Category

Technical Analysis

Brief Technical Analysis: Global Equity Strategy: Initial Low Established and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Global Equity Strategy: Initial Low Established
  2. US Market Improvements as SPX Bull Wedge Gears Up for a Rally
  3. Keppel Corp Tactical Buy Level with Macro Heavy Cycle
  4. EEM Coiled for a Rally as USD Rise Exhausts
  5. Where We Are Buying the SPX

1. Global Equity Strategy: Initial Low Established

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Several equity indexes and indicators we watch are telling us an initial primary low has been established for global equities (ACWI-US). At the same time, after this type of major waterfall decline there is often a test of this initial low – and oftentimes we get an undercut of the initial low. Barring approval of a first-line therapy for COVID-19 we are of the belief that we will get an eventual test of this initial low and potentially an undercut. In this report we highlight key technical levels and indicators to watch and suggest investment opportunities with defensive and/or growth characteristics. We are also expanding our recommendations to include bottom-up ideas within several other Sectors.

2. US Market Improvements as SPX Bull Wedge Gears Up for a Rally

The descending wedge in the SPX has a 70% probability of breaking higher and with noted bull divergence in yesterday’s update those odds increase to 82%. The bull wedge remains our focus to buy below 2,191 and near ideal support at 2,150 as outlined yesterday with noise allowed to 2,130.

The following charts outline key areas of market internal improvement that at least set up for a tactical rise in April as stimulus measures begin to work into market sentiment amid incredibly oversold levels. Passing of the stimulus bill work most likely be the catalyst to trigger a short squeeze of 15-20%. 

Key relative upturns in downside leaders are noted (transports and small caps) and a must for a viable SPX low. Relative bull turns are flagged in airlines, CCL, SOX, tech and EEM (smelling out a USD peak). Breadth has met key exhaustive lows with stocks trade above their 50 and 200 day moving averages near or at 0.

The bond market is seeing signs of normalization as corporate debt (LQD) is coming off key lows but still has ripples to  deal with in April.

Limit down day yesterday, ended off the limit lows which is an improvement to previous limit down days in March. 
Volatility also came off in the face of a 3% decline in the US. This is viewed as constructive.

3. Keppel Corp Tactical Buy Level with Macro Heavy Cycle

Kepel%20w%20for%20sk

Keppel Corp Ltd (KEP SP) is approaching tactical price support at 4.60 where a recovery attempt is expected but unless Keppel can clear 6.0 the macro bear cycle will resume course in coming months/into the summer.

Weekly MACD triangulation (like many assets in Asia) is breaking down and needs a price push back above 6.0 and then 7.0 to avert a harder bear cycle into the summer. A tactical rally fits with our cycle low for Asia equities in late March/early April for an April counter trend rise that fizzles out in May.

We outline a tactical bounce trade and reverse to macro short for a new low in the summer with stop and price target levels. This fits our Asia cycle for a low in late March, April rally into early May and resumption of the bear cycle by mid-May.

4. EEM Coiled for a Rally as USD Rise Exhausts

Eem%20d

iShares MSCI Emerging Markets (EEM US) has been a good bear bet. We are now seeing constructive signs for a low taking shape this week ahead of our key late March cycle timeline for global equities to bottom. After meeting targeted support at 30.50 we do see risk down to 28. It is the bullish RSI wedge that is screaming for a low and April power rally as the contracting pattern matures late this week (with noise into early April) and set for a powerful upside breakout.

We pounded the table regarding buying the USD in January with EM FX showing major breakout energy which has transpired nicely from the USD/BRL to the EM FX complex and then bled into Asian FX. We now see signs of the USD rise exhausting in late March.

A low this week should induce a rise of 17% to 21% given EEM targets of 35 and 37. Risk lies with the COVID overhang muting a rally to the tune of 10-15%.

5. Where We Are Buying the SPX

Spx%20h

S&P 500 (SPX INDEX) has broken important long term trendline support and will act as ressitance in the touted April rally. We have been shorting bounces from SPX 3,380 and now looking for some downside exhaustion to place some long bets (NDX, SOX, EEM and Asia favored) for a short squeeze rip higher in April. Worth noting that virus battered sectors (airlines and cruise lines) did NOT make new lows Friday with some light at the end of the tunnel. SOX is also making a stand to perform over the NDX which faces late cycle big tech downside capitulation selling that would help identify a key low near SPX macro support at 2,150/30. A USD cycle peak is also a key component in chiseling out key lows in Asia and EEM.

