U.S Stocks
Fundamental Analysis:
The U.S. stock market fell, while the technology stocks that boosted stock indices to new highs during the pandemic weakened last Friday, 30th July, 2021. This is brought upon by investors, towards the concerns of the growth decline of large technology companies.
Amazon, whose performance outlook is weaker than expected, fell by 7.6%, the biggest drop since May 2020. It is also known as the biggest drag on the Nasdaq-100 Index and the S&P 500 Index.
In addition, technology stocks such as Microsoft put pressure on the Dow Jones Index.
Among these, Amazon, Facebook, and Apple’s performance outlooks are on a cautious shift, triggering discussions about whether the performance of these technology companies that are related to the pandemic will be thrown off by cyclical stocks.
David Spika, president of GuideStone Capital Management, said that after the market reached the current valuation level, professional investors began to look for reasons to sell. It may be the delta variant, or it may be other factors, which are not important. Ultimately, they are selling stocks because they think the valuation has been overstretched and they don’t want to be the ones who would eventually need to clean up the mess.
Technical Analysis:
(Dow30，1-hour chart)
Execution Insight:
Today, continue to pay attention to the direction of the Dow’s breakthrough in the range of 34870 to 35161. Particularly, pay extra attention on the possibility of it falling below the 34870-line.
If the Dow breaks through the 35161-line, it will hit a new record high. With that, pay attention to the possibility of it forming a “long” position that can rise and fall.
Once the bullish trap signal is formed, it could be an opportunity to open a small position and possibly keeps its all-time high. If the strength below the line drops below the 34870-line, it will create a downside potential.
Hong Kong Stocks
Fundamental Analysis:
The U.S. Treasury Yields retracement was relatively large last month. A more reasonable explanation is that there is a considerable gap between the consumer confidence index (CCI) and the number of employees before the pandemic.
Although monetary easing has lasted for a year, the CPI, PPI, real estate, and other indicators have reached new highs. However, the recovery of the employment rate has been slow, making investors less confident in the U.S. economy’s recovery compared to the previous economic cycles.
We expect that in August and September, the U.S. employment data may be better than expected with the suspension of subsidies.
Furthermore, the short-term TAPER is expected to increase by then, and U.S. stocks may have a retracement （and continue to rise after the retracement）.
However, according to the Fed’s cautious and transparent communication with the market in the past two years, it should not be TAPER’s expectation that the final impact on U.S. stocks should be. It is the position of the economic cycle.
Currently, the high point of U.S. corporate ROE may be in Q1 or Q2 next year, and the bull market in US stocks will not end easily.
Adding on to that, investors involved in Hong Kong stocks should gradually pay more attention to the U.S. dollar index. Once the U.S. dollar index confirms a reversal （breaking through the high point in the first half of the year）, it may be the beginning of this round of recovery cycle of capital outflows.
Technical Analysis:
(HK50，1-hour chart)
Execution Insight:
Today, on HK50, pay attention to the support of the 25880-line. If the HK50 runs above the 25880-line, it will remain to maintain a rebound trend.
With that, pay attention to the suppression of the 26535 and 26951 positions. If the HK50 market outlook falls below the 25880-line, this wave will be opened.
After the rebound, there is room for further callbacks, and attention will be paid to the supporting strength of the 25160-line.
FTSE China A50 Index
Technical Analysis:
(A50，1-hour chart)
Execution Insight:
Today, A50 imposes concerned on the direction of the breakthrough, at the interval between 15666 to 14669. If it breaks above the 15666-line, it will open up an upside potential.
With this, pay attention to the suppression of the 16163-line. If it falls below the 14669-line, it will open up further downside potential.
Disclaimer
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