New Chart High Targets

Nintendo Co Ltd (7974 JP) is gearing up for a test on the highs from 2018, representing a tough zone near term.

Key upside resistance breakpoints at 43k and 47k now become pullback/buy supports under the assumption Nintendo has trouble clearing the 2018 49,725 high zone. Tepid buy volumes support a fade case.

The Nikkei cycle will also weigh on Nintendo’s cycle after late June with the Nikkei rally overdone at/above 23k. A Nikkei pullback would sap needed strength for Nintendo to clear the key highs.

Nintendo’s macro posture remains bullish on weakness with core trendline support running near 37k with time translation. Physical base support lies at  43k. Prefer buying a correction barring an impressive break above the 2018 high zone.

Macro bull objective comes in at 61k.

2. Asia’s Rally into Sell Zones

3. SPX Trendline Breach and 2,950 Risk Pivot This Week

S&P 500 (SPX INDEX) broke trendline inflection support at 3,165 that triggered a bear break and signal to put on short protection.

4. Smartkarma Webinar

In this Smartkarma Webinar, Thomas Schroeder will provide his technical outlook for markets. After the recent melt-up, markets are up against renewed concerns from: 

• A second wave of COVID-19 cases in the US
• Unexpected lockdowns in Beijing
• Diminished short-base after extensive covering
• Oversold levels on the Dollar Index (DXY) (DXY CURNCY), as well as,
• An acceleration in new capital raising

The webinar will be held on 17 June 2020 at 1700hrs Singapore/Hong Kong time.

In this briefing:

1. Softbank Reverse from Long to Short Target
2. U.S. Equity Strategy: Buy The Dips
3. Ping An Rally Fuel to Challenge the 95 Macro Hurdle
4. Sell USD Rally Attempts
5. Company Spotlight: Buy Money Forward, Inc. (3994-JP)

1. Softbank Reverse from Long to Short Target

Softbank Group (9984 JP) has witnessed a sharp rise from our recent 4,400 long entry and nearing the ideal 6,600 target representing the top end of the intermediate expanding wedge range. We made a bull call near lower wedge support at 2,800.

Recent breakout point at 5,900 will act as pivot support that will induce a reaction back upward.

RSI shows synergy with dual tops in this zone to mark key cycle tops which fits with a top near 6,600. RSI is also forming a rising wedge that has a better than 70% probability of breaking down amid bear divergence.

Macro pivots are 6,800 and 4,900 as the expanding wedge defines a clear range (6,800 and 2,500).

2. U.S. Equity Strategy: Buy The Dips

New developments outlined in today’s report are of the bullish variety. The way we see it, the positives continue to heavily outweigh the negatives. With positive new developments and essentially nothing new to be worried about, our view remains bullish. Buy the dips. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Materials: CD-46 Retailers, Home Improvement, CD-30 Internet Retailers, CD-55 Lawn & Garden, and MA-27 Gold, Western Hemisphere, Small-Cap.

3. Ping An Rally Fuel to Challenge the 95 Macro Hurdle

Ping An Insurance (H) (2318 HK) has exploded higher off of the strong 70 macro base line support. We see a fresh rally opportunity after a July give back to pocket support (83) to challenge the bigger 95 macro barrier with longer term scope to finally break the 70 to 95 range that has held Ping An captive since late 2017.

Given the breakout in A shares and H shares, attention now turns to tier two names that show catch up potential behind the likes of BABA and Tencent.

Macro base support is now firm at the 70 level that will hold up in coming years.

MACD is attempting to clear noted trendline resistance and may need more than one attempt for a successful breakout.

The buy volumes spike is supportive looking forward but does run the risk of a sharp give back in price and a pullback we want to buy.

4. Sell USD Rally Attempts

Dollar Index (DXY) (DXY CURNCY) sell strength near 98.00-50 in line with the Euro near 1.1120 (between 1.12 and 1.1120). Macro conviction is to sell near 98.50-99 for a decline to 95.10 with 94 attracting. Rising wedge support crack is in focus.

Sell rally attempts in July but by late July the dollar will form a better tactical or intermediate low.