Choppy descending ranges and RSI bull divergence into a cycle low timeline in late March are conviction inputs as is the overdone USD rise.

You are currently reading Executive Summaries of Smartkarma Insights.

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Brief Technical Analysis: Long and Short Plays in Asia with SPX Bear Pressure into March and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Long and Short Plays in Asia with SPX Bear Pressure into March
  2. Softbank Tactical Push into Intermediate Short Zone
  3. Korea Bear Pressure to Break Pattern Support

1. Long and Short Plays in Asia with SPX Bear Pressure into March

S&P 500 (SPX INDEX) is buckling form our mid February peak call and pullback sequence slated for late February/early March.

Our cycle work touted a harder decline cycle into late Feb/early March with March a month to start working into risk again. Virus outbreaks will stretch this cycle into late March if not April for more vulnerable markets and may overshoot some of our downside targets.
SPX bear divergence calls for more weakness after an uptick attempt today.
Charts and webcast cover long/short views in the US, US yield risk of breaking below 1.35% and favored Asian markets to buy in March and current short plays in Asia.

2. Softbank Tactical Push into Intermediate Short Zone

Soft%20bank%20for%20sk

Softbank Group (9984 JP) is moving into the more mature range of the expanding wedge that has been taking shape since early 2018. Recent highs at 6,000 present a challenge with ideal resistance near 6,300. Spikes in Softbank have a history of failing to stick.

Buy volumes spiked on the merger news but have since tapered off into the rise late last week and a trend that should continue to mark a top near the upper range.

Tactical support lies at 5,000/200 as the fresh buy zone. Last week we did see the upside gap partially filled and bodes well for a dip and recovery to test the high zone at 5,900-6,000.

RSI triple tops have marked significant cycle peaks in price in the past and this time sets up a minor new price high for the third RSI peak above 70 to lock in bear divergence (RSI not confirming new price highs as an underlying weaker lead signal). This sets up a cycle peak and short trade.

3. Korea Bear Pressure to Break Pattern Support

Korea

Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) was one of our core short bets outlined in our January 21 insight Top Short Triggers in Asia for a Q1 Pullback at 307. We recently added to this short at 304.

Growing evidence points to pattern support at 280/278 not holding bear pressure. Originally this was our downside target to reverse to long but as we head into the more bearish late February global cycle we see increasing odds of breaking this key wedge support.

Wedge formations are noted across Asia (HK and Singapore in addition to Korea) with HK already seeing a secondary break below wedge support. These wedge patterns are gunning for a new low below August lows.

Downside targets below 278 comes in at 267 and 262. We are holding our short from 307/304 for a press below wedge support.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Technical Analysis: US Market Improvements as SPX Bull Wedge Gears Up for a Rally and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. US Market Improvements as SPX Bull Wedge Gears Up for a Rally
  2. Keppel Corp Tactical Buy Level with Macro Heavy Cycle
  3. EEM Coiled for a Rally as USD Rise Exhausts
  4. Where We Are Buying the SPX
  5. Dollar Surge Further Aggravates Equity Markets

1. US Market Improvements as SPX Bull Wedge Gears Up for a Rally

The descending wedge in the SPX has a 70% probability of breaking higher and with noted bull divergence in yesterday’s update those odds increase to 82%. The bull wedge remains our focus to buy below 2,191 and near ideal support at 2,150 as outlined yesterday with noise allowed to 2,130.

The following charts outline key areas of market internal improvement that at least set up for a tactical rise in April as stimulus measures begin to work into market sentiment amid incredibly oversold levels. Passing of the stimulus bill work most likely be the catalyst to trigger a short squeeze of 15-20%. 

Key relative upturns in downside leaders are noted (transports and small caps) and a must for a viable SPX low. Relative bull turns are flagged in airlines, CCL, SOX, tech and EEM (smelling out a USD peak). Breadth has met key exhaustive lows with stocks trade above their 50 and 200 day moving averages near or at 0.

The bond market is seeing signs of normalization as corporate debt (LQD) is coming off key lows but still has ripples to  deal with in April.

Limit down day yesterday, ended off the limit lows which is an improvement to previous limit down days in March. 
Volatility also came off in the face of a 3% decline in the US. This is viewed as constructive.

