ASEAN KEY DESTINATIONS
This is the Week to Own ASEAN Stocks
The global markets have kept ASEAN Stocks undervalued over the last few weeks, but this week should mark the end of that trend, this week is the week to be buying ASEAN stocks, next week we will see a turn in the global markets and ASEAN stocks should be set for a strong bull run, and here is why.
The uptick in short bets in the equity options market, coupled with an increasingly bearish from a technical perspective, suggest stocks will struggle to break from a vicious two-month downtrend this week. But once there is a turn short covering will see a rapid jump forward in the market according to Shayne Heffernan of Ebeling Heffernan.
It has been difficult for investors to find a reason to buy as recent declines and a jobs report that did not confirm investors' worst fears present the opportunity for a short-term boost.
U.S. markets will be closed on Monday for Independence Day, and the holiday is expected to depress volume during the week, making equities more vulnerable to large swings following the worst week for the S&P 500 in two months.
Only 30 percent of major stocks are above their 200-day moving averages, so the vast majority are on a downtrend, entry now on a continued fall will be extremely lucrative indeed. Last week, the Dow fell 4.5 percent, the S&P lost 5 percent and the Nasdaq shed 5.9 percent.
Over the past couple of months, markets have been beset with a string of negative data showing weaker-than-expected retail sales, consumer confidence and plunging home sales. The data was capped by Friday's weak payrolls report.
Options activity on exchange-traded funds (ETF) that tracks the S&P 500 benchmark and the Nasdaq show clearly that investors are betting on more declines.
PowerShares QQQ Trust ETF (QQQQ.P) which tracks the performance of the Nasdaq 100. The most active trades were on July $41, $40 puts. The ETF closed 0.3 percent lower at $42.47. Make no mistake we are very over sold at these levels.
As of late Friday, 133.94 million shares traded on the SPDR S&P 500 fund, and on Thursday 382.92 million shares exchanged hands, the highest volume since May 21. The three-month average trading volume is 266.34 million shares.
The June U.S. nonfarm payrolls report showed a fall in overall employment while private payrolls rose only slightly, a sign the recovery continues to struggle to gain traction. But some analysts say the market's recent sharp declines and positive elements in Friday's unemployment report could give stocks a short-term boost.
The S&P's 14-day relative strength index fell below 30 on Friday, indicating it could be oversold in the near-term. The Standard & Poor's 500 Index .SPX fell to 1,022.58 on Friday. The benchmark could find technical support near the 1,008-1,010 level, this year's low and also the 38.2 percent Fibonacci retracement of the advance from the low in early March 2009 to the high in April 2010.
One of the few indicators on tap for this week is June same-store sales, which many retailers will report on Thursday, giving insight into the state of consumer spending.
Despite the lack of scheduled reports, a number of companies could give guidance about earnings this week. On average preannouncements are more negative than positive which may weigh the week down somewahet with a strong bounce next week.
Also on tap for this week is the Institute of Supply Management's services sector survey for June, which is expected to contract slightly from the previous month but still show expansion.