Short USD bets remains in Sterling (short from 1.28) and USD/JPY from 109 area and at USD/KRW base. USD/IDR and USD/THB are moving into oversold cycle lows. 

5. Company Spotlight: Buy Money Forward, Inc. (3994-JP)

Money Forward stock is currently offering an attractive entry point for both short-term traders and long-term investors. The stock’s price and RS exhibit bullish short-term reversals at 2.5-year base support — buy. The size of the base implies a price target of ~9,300 JPY or +47% from current levels. Our long-term bullish thesis will remain intact as long as the stock does not decisively break below 5450 support… see chart below.

In this briefing:

1. Asia’s Rally into Sell Zones
2. SPX Trendline Breach and 2,950 Risk Pivot This Week
3. Smartkarma Webinar

1. Asia’s Rally into Sell Zones

2. SPX Trendline Breach and 2,950 Risk Pivot This Week

S&P 500 (SPX INDEX) broke trendline inflection support at 3,165 that triggered a bear break and signal to put on short protection.

3. Smartkarma Webinar

In this Smartkarma Webinar, Thomas Schroeder will provide his technical outlook for markets. After the recent melt-up, markets are up against renewed concerns from: 

• A second wave of COVID-19 cases in the US
• Unexpected lockdowns in Beijing
• Diminished short-base after extensive covering
• Oversold levels on the Dollar Index (DXY) (DXY CURNCY), as well as,
• An acceleration in new capital raising

The webinar will be held on 17 June 2020 at 1700hrs Singapore/Hong Kong time.

In this briefing:

1. Asia’s Rally into Sell Zones
2. SPX Trendline Breach and 2,950 Risk Pivot This Week
3. Smartkarma Webinar
4. U.S. Equity Strategy: Value Overtaking Growth; Treasury Yields and Commodities Bottoming

1. Asia’s Rally into Sell Zones

2. SPX Trendline Breach and 2,950 Risk Pivot This Week

S&P 500 (SPX INDEX) broke trendline inflection support at 3,165 that triggered a bear break and signal to put on short protection.

3. Smartkarma Webinar

In this Smartkarma Webinar, Thomas Schroeder will provide his technical outlook for markets. After the recent melt-up, markets are up against renewed concerns from: 

• A second wave of COVID-19 cases in the US
• Unexpected lockdowns in Beijing
• Diminished short-base after extensive covering
• Oversold levels on the Dollar Index (DXY) (DXY CURNCY), as well as,
• An acceleration in new capital raising

The webinar will be held on 17 June 2020 at 1700hrs Singapore/Hong Kong time.

4. U.S. Equity Strategy: Value Overtaking Growth; Treasury Yields and Commodities Bottoming

New and ongoing developments continue to support our bullish outlook. In the “new” column, we have bullish inflections in Treasury yields, the value vs. growth ratio, and broad commodities (Bloomberg Commodity index). These are classic signs that the economy is improving and is historically consistent with prior equity bull markets. Another new development is the market becoming increasingly overbought. As we outline in today’s report, being “overbought” is far from a sell signal.  We also highlight attractive Groups and stocks within Energy and Materials: Large-, Mid-, and Small-Cap Domestic Oil & Gas E&P , Chemicals, Diversified, and Specialty Chemicals, Petro/Basic/Commodity.

In this briefing:

1. U.S. Equity Strategy: Buy The Dips
2. Ping An Rally Fuel to Challenge the 95 Macro Hurdle
3. Sell USD Rally Attempts
4. Company Spotlight: Buy Money Forward, Inc. (3994-JP)
5. HK Breakout as A50 Clears Triple Highs

1. U.S. Equity Strategy: Buy The Dips

New developments outlined in today’s report are of the bullish variety. The way we see it, the positives continue to heavily outweigh the negatives. With positive new developments and essentially nothing new to be worried about, our view remains bullish. Buy the dips. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Materials: CD-46 Retailers, Home Improvement, CD-30 Internet Retailers, CD-55 Lawn & Garden, and MA-27 Gold, Western Hemisphere, Small-Cap.