2. Keppel Corp Tactical Buy Level with Macro Heavy Cycle

Keppel%20corp%20for%20sk

Keppel Corp Ltd (KEP SP) is approaching tactical price support at 4.60 where a recovery attempt is expected but unless Keppel can clear 6.0 the macro bear cycle will resume course in coming months/into the summer.

Weekly MACD triangulation (like many assets in Asia) is breaking down and needs a price push back above 6.0 and then 7.0 to avert a harder bear cycle into the summer. A tactical rally fits with our cycle low for Asia equities in late March/early April for an April counter trend rise that fizzles out in May.

We outline a tactical bounce trade and reverse to macro short for a new low in the summer with stop and price target levels. This fits our Asia cycle for a low in late March, April rally into early May and resumption of the bear cycle by mid-May.

3. EEM Coiled for a Rally as USD Rise Exhausts

Eem%20d

iShares MSCI Emerging Markets (EEM US) has been a good bear bet. We are now seeing constructive signs for a low taking shape this week ahead of our key late March cycle timeline for global equities to bottom. After meeting targeted support at 30.50 we do see risk down to 28. It is the bullish RSI wedge that is screaming for a low and April power rally as the contracting pattern matures late this week (with noise into early April) and set for a powerful upside breakout.

We pounded the table regarding buying the USD in January with EM FX showing major breakout energy which has transpired nicely from the USD/BRL to the EM FX complex and then bled into Asian FX. We now see signs of the USD rise exhausting in late March.

A low this week should induce a rise of 17% to 21% given EEM targets of 35 and 37. Risk lies with the COVID overhang muting a rally to the tune of 10-15%.

4. Where We Are Buying the SPX

Spx%20h

S&P 500 (SPX INDEX) has broken important long term trendline support and will act as ressitance in the touted April rally. We have been shorting bounces from SPX 3,380 and now looking for some downside exhaustion to place some long bets (NDX, SOX, EEM and Asia favored) for a short squeeze rip higher in April. Worth noting that virus battered sectors (airlines and cruise lines) did NOT make new lows Friday with some light at the end of the tunnel. SOX is also making a stand to perform over the NDX which faces late cycle big tech downside capitulation selling that would help identify a key low near SPX macro support at 2,150/30. A USD cycle peak is also a key component in chiseling out key lows in Asia and EEM.

Choppy descending ranges and RSI bull divergence into a cycle low timeline in late March are conviction inputs as is the overdone USD rise.

5. Dollar Surge Further Aggravates Equity Markets

Image 99635876021584650037703

Support levels have meant little more than talking points as indexes are slicing through them like butter. The truth remains that no one knows how low we will go, and the trend is still down for global equities. At the same time, every week where the MSCI ACWI loses ~10%, it gets that much closer to finding a bottom. In this report we provide updates on several indicators we are watching as to clues of a bottom.  We also highlight actionable themes within Staples, Health Care, Technology. We continue to recommend areas with defensive and/or growth characteristics.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Technical Analysis: Softbank Tactical Push into Intermediate Short Zone and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Softbank Tactical Push into Intermediate Short Zone
  2. Korea Bear Pressure to Break Pattern Support

1. Softbank Tactical Push into Intermediate Short Zone

Soft%20bank%20for%20sk

Softbank Group (9984 JP) is moving into the more mature range of the expanding wedge that has been taking shape since early 2018. Recent highs at 6,000 present a challenge with ideal resistance near 6,300. Spikes in Softbank have a history of failing to stick.

Buy volumes spiked on the merger news but have since tapered off into the rise late last week and a trend that should continue to mark a top near the upper range.

Tactical support lies at 5,000/200 as the fresh buy zone. Last week we did see the upside gap partially filled and bodes well for a dip and recovery to test the high zone at 5,900-6,000.

RSI triple tops have marked significant cycle peaks in price in the past and this time sets up a minor new price high for the third RSI peak above 70 to lock in bear divergence (RSI not confirming new price highs as an underlying weaker lead signal). This sets up a cycle peak and short trade.

2. Korea Bear Pressure to Break Pattern Support

Korea

Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) was one of our core short bets outlined in our January 21 insight Top Short Triggers in Asia for a Q1 Pullback at 307. We recently added to this short at 304.

Growing evidence points to pattern support at 280/278 not holding bear pressure. Originally this was our downside target to reverse to long but as we head into the more bearish late February global cycle we see increasing odds of breaking this key wedge support.

