Category

Technical Analysis

Brief Technical Analysis: Top Short Triggers in Asia for a Q1 Pullback and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Top Short Triggers in Asia for a Q1 Pullback
  2. Naver Spike Overdone – Sell

1. Top Short Triggers in Asia for a Q1 Pullback

We have outlined increasing risk of tops forming into the late January cycle timeline with some markets peaking before the SPX. The first top cycle date comes near January 23 and appears to be rolling in a touch early. The bigger cycle inflection comes between January 27 and February 9th. Our base case called for an equity cycle peak into late January and Q1 pullback into March.

Our short group in Asia is comprised of Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) , FTSE Straits Times Index (STI) (STI INDEX) , Kuala Lumpur Composite Index (Klci) (FBMKLCI INDEX) , FTSE China A50 Index (XIN9I INDEX) , Hong Kong Hang Seng Index (HSI INDEX) and NIFTY Index (NIFTY INDEX) .

The common thread is an oversold USD, slated cycle peaks in line with the global cycle, severe RSI divergence and sell signals in A50, HSI, Korea and India. This technical set up warns of a harder decline in Q1. Today’s price action aligns with power moves associated with non confirmation divergences.

EEM is also at a clear cycle peak as the USD makes key lows vs EM FX at a time when consensus is USD bearish (we have a bullish take on the green back).

2. Naver Spike Overdone – Sell

Naver%20for%20sk

Naver Corp (035420 KS) has risen in a linear manner and testing highs from 2017 and 2018 amid growing bear divergence (non confirmation of new price highs that creates a negative undertone and precedes intermediate corrective cycles) along with deteriorating buy volume into recent strength. These weaker inputs sets up a good short trade in Naver.

RSI break below pattern support will act as a lead signal for price to break noted trendline support near 180k. Initially one would expect a reaction bounce from this trend support.

38.2% retracement lies at 160k and 50% near 150k, representing key pullback objectives.

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Brief Technical Analysis: Apple and Big Tech Fade and Fresh Buy Levels in March and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Apple and Big Tech Fade and Fresh Buy Levels in March
  2. HSCEI Rejection Level
  3. Nikkei Triple Top Threat
  4. Company Spotlight: Buy WuXi Biologics Inc. (2269-HK)
  5. US 10yr Yield Pressuring Macro Lows

1. Apple and Big Tech Fade and Fresh Buy Levels in March

Focus is on Apple Inc (AAPL US) and the rising wedge as well as big tech upside fade levels and pullback targets for March. We cover cycles levels in Amazon.com Inc (AMZN US)Alphabet Inc Cl C (GOOG US)Facebook Inc A (FB US)Microsoft Corp (MSFT US) .

Apples’ exhaustive rising wedge stands out as a peak set up with uptick resistance within yesterdays’ gap zone.

As breadth narrows, it comes down to top tech holding the market together. If big tech rolls over then so does the NDX and SPX and the global cycle.

Note that recent tech strength has been on diminishing buy volumes from early February (x Microsoft) for this group which often precedes pullbacks from current overbought readings. Pullback levels and fresh buy zones in March hinge on price congestion and trendline supports holding. Apple and Facebook display the weaker underlying structures. Google and Microsoft show extended rises with pullback risk but remain macro bullish. Amazon exhibits the more bullish underlying technical posture.

2. HSCEI Rejection Level

Hscei

Hang Seng China Enterprises Index (HSCEI INDEX) has rallied back to test the underside of broken wedge support which is now labeled backswing resistance. Current resistance near 10,920 is a natural rejection level.

It is the rising wedge formation in H shares that has our attention as well as similar wedge patterns noted in the HSI, Korea and Singapore.

Wedge patterns like this show a 70% probability of breaking to the downside but when you add in the bear divergence tact, odds increase to 85%. Given the late January break of wedge support this is labeled a re test where a rejection is expected with 11,000 acting as a key pivot level just above noted resistance.

3. Nikkei Triple Top Threat

Japan%20weekly

Nikkei 225 (NKY INDEX) shows a 24,000 triple top threat on the weekly cash chart going back to the high in late 2017, 2018 and the recent topping pattern. This places macro bear pressure the recent rejection of the daily cycle at 24,000. Staying below 23,600 puts addition pressure to reach for support near 22,000.