2. Ping An Rally Fuel to Challenge the 95 Macro Hurdle

Ping An Insurance (H) (2318 HK) has exploded higher off of the strong 70 macro base line support. We see a fresh rally opportunity after a July give back to pocket support (83) to challenge the bigger 95 macro barrier with longer term scope to finally break the 70 to 95 range that has held Ping An captive since late 2017.

Given the breakout in A shares and H shares, attention now turns to tier two names that show catch up potential behind the likes of BABA and Tencent.

Macro base support is now firm at the 70 level that will hold up in coming years.

MACD is attempting to clear noted trendline resistance and may need more than one attempt for a successful breakout.

The buy volumes spike is supportive looking forward but does run the risk of a sharp give back in price and a pullback we want to buy.

3. Sell USD Rally Attempts

Dollar Index (DXY) (DXY CURNCY) sell strength near 98.00-50 in line with the Euro near 1.1120 (between 1.12 and 1.1120). Macro conviction is to sell near 98.50-99 for a decline to 95.10 with 94 attracting. Rising wedge support crack is in focus.

Sell rally attempts in July but by late July the dollar will form a better tactical or intermediate low.

Short USD bets remains in Sterling (short from 1.28) and USD/JPY from 109 area and at USD/KRW base. USD/IDR and USD/THB are moving into oversold cycle lows. 

4. Company Spotlight: Buy Money Forward, Inc. (3994-JP)

Money Forward stock is currently offering an attractive entry point for both short-term traders and long-term investors. The stock’s price and RS exhibit bullish short-term reversals at 2.5-year base support — buy. The size of the base implies a price target of ~9,300 JPY or +47% from current levels. Our long-term bullish thesis will remain intact as long as the stock does not decisively break below 5450 support… see chart below.

5. HK Breakout as A50 Clears Triple Highs

Hang Seng China Enterprises Index (HSCEI INDEX) and Hong Kong Hang Seng Index (HSI INDEX) have broken though 10,200 and 25,000   breakout resistance points with momentum on the back of the A share higher energy breakout.

While parts of Asia are knocking on tougher resistance points (Nikkei 23k and Korea 295), Hong Kong now represents a rotation/laggard play on the A share lead.

We prefer going long H shares over the HSI at this point.

A50 major breakout above 15k if we hold this level on a give back represents a major bullish shift for a new up cycle. Weekly chart breakout points illustrated.

In this briefing:

1. SPX Trendline Breach and 2,950 Risk Pivot This Week
2. Smartkarma Webinar
3. U.S. Equity Strategy: Value Overtaking Growth; Treasury Yields and Commodities Bottoming
4. Hepalink Pharma Triangle Breakout

1. SPX Trendline Breach and 2,950 Risk Pivot This Week

S&P 500 (SPX INDEX) broke trendline inflection support at 3,165 that triggered a bear break and signal to put on short protection.

2. Smartkarma Webinar

In this Smartkarma Webinar, Thomas Schroeder will provide his technical outlook for markets. After the recent melt-up, markets are up against renewed concerns from: 

• A second wave of COVID-19 cases in the US
• Unexpected lockdowns in Beijing
• Diminished short-base after extensive covering
• Oversold levels on the Dollar Index (DXY) (DXY CURNCY), as well as,
• An acceleration in new capital raising

The webinar will be held on 17 June 2020 at 1700hrs Singapore/Hong Kong time.

3. U.S. Equity Strategy: Value Overtaking Growth; Treasury Yields and Commodities Bottoming

New and ongoing developments continue to support our bullish outlook. In the “new” column, we have bullish inflections in Treasury yields, the value vs. growth ratio, and broad commodities (Bloomberg Commodity index). These are classic signs that the economy is improving and is historically consistent with prior equity bull markets. Another new development is the market becoming increasingly overbought. As we outline in today’s report, being “overbought” is far from a sell signal.  We also highlight attractive Groups and stocks within Energy and Materials: Large-, Mid-, and Small-Cap Domestic Oil & Gas E&P , Chemicals, Diversified, and Specialty Chemicals, Petro/Basic/Commodity.