Wedge formations are noted across Asia (HK and Singapore in addition to Korea) with HK already seeing a secondary break below wedge support. These wedge patterns are gunning for a new low below August lows.

Downside targets below 278 comes in at 267 and 262. We are holding our short from 307/304 for a press below wedge support.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Technical Analysis: Keppel Corp Tactical Buy Level with Macro Heavy Cycle and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Keppel Corp Tactical Buy Level with Macro Heavy Cycle
  2. EEM Coiled for a Rally as USD Rise Exhausts
  3. Where We Are Buying the SPX
  4. Dollar Surge Further Aggravates Equity Markets
  5. S&P 500 Technical Appraisal and Support Levels

1. Keppel Corp Tactical Buy Level with Macro Heavy Cycle

Keppel%20corp%20for%20sk

Keppel Corp Ltd (KEP SP) is approaching tactical price support at 4.60 where a recovery attempt is expected but unless Keppel can clear 6.0 the macro bear cycle will resume course in coming months/into the summer.

Weekly MACD triangulation (like many assets in Asia) is breaking down and needs a price push back above 6.0 and then 7.0 to avert a harder bear cycle into the summer. A tactical rally fits with our cycle low for Asia equities in late March/early April for an April counter trend rise that fizzles out in May.

We outline a tactical bounce trade and reverse to macro short for a new low in the summer with stop and price target levels. This fits our Asia cycle for a low in late March, April rally into early May and resumption of the bear cycle by mid-May.

2. EEM Coiled for a Rally as USD Rise Exhausts

Eem%20weekly

iShares MSCI Emerging Markets (EEM US) has been a good bear bet. We are now seeing constructive signs for a low taking shape this week ahead of our key late March cycle timeline for global equities to bottom. After meeting targeted support at 30.50 we do see risk down to 28. It is the bullish RSI wedge that is screaming for a low and April power rally as the contracting pattern matures late this week (with noise into early April) and set for a powerful upside breakout.

We pounded the table regarding buying the USD in January with EM FX showing major breakout energy which has transpired nicely from the USD/BRL to the EM FX complex and then bled into Asian FX. We now see signs of the USD rise exhausting in late March.

A low this week should induce a rise of 17% to 21% given EEM targets of 35 and 37. Risk lies with the COVID overhang muting a rally to the tune of 10-15%.

3. Where We Are Buying the SPX

Ndx%20smh

S&P 500 (SPX INDEX) has broken important long term trendline support and will act as ressitance in the touted April rally. We have been shorting bounces from SPX 3,380 and now looking for some downside exhaustion to place some long bets (NDX, SOX, EEM and Asia favored) for a short squeeze rip higher in April. Worth noting that virus battered sectors (airlines and cruise lines) did NOT make new lows Friday with some light at the end of the tunnel. SOX is also making a stand to perform over the NDX which faces late cycle big tech downside capitulation selling that would help identify a key low near SPX macro support at 2,150/30. A USD cycle peak is also a key component in chiseling out key lows in Asia and EEM.

Choppy descending ranges and RSI bull divergence into a cycle low timeline in late March are conviction inputs as is the overdone USD rise.

4. Dollar Surge Further Aggravates Equity Markets

Image 99635876021584650037703

Support levels have meant little more than talking points as indexes are slicing through them like butter. The truth remains that no one knows how low we will go, and the trend is still down for global equities. At the same time, every week where the MSCI ACWI loses ~10%, it gets that much closer to finding a bottom. In this report we provide updates on several indicators we are watching as to clues of a bottom.  We also highlight actionable themes within Staples, Health Care, Technology. We continue to recommend areas with defensive and/or growth characteristics.

5. S&P 500 Technical Appraisal and Support Levels

Image 8377219721584618564702

S&P 500 Potential Support Levels. Current logical support levels we are monitoring include the December 2018 low of 2,346 and prior resistance in 2015-2016 at 2,130-2,200. The 2,346 level would make a lot of sense, however there is nothing that says we can’t be down 35% (coinciding with the 2,130-2,200 level) or more from the highs. Ultimately, COVID-19 is holding the market hostage and it likely will stay that way until the virus spread diminishes.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Technical Analysis: EEM Coiled for a Rally as USD Rise Exhausts and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. EEM Coiled for a Rally as USD Rise Exhausts
  2. Where We Are Buying the SPX
  3. Dollar Surge Further Aggravates Equity Markets
  4. S&P 500 Technical Appraisal and Support Levels
  5. India Nifty Late March Cycle Low Ahead of April Squeeze – Macro Heavy