Weekly trendline support comes in just under 22,000 with time translation, acting as a macro inflection marker.

Daily cycle triple tops stand out as does the recent rejection at 24,000 marking a point below broken trendline. 23,600 is another pivot level that is a tactical swing point for downside momentum to the sub 23k area and acts as a fresh sell trigger.

4. Company Spotlight: Buy WuXi Biologics Inc. (2269-HK)

Image 6000262621581558445995

Health Care remains one of our favorite Sector overweights, both globally (ex-US) and in Greater China. We believe WuXi Biologics offers a timely opportunity to take advantage of what we expect are higher prices ahead for this biotechnology growth stock. The fundamental story is easy to see, as the company has delivered top line annual sales growth of over 60% for the past four years coupled with an EPS CAGR of 129% over the past three years (FactSet). Of course, what is most important to us is that the price of the stock is confirming the fundamental story. Buy this breakout, and secondarily buy any pullback toward 97 HK$ base support (if applicable). 

5. US 10yr Yield Pressuring Macro Lows

Us%2010%20yr%20new

US Treasury (10 Yr Generic) (T GOVT) has continued to see a weaker yield trend even in the face of equity risk on cycles and that screams slower growth. In this chart we outline compelling pressure points that show risk of brief break of the 1.40% macro triple low ahead of a recovery into the summer toward 2%. It is the bear pressure in late 2020 and 2021 that exhibits a stronger cycle to break these key lows of 1.35/1.40% on the 10yr.

The 5yr yield always leads the 10yr cycle and just test 1.35% (the equivalent of 10yr 1.45%) in a traditional lead cycle. Bear pressure yield is mounting. A 5yr yield move below 1.30/28% would represent a break that would lead the 10yr.

This will eventually play a bigger role in the FX market and the shape of risk in late 2020/2021.

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Brief Technical Analysis: Naver Spike Overdone – Sell and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Naver Spike Overdone – Sell
  2. SK Hynix Short Zone with Option for SEC Long Pair

1. Naver Spike Overdone – Sell

Naver%20for%20sk

Naver Corp (035420 KS) has risen in a linear manner and testing highs from 2017 and 2018 amid growing bear divergence (non confirmation of new price highs that creates a negative undertone and precedes intermediate corrective cycles) along with deteriorating buy volume into recent strength. These weaker inputs sets up a good short trade in Naver.

RSI break below pattern support will act as a lead signal for price to break noted trendline support near 180k. Initially one would expect a reaction bounce from this trend support.

38.2% retracement lies at 160k and 50% near 150k, representing key pullback objectives.

2. SK Hynix Short Zone with Option for SEC Long Pair

Sk%20hynix%20for%20sk

SK Hynix (000660 KS) has done very well from our buy in level at 78k but the current upleg is looking overdone with ideal topside projection just under 105k and the RSI exhibiting minor bear divergence (non confirmation of the recent high) amid lofty readings. 

A choppy dip and rally would fit with some distribution taking place as the KOSPI shows similar froth near the 306-09 range.

SK Hynix needs a rest on the form of a pullback from a minor new high with supports near 94k and 90.50k. The macro drive higher should then resume.

The ratio chart between SK Hynix and SEC shows a clear bias for SK Hynix to continue to U/P SEC and another positioning option to test the 1.50 support zone. 1.66 represents uptick resistance on this ration.

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Brief Technical Analysis: Naver Spike Overdone – Sell and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Naver Spike Overdone – Sell
  2. SK Hynix Short Zone with Option for SEC Long Pair
  3. Ping An Long/Tencent Short Pair

1. Naver Spike Overdone – Sell

Naver%20for%20sk

Naver Corp (035420 KS) has risen in a linear manner and testing highs from 2017 and 2018 amid growing bear divergence (non confirmation of new price highs that creates a negative undertone and precedes intermediate corrective cycles) along with deteriorating buy volume into recent strength. These weaker inputs sets up a good short trade in Naver.

RSI break below pattern support will act as a lead signal for price to break noted trendline support near 180k. Initially one would expect a reaction bounce from this trend support.

38.2% retracement lies at 160k and 50% near 150k, representing key pullback objectives.