4. Hepalink Pharma Triangle Breakout

Shenzhen Hepalink Pharma Co., Ltd. (002399 CH) surge off of support does provide better evidence that the triangle pattern will break to the upside. Buy volume spiked and any follow through strength needs to see volumes improve for sustainability.

The standout chart pattern is the bullish triangle pattern with break points at 24 and 21. Triangles typically form due to two opposing cycles clashing and results in a higher energy breakout move. The key question is if a breakout has enough energy to clear the firm range barrier of 27? The 24 breakout point that turns into support will answer this question.

Rally peaks over the last year are well defined at 26/27 and the immediate rally objective and challenge. There is growing evidence that pent up energy will finally clear range resistance and is a matter of time.

In this briefing:

1. Ping An Rally Fuel to Challenge the 95 Macro Hurdle
2. Sell USD Rally Attempts
3. Company Spotlight: Buy Money Forward, Inc. (3994-JP)
4. HK Breakout as A50 Clears Triple Highs
5. Fortis Healthcare Bear Pressure Dominates

1. Ping An Rally Fuel to Challenge the 95 Macro Hurdle

Ping An Insurance (H) (2318 HK) has exploded higher off of the strong 70 macro base line support. We see a fresh rally opportunity after a July give back to pocket support (83) to challenge the bigger 95 macro barrier with longer term scope to finally break the 70 to 95 range that has held Ping An captive since late 2017.

Given the breakout in A shares and H shares, attention now turns to tier two names that show catch up potential behind the likes of BABA and Tencent.

Macro base support is now firm at the 70 level that will hold up in coming years.

MACD is attempting to clear noted trendline resistance and may need more than one attempt for a successful breakout.

The buy volumes spike is supportive looking forward but does run the risk of a sharp give back in price and a pullback we want to buy.

2. Sell USD Rally Attempts

Dollar Index (DXY) (DXY CURNCY) sell strength near 98.00-50 in line with the Euro near 1.1120 (between 1.12 and 1.1120). Macro conviction is to sell near 98.50-99 for a decline to 95.10 with 94 attracting. Rising wedge support crack is in focus.

Sell rally attempts in July but by late July the dollar will form a better tactical or intermediate low.

Short USD bets remains in Sterling (short from 1.28) and USD/JPY from 109 area and at USD/KRW base. USD/IDR and USD/THB are moving into oversold cycle lows. 

3. Company Spotlight: Buy Money Forward, Inc. (3994-JP)

Money Forward stock is currently offering an attractive entry point for both short-term traders and long-term investors. The stock’s price and RS exhibit bullish short-term reversals at 2.5-year base support — buy. The size of the base implies a price target of ~9,300 JPY or +47% from current levels. Our long-term bullish thesis will remain intact as long as the stock does not decisively break below 5450 support… see chart below.

4. HK Breakout as A50 Clears Triple Highs

Hang Seng China Enterprises Index (HSCEI INDEX) and Hong Kong Hang Seng Index (HSI INDEX) have broken though 10,200 and 25,000   breakout resistance points with momentum on the back of the A share higher energy breakout.

While parts of Asia are knocking on tougher resistance points (Nikkei 23k and Korea 295), Hong Kong now represents a rotation/laggard play on the A share lead.

We prefer going long H shares over the HSI at this point.

A50 major breakout above 15k if we hold this level on a give back represents a major bullish shift for a new up cycle. Weekly chart breakout points illustrated.

5. Fortis Healthcare Bear Pressure Dominates

Fortis Healthcare (FORH IN) is knocking on key resistance at 135 with a secondary barrier at 153 that will act as cap levels for rally attempts looking forward. 

Fortis lacks the improvement in buy volume to suggest a key low is in place.

Near term direction will be driven by the rising wedge with resistance at 132-135. Breaking wedge support would see a re test of the 115 low with key lows at 110 attracting.

MACD is well off of noted key resistance. A re break below pivot support would act as a bear trigger.

A fresh bull cycle would require a better base to form.