1. EEM Coiled for a Rally as USD Rise Exhausts

Eem%20d

iShares MSCI Emerging Markets (EEM US) has been a good bear bet. We are now seeing constructive signs for a low taking shape this week ahead of our key late March cycle timeline for global equities to bottom. After meeting targeted support at 30.50 we do see risk down to 28. It is the bullish RSI wedge that is screaming for a low and April power rally as the contracting pattern matures late this week (with noise into early April) and set for a powerful upside breakout.

We pounded the table regarding buying the USD in January with EM FX showing major breakout energy which has transpired nicely from the USD/BRL to the EM FX complex and then bled into Asian FX. We now see signs of the USD rise exhausting in late March.

A low this week should induce a rise of 17% to 21% given EEM targets of 35 and 37. Risk lies with the COVID overhang muting a rally to the tune of 10-15%.

2. Where We Are Buying the SPX

Spx%20h

S&P 500 (SPX INDEX) has broken important long term trendline support and will act as ressitance in the touted April rally. We have been shorting bounces from SPX 3,380 and now looking for some downside exhaustion to place some long bets (NDX, SOX, EEM and Asia favored) for a short squeeze rip higher in April. Worth noting that virus battered sectors (airlines and cruise lines) did NOT make new lows Friday with some light at the end of the tunnel. SOX is also making a stand to perform over the NDX which faces late cycle big tech downside capitulation selling that would help identify a key low near SPX macro support at 2,150/30. A USD cycle peak is also a key component in chiseling out key lows in Asia and EEM.

Choppy descending ranges and RSI bull divergence into a cycle low timeline in late March are conviction inputs as is the overdone USD rise.

3. Dollar Surge Further Aggravates Equity Markets

Image 99635876021584650037703

Support levels have meant little more than talking points as indexes are slicing through them like butter. The truth remains that no one knows how low we will go, and the trend is still down for global equities. At the same time, every week where the MSCI ACWI loses ~10%, it gets that much closer to finding a bottom. In this report we provide updates on several indicators we are watching as to clues of a bottom.  We also highlight actionable themes within Staples, Health Care, Technology. We continue to recommend areas with defensive and/or growth characteristics.

4. S&P 500 Technical Appraisal and Support Levels

Image 8377219721584618564702

S&P 500 Potential Support Levels. Current logical support levels we are monitoring include the December 2018 low of 2,346 and prior resistance in 2015-2016 at 2,130-2,200. The 2,346 level would make a lot of sense, however there is nothing that says we can’t be down 35% (coinciding with the 2,130-2,200 level) or more from the highs. Ultimately, COVID-19 is holding the market hostage and it likely will stay that way until the virus spread diminishes.

5. India Nifty Late March Cycle Low Ahead of April Squeeze – Macro Heavy

India%20weekly

NIFTY Index (NIFTY INDEX) – India’s free fall stems from the weekly MACD bear cycle that has been building bear divergence since early 2018 is now unleashing pend up sell pressure.

The most powerful trend changing set ups are found in the weekly MACD contracting patterns. In this case for India, the choppy ascending wedge that formed from late 2018 until the high at 12,400 (where we went short) warned of upside momentum deterioration, slowing buy volume, distribution and signa of an over owned market.

The break below 11,000 pattern support (rising wedge) triggered downside momentum and a confirmation of a trend change. Rising wedge formations have a 70% probability of breaking to the downside but when combined with macro bear divergence, odds increase to 82-85% and why we turned macro bearish at 12,400 and below 11,000.

The bet is to turn from short to long in late March where we expect a capitulation low.

USD/INR macro long bet has paid off but is moving into a new high zone that needs to align with a Nifty low. 

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Technical Analysis: Korea Bear Pressure to Break Pattern Support and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Korea Bear Pressure to Break Pattern Support

1. Korea Bear Pressure to Break Pattern Support

Korea

Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) was one of our core short bets outlined in our January 21 insight Top Short Triggers in Asia for a Q1 Pullback at 307. We recently added to this short at 304.

Growing evidence points to pattern support at 280/278 not holding bear pressure. Originally this was our downside target to reverse to long but as we head into the more bearish late February global cycle we see increasing odds of breaking this key wedge support.