2. SK Hynix Short Zone with Option for SEC Long Pair

Sk%20hynix%20for%20sk

SK Hynix (000660 KS) has done very well from our buy in level at 78k but the current upleg is looking overdone with ideal topside projection just under 105k and the RSI exhibiting minor bear divergence (non confirmation of the recent high) amid lofty readings. 

A choppy dip and rally would fit with some distribution taking place as the KOSPI shows similar froth near the 306-09 range.

SK Hynix needs a rest on the form of a pullback from a minor new high with supports near 94k and 90.50k. The macro drive higher should then resume.

The ratio chart between SK Hynix and SEC shows a clear bias for SK Hynix to continue to U/P SEC and another positioning option to test the 1.50 support zone. 1.66 represents uptick resistance on this ration.

3. Ping An Long/Tencent Short Pair

Ping%20an%20tencent%20ration%20chart

We are long/bullish Ping An Insurance (H) (2318 HK)  from some time ago (87 region) and just sold  Tencent Holdings (700 HK)  at 387 (too early).

Ping An shows good upside potential on the breakout of triangulation in price and MACD as well as energy above the 97/98 highs on rising volume (supportive and a measure to buy dips). Triangle breakouts are followed by high momentum moves as unfolded in Tencent’s triangle break in mid December. 

Ping An – Fresh buy support lies at 97/98 on any weakness with a near target at 101.82 and more aggressive new highs targets near 110.

Tencent’s rise is currently stretched with resistance at 420 and pullback support at 380. RSI bear divergence noted and brewing as the MACD is due for a stall cycle and tactical correction.

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Brief Technical Analysis: HSCEI Rejection Level and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. HSCEI Rejection Level
  2. Nikkei Triple Top Threat
  3. Company Spotlight: Buy WuXi Biologics Inc. (2269-HK)
  4. US 10yr Yield Pressuring Macro Lows
  5. U.S. Equities: Still Bullish, With Reservations

1. HSCEI Rejection Level

Hscei

Hang Seng China Enterprises Index (HSCEI INDEX) has rallied back to test the underside of broken wedge support which is now labeled backswing resistance. Current resistance near 10,920 is a natural rejection level.

It is the rising wedge formation in H shares that has our attention as well as similar wedge patterns noted in the HSI, Korea and Singapore.

Wedge patterns like this show a 70% probability of breaking to the downside but when you add in the bear divergence tact, odds increase to 85%. Given the late January break of wedge support this is labeled a re test where a rejection is expected with 11,000 acting as a key pivot level just above noted resistance.

2. Nikkei Triple Top Threat

Japan%20weekly

Nikkei 225 (NKY INDEX) shows a 24,000 triple top threat on the weekly cash chart going back to the high in late 2017, 2018 and the recent topping pattern. This places macro bear pressure the recent rejection of the daily cycle at 24,000. Staying below 23,600 puts addition pressure to reach for support near 22,000.

Weekly trendline support comes in just under 22,000 with time translation, acting as a macro inflection marker.

Daily cycle triple tops stand out as does the recent rejection at 24,000 marking a point below broken trendline. 23,600 is another pivot level that is a tactical swing point for downside momentum to the sub 23k area and acts as a fresh sell trigger.

3. Company Spotlight: Buy WuXi Biologics Inc. (2269-HK)

Image 6000262621581558445995

Health Care remains one of our favorite Sector overweights, both globally (ex-US) and in Greater China. We believe WuXi Biologics offers a timely opportunity to take advantage of what we expect are higher prices ahead for this biotechnology growth stock. The fundamental story is easy to see, as the company has delivered top line annual sales growth of over 60% for the past four years coupled with an EPS CAGR of 129% over the past three years (FactSet). Of course, what is most important to us is that the price of the stock is confirming the fundamental story. Buy this breakout, and secondarily buy any pullback toward 97 HK$ base support (if applicable). 

4. US 10yr Yield Pressuring Macro Lows

Us%2010%20yr%20new

US Treasury (10 Yr Generic) (T GOVT) has continued to see a weaker yield trend even in the face of equity risk on cycles and that screams slower growth. In this chart we outline compelling pressure points that show risk of brief break of the 1.40% macro triple low ahead of a recovery into the summer toward 2%. It is the bear pressure in late 2020 and 2021 that exhibits a stronger cycle to break these key lows of 1.35/1.40% on the 10yr.

