In this briefing:
- SPX Buy Summer Weakness – 3,220 and 3,080 Direction Break Points – 3,200 Short Target
- Softbank Reverse from Long to Short Target
- U.S. Equity Strategy: Buy The Dips
- Ping An Rally Fuel to Challenge the 95 Macro Hurdle
- Sell USD Rally Attempts
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.
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).
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.
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.
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.
USD now rolling over in EM. In Asia the SGD (bear triangle) and INR are gaining downside traction while the IDR and THB have bounced from oversold levels. MYR bear wedge breaking lower. Solid USD downtrends remain intact in PHP and TWD.
USD/CNH bet is for a bounce from sub 7.0 to 7.05 then down to 6.95 to base.