Wedge formations are noted across Asia (HK and Singapore in addition to Korea) with HK already seeing a secondary break below wedge support. These wedge patterns are gunning for a new low below August lows.

Downside targets below 278 comes in at 267 and 262. We are holding our short from 307/304 for a press below wedge support.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Technical Analysis: Where We Are Buying the SPX and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Where We Are Buying the SPX
  2. Dollar Surge Further Aggravates Equity Markets
  3. S&P 500 Technical Appraisal and Support Levels
  4. India Nifty Late March Cycle Low Ahead of April Squeeze – Macro Heavy
  5. Stocks to Work into on March Weakness

1. Where We Are Buying the SPX

Spx%20h

S&P 500 (SPX INDEX) has broken important long term trendline support and will act as ressitance in the touted April rally. We have been shorting bounces from SPX 3,380 and now looking for some downside exhaustion to place some long bets (NDX, SOX, EEM and Asia favored) for a short squeeze rip higher in April. Worth noting that virus battered sectors (airlines and cruise lines) did NOT make new lows Friday with some light at the end of the tunnel. SOX is also making a stand to perform over the NDX which faces late cycle big tech downside capitulation selling that would help identify a key low near SPX macro support at 2,150/30. A USD cycle peak is also a key component in chiseling out key lows in Asia and EEM.

Choppy descending ranges and RSI bull divergence into a cycle low timeline in late March are conviction inputs as is the overdone USD rise.

2. Dollar Surge Further Aggravates Equity Markets

Image 99635876021584650037703

Support levels have meant little more than talking points as indexes are slicing through them like butter. The truth remains that no one knows how low we will go, and the trend is still down for global equities. At the same time, every week where the MSCI ACWI loses ~10%, it gets that much closer to finding a bottom. In this report we provide updates on several indicators we are watching as to clues of a bottom.  We also highlight actionable themes within Staples, Health Care, Technology. We continue to recommend areas with defensive and/or growth characteristics.

3. S&P 500 Technical Appraisal and Support Levels

Image 8377219721584618564702

S&P 500 Potential Support Levels. Current logical support levels we are monitoring include the December 2018 low of 2,346 and prior resistance in 2015-2016 at 2,130-2,200. The 2,346 level would make a lot of sense, however there is nothing that says we can’t be down 35% (coinciding with the 2,130-2,200 level) or more from the highs. Ultimately, COVID-19 is holding the market hostage and it likely will stay that way until the virus spread diminishes.

4. India Nifty Late March Cycle Low Ahead of April Squeeze – Macro Heavy

India%20weekly

NIFTY Index (NIFTY INDEX) – India’s free fall stems from the weekly MACD bear cycle that has been building bear divergence since early 2018 is now unleashing pend up sell pressure.

The most powerful trend changing set ups are found in the weekly MACD contracting patterns. In this case for India, the choppy ascending wedge that formed from late 2018 until the high at 12,400 (where we went short) warned of upside momentum deterioration, slowing buy volume, distribution and signa of an over owned market.

The break below 11,000 pattern support (rising wedge) triggered downside momentum and a confirmation of a trend change. Rising wedge formations have a 70% probability of breaking to the downside but when combined with macro bear divergence, odds increase to 82-85% and why we turned macro bearish at 12,400 and below 11,000.

The bet is to turn from short to long in late March where we expect a capitulation low.

USD/INR macro long bet has paid off but is moving into a new high zone that needs to align with a Nifty low. 

5. Stocks to Work into on March Weakness

Amazon.com Inc (AMZN US)Microsoft Corp (MSFT US)Samsung Electronics (005930 KS)Samsung SDI Co Ltd (006405 KS)Larsen & Toubro (LT IN)ICICI Bank Ltd (ICICIBC IN)HDFC Bank (HDFCB IN) are covered in this webcast.

We outline buy support levels into weakness where we like working into some long exposure as we transition out of shorts in major markets. Quality names more often than not lead a low in key indices.

Rally resistance points are outlined for a rise in April that may very well succumb to fresh weakness in May.

Korea – Stocks like SEC and SDI should bottom ahead of the KOSPI and telegraph a low in Korea. 

Big tech in the US has not seen the final bout of capitulation selling that is normally seen to market a low in late March. Amazon and Microsoft have yet to dig into good RSI oversold territory and our support levels reflect this.