The 5yr yield always leads the 10yr cycle and just test 1.35% (the equivalent of 10yr 1.45%) in a traditional lead cycle. Bear pressure yield is mounting. A 5yr yield move below 1.30/28% would represent a break that would lead the 10yr.

This will eventually play a bigger role in the FX market and the shape of risk in late 2020/2021.

5. U.S. Equities: Still Bullish, With Reservations

Image 64556504921581467431116

And just like that, the S&P 500, Nasdaq, and the Dow have reclaimed new highs despite ongoing coronavirus concerns, as a buy the dip strategy has paid off. Primarily responsible for new highs in these indexes is Technology (esp. software and semis/semi suppliers) and FAANG stocks. While these areas all remain bullish, we still have some reservations due to the massive disparity in performance between them and the Materials (XLB, XME) and Energy (RYE) Sectors, and also small-caps (IWM) which continue to hit new RS lows. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Financials: Homebuilding, Large-Cap, Casinos & Gaming, Small-Cap, Asset Management & Custody Banks, Large-Cap, and Investment Banking & Brokerage, Small-Cap.

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Brief Technical Analysis: SK Hynix Short Zone with Option for SEC Long Pair and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. SK Hynix Short Zone with Option for SEC Long Pair
  2. Ping An Long/Tencent Short Pair

1. SK Hynix Short Zone with Option for SEC Long Pair

Sk%20hynix%20for%20sk

SK Hynix (000660 KS) has done very well from our buy in level at 78k but the current upleg is looking overdone with ideal topside projection just under 105k and the RSI exhibiting minor bear divergence (non confirmation of the recent high) amid lofty readings. 

A choppy dip and rally would fit with some distribution taking place as the KOSPI shows similar froth near the 306-09 range.

SK Hynix needs a rest on the form of a pullback from a minor new high with supports near 94k and 90.50k. The macro drive higher should then resume.

The ratio chart between SK Hynix and SEC shows a clear bias for SK Hynix to continue to U/P SEC and another positioning option to test the 1.50 support zone. 1.66 represents uptick resistance on this ration.

2. Ping An Long/Tencent Short Pair

Ping%20an%20tencent%20ration%20chart

We are long/bullish Ping An Insurance (H) (2318 HK)  from some time ago (87 region) and just sold  Tencent Holdings (700 HK)  at 387 (too early).

Ping An shows good upside potential on the breakout of triangulation in price and MACD as well as energy above the 97/98 highs on rising volume (supportive and a measure to buy dips). Triangle breakouts are followed by high momentum moves as unfolded in Tencent’s triangle break in mid December. 

Ping An – Fresh buy support lies at 97/98 on any weakness with a near target at 101.82 and more aggressive new highs targets near 110.

Tencent’s rise is currently stretched with resistance at 420 and pullback support at 380. RSI bear divergence noted and brewing as the MACD is due for a stall cycle and tactical correction.

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Brief Technical Analysis: Nikkei Triple Top Threat and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Nikkei Triple Top Threat
  2. Company Spotlight: Buy WuXi Biologics Inc. (2269-HK)
  3. US 10yr Yield Pressuring Macro Lows
  4. U.S. Equities: Still Bullish, With Reservations
  5. Long/Short Stock Set Ups in Asia

1. Nikkei Triple Top Threat

Japan%20nikk

Nikkei 225 (NKY INDEX) shows a 24,000 triple top threat on the weekly cash chart going back to the high in late 2017, 2018 and the recent topping pattern. This places macro bear pressure the recent rejection of the daily cycle at 24,000. Staying below 23,600 puts addition pressure to reach for support near 22,000.

Weekly trendline support comes in just under 22,000 with time translation, acting as a macro inflection marker.

Daily cycle triple tops stand out as does the recent rejection at 24,000 marking a point below broken trendline. 23,600 is another pivot level that is a tactical swing point for downside momentum to the sub 23k area and acts as a fresh sell trigger.

2. Company Spotlight: Buy WuXi Biologics Inc. (2269-HK)

Image 6000262621581558445995

Health Care remains one of our favorite Sector overweights, both globally (ex-US) and in Greater China. We believe WuXi Biologics offers a timely opportunity to take advantage of what we expect are higher prices ahead for this biotechnology growth stock. The fundamental story is easy to see, as the company has delivered top line annual sales growth of over 60% for the past four years coupled with an EPS CAGR of 129% over the past three years (FactSet). Of course, what is most important to us is that the price of the stock is confirming the fundamental story. Buy this breakout, and secondarily buy any pullback toward 97 HK$ base support (if applicable). 

