|
Many
global stock markets are seeing a late spring recovery rally after a
difficult April. Today international equity markets can move in tandem, but
at different speeds. China
might be heading south at 50
MPH while India is going north at 35 and
money flows across international boarders in deregulated world economies
speed the differential performances between markets. We at Delta Global
Advisors advocate exposure to foreign markets much like the great investor
Sir John Templeton said, “diversify among nations, industries and types
of securities”.
I
keep an eye on more than 2-dozen world equity markets in 4 broad regions and
our database quickly categorizes 9 major economic groups in each region and
gives a current assessment of current risk level every group. Furthermore, the 4 major regions can
access technical data on 125 – 700 stocks each, depending on the number
of actively traded stocks in a particular market. Following, then, is a fly-over look at
the how I see the technical conditions of various markets worldwide.
Domestic
Markets
Dow Jones Industrial Average (DJIA)
- Technical
Comment - Trend Bullish, Buy on Pullback
Was
the spread triple top breakout due solely to June option expirations? Is the market telling us the Fed is
nearly done hiking rates? Is the
earnings outlook likely to stay strong with the majority of companies
reporting earnings above consensus?
The nasty Spring sell-off had erected a formable upside barrier to any
further recovery in the Dow, but spread triple top breaks tend to be patterns
I consider very meaningful. The
recent break you see in the chart below turns the trend for the Dow back to
positive with a price objective of 11,150. While seasonal factors would seem to
be at odds with this break and price objective, the Dow could at least reach
up to the March highs of 10950. A
pullback would be a lot more comfortable way to enter this market, but its
recent refusal to do anything meaningful on the downside suggests we might
not get that opportunity just yet.
NASDAQ Composite (COMP)
- Technical
Comment - Trend Bearish, wait for breakout.
We
have seen some of the traditional NASDAQ sectors perform much better
recently. The software, Internet, biotech and semiconductors stocks have
experienced dead cat bounces off the early spring lows. However, we still see small cap stocks
performing better than large cap issues, which could continue to hold back
gains in the Composite Index itself.
The same spread triple top breakout that the Dow saw last week would
occur at 2120 for the NAZ, so investors should keep an eye on this
level. Absent that break, the
index has work to do to prove this is more than just an oversold bounce from
its 10% correction this spring.
International Markets
S & P Toronto Stock
Index (SPTSE) – 555.76
- Technical
Comment - Trend Bullish, textbook up-trend since August 2004.
This
capitalization-weighted index has been in a strong up-trend since late last
summer. Strikingly, this
commodity-related economy really didn’t miss a beat in the commodity
market sell-off in April and in fact it just gave its 5th
consective buy signal in early June. Components of the TSE are laden with
names from the materials, energy and transport sectors, recently seeing a
re-emergence due to yet another spike in crude oil. While the technical picture is largely
positive for the Canadian market, investors should keep in mind that the
support line lies well below at 480.
In addition, a significant spread quadruple bottom break would occur
at 486, but the area just below 500 would likely act as support before such a
breech.
Nikkei 225 Stock Index (NKY) – 11514
- Technical
Comment - Trend just turned positive, could reach for spring highs?
With
a strong 10800 support in place, the Nikkei just burst through the bearish
resistance line at 11450. This
break suggests a price objective into the 12100 area. Is the Japanese market finally
awakening from its long slumber?
Since there have been so many false signs of hope in recent years, we
are no different than most in approaching this market with great caution and
skepticism, especially an economy so dependent upon oil imports, but
investors can snoop around this market for names they might be comfortable
nibbling on slowly.
FTSE 100 (UKX-LN)
– 5077.77
- Technical
Comment - Trend Bullish, textbook up trend since August 2004.
The
FTSE has been up by 50% since March of 2003. Despite any turmoil in the nearby Euro
Zone and the slowly eroding popularity of Tony Blair’s government,
stocks in the U.K.
have continued to climb.
Currently, the index is at the top of its expected trading range. Seasonal factors would now weigh in on
our strategy, as the FTSE tends to experience sell-offs in the summer (notice
these as marked in the chart below by the “7”—July—
in 2004 and 2003 and the deep decline of 2002 that ultimately bottomed in
October). Since the price objective
has been fulfilled on the FTSE, investors should now consider lightening up
in their positions or at least placing protective stops on their holdings in
this market. The notion that a
rate cut may be coming not only to the Euro but to Britain, as well,
continues to stand as a potential risk to the strength of the Pound, and
currency risk is something U.S. investors need to keep in mind when analyzing
any foreign market, to be sure.
When
investing, studies have shown it’s even more important to accurately
predict the direction of the market than an individual stock within that
market; in the investment world, then, rising tides do indeed seem to lift
all boats. As I mentioned earlier,
the comments above are merely meant to give investors a big-picture view of
the technical condition of certain markets worldwide. Since most investors tend to focus
primarily on fundamental analysis and our ability to provide meaningful
technical analysis on foreign markets is particularly unique and I hope the
comments above are of interest.
Investors
who might like to explore the technical conditions of their individual
stocks, foreign as well as domestic, are welcome to contact us for a
check-up.
**The
above commentary is an excerpt from one currently available on our website, www.deltaga.com,
which includes a technical look at both China
and India.
Bruce Zaro
Chief
Technical Strategist
Delta Global Advisors, Inc
877-746-4228
bzaro@deltaga.com.
Over his 20-year investment career, Mr. Zaro has become a
highly-regarded technical analyst who runs private client portfolios at Delta
Global. For the last year, he
served as Managing Director of Granite Wealth Management outside of Boston and spent nearly
15 years prior as a Vice President at Gage Wiley & Co. His current firm is full-service, but
specializes in providing international market access as well as alternative
investment strategies
19051 Goldenwest, #106-116 Huntington Beach, CA
92648 Phone:
800-485-1220
Fax: 800-485-1225 www.deltaga.com
| 