India has seen an overshoot and some quality names are worth picking up on weakness into late March.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Technical Analysis: SEC Trendline Must Hold Support and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. SEC Trendline Must Hold Support
  2. Long and Short Plays in Asia with SPX Bear Pressure into March
  3. Softbank Tactical Push into Intermediate Short Zone
  4. Korea Bear Pressure to Break Pattern Support

1. SEC Trendline Must Hold Support

Sec%20for%20sk

Samsung Electronics (005930 KS) is so far showing a flat corrective pattern within a clear range. Resistance lies at 61k and intermediate pivot support comes in where trendline and price coincide at 55/54k.

The standout chart support revolves around the daily MACD trendline and “0” inflection support that will define the intermediate bias to hold support and reaching for a minor high (this appears to be in a forward March cycle) or see a brief pierce of price support at 54k.

The relative chart (blue) continues to show SEC outperforming the Kospi index. The current relative triangle break will give clear direction and a break would be an action point that would drive SEC and the KOSPI.

2. Long and Short Plays in Asia with SPX Bear Pressure into March

S&P 500 (SPX INDEX) is buckling form our mid February peak call and pullback sequence slated for late February/early March.

Our cycle work touted a harder decline cycle into late Feb/early March with March a month to start working into risk again. Virus outbreaks will stretch this cycle into late March if not April for more vulnerable markets and may overshoot some of our downside targets.
SPX bear divergence calls for more weakness after an uptick attempt today.
Charts and webcast cover long/short views in the US, US yield risk of breaking below 1.35% and favored Asian markets to buy in March and current short plays in Asia.

3. Softbank Tactical Push into Intermediate Short Zone

Soft%20bank%20for%20sk

Softbank Group (9984 JP) is moving into the more mature range of the expanding wedge that has been taking shape since early 2018. Recent highs at 6,000 present a challenge with ideal resistance near 6,300. Spikes in Softbank have a history of failing to stick.

Buy volumes spiked on the merger news but have since tapered off into the rise late last week and a trend that should continue to mark a top near the upper range.

Tactical support lies at 5,000/200 as the fresh buy zone. Last week we did see the upside gap partially filled and bodes well for a dip and recovery to test the high zone at 5,900-6,000.

RSI triple tops have marked significant cycle peaks in price in the past and this time sets up a minor new price high for the third RSI peak above 70 to lock in bear divergence (RSI not confirming new price highs as an underlying weaker lead signal). This sets up a cycle peak and short trade.

4. Korea Bear Pressure to Break Pattern Support

Korea

Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) was one of our core short bets outlined in our January 21 insight Top Short Triggers in Asia for a Q1 Pullback at 307. We recently added to this short at 304.

Growing evidence points to pattern support at 280/278 not holding bear pressure. Originally this was our downside target to reverse to long but as we head into the more bearish late February global cycle we see increasing odds of breaking this key wedge support.

Wedge formations are noted across Asia (HK and Singapore in addition to Korea) with HK already seeing a secondary break below wedge support. These wedge patterns are gunning for a new low below August lows.

Downside targets below 278 comes in at 267 and 262. We are holding our short from 307/304 for a press below wedge support.

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Brief Technical Analysis: Dollar Momentum and Big Break Points and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Dollar Momentum and Big Break Points

1. Dollar Momentum and Big Break Points

US Dollar Index (DXY) (DXY CURNCY)  – Clearing 99.40 is now testing the key 99.80 level. We remain USD bullish (long from early Jan) on pullbacks as the current rise is very extended. Risk lies with an acceleration to the 100.40 macro barrier, once above 99.80 on the back risk aversion seeking safety in the USD. We have been long the USD from early January and expect any rally stall to be follow by strength well into March.

Euro remains bearish (short from 1.12) and would represent a key break below 1.08 on the weekly support pivot. Sterling remains weak from the 1.3050 resistance to press toward 1.28/27.
USD in Asia is showing accelerating upside energy where we are long the greenback outside of IDR and PHP.  USD/SGD just cleared key 1.39 resistance (opens the way to 1.4250). Touted turning long the USD/KRW as a follow play with MYR, THB, INR front run USD long positions that have shown explosive upside momentum momentum.
Strategy/pivot points – DXY above 99.80 would open the way higher. Euro below 1.08 would break weekly pivot support. USD acceleration in Asia. AUD next big inflection level at 0.6680. USD bullish into March.

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