3. US 10yr Yield Pressuring Macro Lows

Us%2010%20yr%20new

US Treasury (10 Yr Generic) (T GOVT) has continued to see a weaker yield trend even in the face of equity risk on cycles and that screams slower growth. In this chart we outline compelling pressure points that show risk of brief break of the 1.40% macro triple low ahead of a recovery into the summer toward 2%. It is the bear pressure in late 2020 and 2021 that exhibits a stronger cycle to break these key lows of 1.35/1.40% on the 10yr.

The 5yr yield always leads the 10yr cycle and just test 1.35% (the equivalent of 10yr 1.45%) in a traditional lead cycle. Bear pressure yield is mounting. A 5yr yield move below 1.30/28% would represent a break that would lead the 10yr.

This will eventually play a bigger role in the FX market and the shape of risk in late 2020/2021.

4. U.S. Equities: Still Bullish, With Reservations

Image 64556504921581467431116

And just like that, the S&P 500, Nasdaq, and the Dow have reclaimed new highs despite ongoing coronavirus concerns, as a buy the dip strategy has paid off. Primarily responsible for new highs in these indexes is Technology (esp. software and semis/semi suppliers) and FAANG stocks. While these areas all remain bullish, we still have some reservations due to the massive disparity in performance between them and the Materials (XLB, XME) and Energy (RYE) Sectors, and also small-caps (IWM) which continue to hit new RS lows. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Financials: Homebuilding, Large-Cap, Casinos & Gaming, Small-Cap, Asset Management & Custody Banks, Large-Cap, and Investment Banking & Brokerage, Small-Cap.

5. Long/Short Stock Set Ups in Asia

The following are some compelling short and long stock ideas for trades in Asia with entry, stop and target levels which are run through in the webcast. Short bets become more compelling into near term strength in Asia into mid February with late February touted as a harder cycle timeline. Longs are concentrated in defensive names near supports.

Shorts are in United Microelectronics Corp (2303 TT)Samsung Biologics Co., (207940 KS)LG Display (034220 KS)HKEX (388 HK) .

Longs on our radar are China Mobile (941 HK)China Unicom Hong Kong (762 HK)Reliance Industries (RIL IN) and Larsen & Toubro (LT IN) .

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Brief Technical Analysis: Ping An Long/Tencent Short Pair and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Ping An Long/Tencent Short Pair
  2. Oil Macro Heavy Signals Post Tactical Recovery
  3. U.S. Equity Strategy: Growth Surging Relative to Value

1. Ping An Long/Tencent Short Pair

Ping%20an%20tencent%20ration%20chart

We are long/bullish Ping An Insurance (H) (2318 HK)  from some time ago (87 region) and just sold  Tencent Holdings (700 HK)  at 387 (too early).

Ping An shows good upside potential on the breakout of triangulation in price and MACD as well as energy above the 97/98 highs on rising volume (supportive and a measure to buy dips). Triangle breakouts are followed by high momentum moves as unfolded in Tencent’s triangle break in mid December. 

Ping An – Fresh buy support lies at 97/98 on any weakness with a near target at 101.82 and more aggressive new highs targets near 110.

Tencent’s rise is currently stretched with resistance at 420 and pullback support at 380. RSI bear divergence noted and brewing as the MACD is due for a stall cycle and tactical correction.

2. Oil Macro Heavy Signals Post Tactical Recovery

Wti%20d

W&T Offshore (WTI US) is resting on some interesting tactical support at 58 where the 200 day moving average and wedge price support align. This is a tactical bounce zone. Resistance comes in at 57.50/60 with scope to 62.

Our focus today is on trading a tactical rise into strategic sell territory near the Iran spike high zone. The rising wedge warns of a more macro negative cycle as does the MACD slip back below triple resistance.

MACD slipping back below macro resistance is negative and would confirm a bigger topping process (after a tactical recovery). An MACD break below trendline would also nail down a more negative macro cycle toward key support at 55 and 52 (just above the 51 triple lows).

3. U.S. Equity Strategy: Growth Surging Relative to Value

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As we head into Q4 earnings season we remain bullish on the broad market. Our bullish outlook is supported by the themes highlighted in this report.  In addition, we highlight attractive Groups and stocks within Discretionary and Technology: Casinos & Gaming, Large-Cap, Semiconductors, Mid-Cap, Semiconductors, Small-Cap, Software, Design Solutions.

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Brief Technical Analysis: Union Bank of the Philippines Base Line Support and Trend Inflection and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Union Bank of the Philippines Base Line Support and Trend Inflection
  2. Fresh Resistance/Short Levels in Asia
  3. EEM Support Breach with Mounting Macro Bear Pressure
  4. India Joins the Bear Campaign
  5. Global Equity Strategy: Growth Over Value

1. Union Bank of the Philippines Base Line Support and Trend Inflection

Union%20bank%20phils%20for%20sk

Union Bank Of The Philippines (UBP PM) is making a stand at intermediate price and pattern support near the 56 level with a risk point at 55 representing inflection support that will define a recovery cycle. Below 55 would be negative if the current bull wedge fails to take hold.

The spike higher is attempting to breakout from the descending bull wedge with the initial hurdle at 64 which would open the way to a price target at 69. Above 69 would clear the way to challenge retracement resistance near 74.

Buy volumes lack a turnaround signal and must improve on upside from the recent spike low near 56.

55 represents the make or break intermediate support level.

2. Fresh Resistance/Short Levels in Asia

Our view in Asia remains to sell rallies in February given risk of supply chain repercussions in February and a follow up on our original insight Top Short Triggers in Asia for a Q1 Pullback  issued on January 21, 2020.
Original shorts have met short term tactical downside targets in lead markets where many have covered shorts and in need of levels to re cycle short exposure.
This webcast covers key resistance levels in FTSE China A50 Index (XIN9I INDEX) and the Hong Kong Hang Seng Index (HSI INDEX) along with favored short re cycle levels in Singapore, Malaysia and India.
Near term sell levels in Korea, Taiwan and Japan are outlined but this is a group we are keen to buy on a Q1 pullback in late Feb/early March.
Our cycle work continues to point to weakness into March per our Q1 pullback sequence.

3. EEM Support Breach with Mounting Macro Bear Pressure

Eem%20d

iShares MSCI Emerging Markets (EEM US) exhibits a more bearish structure now that wedge support at 43 has been broken with uptick resistance at 43.00-50 as the fresh sell zone and the 40.20-41 support zone attracting.

RSI bear divergence and topping pattern alerting us to a short trade near 45-46 to test 43. The break below 43 pattern support sets in motion a heavy bias that will bleed into the weekly or macro cycle.

EEM was touted as an underperform short as well as an absolute short near the 46 zone representing the topside of the rising wedge.

The weekly MACD turn at critical resistance demonstrate increased risk of a harder decline to threaten 40 macro pivot support.

4. India Joins the Bear Campaign

India%20new%20for%20sk

NIFTY Index (NIFTY INDEX) was touted as one of our high conviction short positions in our January 21 insight Top Short Triggers in Asia for a Q1 Pullback that outlined a Nifty short near 12,400. The downside impulse sets in motion a more serious corrective cycle for the Nifty that was led be the banking sector rolling over and underperforming as a leading signal for a Nifty correction. Initial targets at 11,700 and 11,400 appear conservative with a harder decline in the offing based on the macro cycle that is turning south in the weekly chart.

Weekly MACD is just turning down from noted macro trendline resistance with a high degree amount of bear divergence (non confirmation of recent new index highs) from early 2018 which sets a bearish macro bias to test and pressure pattern support near 11,000.

India demonstrates a clear lag to core Asia and now faces a more serious corrective cycle as a market that is over owned and needs to revert to the mean. India has joined the bear campaign and faces some significant macro headwinds.

USD/INR continues to show a strong macro bias in favor of the USD with a break point at 72.30.

5. Global Equity Strategy: Growth Over Value

Image 74526741121580667445701

We continue to see coronavirus concerns as helping correct the excess bullish sentiment across global equity markets in the short-term. Additionally, considering the dearth of breakdowns, we continue to believe this is a bull market until proven otherwise and a “buy the dip” strategy remains warranted. We recap importat technical levels across markets and highlight opportunities within the Services, Technology, Financial Services, and Staples Sectors.

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Brief Technical Analysis: Company Spotlight: Buy WuXi Biologics Inc. (2269-HK) and more

By | Daily Briefs, Technical Analysis

In this briefing:

  1. Company Spotlight: Buy WuXi Biologics Inc. (2269-HK)
  2. US 10yr Yield Pressuring Macro Lows
  3. U.S. Equities: Still Bullish, With Reservations
  4. Long/Short Stock Set Ups in Asia
  5. Noble Development Base Support with Volume Concerns

1. Company Spotlight: Buy WuXi Biologics Inc. (2269-HK)

Image 6000262621581558445995

Health Care remains one of our favorite Sector overweights, both globally (ex-US) and in Greater China. We believe WuXi Biologics offers a timely opportunity to take advantage of what we expect are higher prices ahead for this biotechnology growth stock. The fundamental story is easy to see, as the company has delivered top line annual sales growth of over 60% for the past four years coupled with an EPS CAGR of 129% over the past three years (FactSet). Of course, what is most important to us is that the price of the stock is confirming the fundamental story. Buy this breakout, and secondarily buy any pullback toward 97 HK$ base support (if applicable). 

2. US 10yr Yield Pressuring Macro Lows

Us%2010%20yr%20new

US Treasury (10 Yr Generic) (T GOVT) has continued to see a weaker yield trend even in the face of equity risk on cycles and that screams slower growth. In this chart we outline compelling pressure points that show risk of brief break of the 1.40% macro triple low ahead of a recovery into the summer toward 2%. It is the bear pressure in late 2020 and 2021 that exhibits a stronger cycle to break these key lows of 1.35/1.40% on the 10yr.

The 5yr yield always leads the 10yr cycle and just test 1.35% (the equivalent of 10yr 1.45%) in a traditional lead cycle. Bear pressure yield is mounting. A 5yr yield move below 1.30/28% would represent a break that would lead the 10yr.

This will eventually play a bigger role in the FX market and the shape of risk in late 2020/2021.

3. U.S. Equities: Still Bullish, With Reservations

Image 64556504921581467431116

And just like that, the S&P 500, Nasdaq, and the Dow have reclaimed new highs despite ongoing coronavirus concerns, as a buy the dip strategy has paid off. Primarily responsible for new highs in these indexes is Technology (esp. software and semis/semi suppliers) and FAANG stocks. While these areas all remain bullish, we still have some reservations due to the massive disparity in performance between them and the Materials (XLB, XME) and Energy (RYE) Sectors, and also small-caps (IWM) which continue to hit new RS lows. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Financials: Homebuilding, Large-Cap, Casinos & Gaming, Small-Cap, Asset Management & Custody Banks, Large-Cap, and Investment Banking & Brokerage, Small-Cap.

4. Long/Short Stock Set Ups in Asia

The following are some compelling short and long stock ideas for trades in Asia with entry, stop and target levels which are run through in the webcast. Short bets become more compelling into near term strength in Asia into mid February with late February touted as a harder cycle timeline. Longs are concentrated in defensive names near supports.

Shorts are in United Microelectronics Corp (2303 TT)Samsung Biologics Co., (207940 KS)LG Display (034220 KS)HKEX (388 HK) .

Longs on our radar are China Mobile (941 HK)China Unicom Hong Kong (762 HK)Reliance Industries (RIL IN) and Larsen & Toubro (LT IN) .

5. Noble Development Base Support with Volume Concerns

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Noble Development (NOBLE TB) recent upside price action exhibits corrective characteristics in the form of an a-b-c bounce with the key trend remaining down, however the next low will complete a cycle low/sequence as the decline is extended on many counts but volumes remain challenging.

The break of trend support at 17 now acts as backswing resistance that is being rejection in a counter trend bounce sequence. This rising line is now fresh resistance in a future rally cycle with runs near 18 currently.

Congestion support comes in at 15 and 14 as a zone to begin to accumulate with ideal projection at 12.80 making the 13 zone a higher conviction buy area. Keep an eye on volumes on the way down and into a base for improving signals for buy confidence.

Upside hurdles on a future up cycle are outlined that acted as previous support levels.

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