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Near-term Bottoming Process at Hand, but Expect minor new lows

October 12, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

SPX Cash index
SUPPORT-  2710, 2694, 2688, 2660
RESISTANCE- 2744, 2778-80, 2800-1, 2822


LINK TO TECHNICAL WEBINAR from YESTERDAY 10/11: https://youtu.be/_NY6cKzBZSo

SPX - (3-5 Days)- Mildly Bearish- Sell rallies Friday/Monday, expecting a final pullback to break Thursday's lows which could get to 2723-6 or a max overthrow level near 2700.  While overnight futures are higher, we haven't seen sufficient Washout in volume yet to show the kind of capitulation necessary to put in a bottom.  Demark signals on VIX and on SPX are two days away, with upcoming sells and buys respectively.  While tough to stay short, I don't see this as being the area just yet to buy, so I will hold off and wait for 2723-6 on evidence S&P is making its TD BUY Setup (9 consecutive closes under the close from four days ago) . 

EuroSTOXX 50  - Mildly Bearish-  Pattern here broke down under prior lows at 3274 and closed at the lows, which is a bigger negative than expected heading into today.  One should hold off on buying dips until 3250 can be exceeded.  Movement down to 3100 possible 

HSCEI- Mildly bullish- Trying to rally after hitting prior lows and Close to support- Shorts aren't as great of a risk/reward here.  Rally to 10436 likely and over would provide a larger lift


Trading Longs: AMZN, CRM, SCVL, KL,HMY, ABX, AGI.CN, GOLD,  (SQ, FB, AAPL, all look to require 2-3 days and potentially one final washout, but are growing close-  These should be bought on weakness on Friday)  

Trading Shorts:  JEF, AMP, KMB,  DLTR, MNST, PH, OC, XBI, RHT, AMBA, MNK, DGX, WYNN, LVS, MHK, M, JWN, WGO, ADNT, UPS, R, CAR, VMC


TECHNICAL THOUGHTS

Prices got down to near key levels of support -50% retrace on NASDAQ 100 and near key GANN support near 2723 on SPX, but yet failed to show all that much volume capitulation, which is nearly always necessary before thinking a low of any magnitude is in.  While "shock" and "disgruntlement" have been par for the course, it's tough to say we've seen real fear just yet.   Equity Put/call ratios are still under ideal levels and the TRIN barely registered a 1.4 on Wednesday and yesterday wasn't all that convincing.

To the bulls credit, markets are now oversold on daily charts, and we've begun to see intra-day positive divergence in momentum, the latter being more important near-term in potentially driving a bounce.  But with most of the rhetoric concentrating on "buying the 200-day"  or "buy because markets are oversold" it's likely to be too cute to step in and buy and think we've seen the bottom.   The real key will be a strong rally on good breadth and momentum, but also one where prices bottom out with sufficient Demark exhaustion and at least SOME evidence of capitulation.  At Thursday's close, we just don't seem to be there just yet.   Overall, the final stage of drawdowns tends to be vicious, volatility wise, with quite a few false shakeouts before markets bottom.  We seem to be near that time now.  Thus, for those that can "hold their nose" and buy, there should be some type of rally into the Mid-term Election.  However, on a 2-3 day basis, for my nickel, it still looks a bit premature, and I'd be willing to sell into post market strength heading into Friday. 

 

ACTION PLAN-  

Long GDX with targets at 21
Long XLE with targets at 79
Long XOP targeting 45.50
Short KBE, adding under 46.77 with targets at 42.50 and stops at 48
Short XLI targeting 76.50 , adding under 78.13, with stops on a daily close over 81


 

Additional charts and thoughts below.

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The NASDAQ got right down to its 50% ratio of the prior April to September rally,which took 171 days into the Fall Equinox, peaking where many markets often make turning points, and then falling off for 21 calendar days into yesterday.   Yesterday happened to be a key anniversary for the 2007 highs, and also the 2002 lows, just to name a couple.  A key timeframe for possible trend change.  Yet, Demark counts are early and we attempted to rally off the lows in NASDAQ which held up much better than S&P and then Thursday post close has been higher.  The gut is that minor rallies on Friday into next week are unlikely to get past 7250 before turning back lower and making a final push down, which will create the real momentum divergence that will be blatantly obvious to buy into.  For now, one should avoid putting too much stock in any rally from Thursday's lows having much momentum.  Demark counts are early and this should be revisited and likely make a lower low before any serious bottom is in place .  (This coincides with VIX making a similar but opposite signal on the upside - which shows the same count by the way)  (this adds to the conviction of this thinking) 

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The Bloomberg Dollar index began to rollover in the last few days, and looks likely to continue in the days ahead.  This bodes well for the Metals trade to work in the seasonally bullish month of October.  Pullbacks to 1170-5 look likely and should coincide with commodities and Emerging markets bouncing. 
 

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Gold miners made a huge breakout Thursday which accelerated throughout the day, closing up at the highs. This proved to be a breakout of a reverse Head and Shoulders pattern which was confirmed today.  While momentum got a bit stretched as of Thursday's close, pullbacks should be excellent buying opportunities.   GDX, shown above, the VanEck Vectors Gold Miners ETF, should push higher to test the resistance shown by this "WHITE" line undercutting all the previous lows from the last couple years, which should now be important resistance on a test in the weeks ahead.  This lies near 20.75-21 and would be the first meaningful area of resistance.  Pullbacks to 19.50 or below would make this attractive to buy dips and/or add to existing longs.

No real signs of Capitulation to call a Low- Stay defensive into weekend

October 11, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

SPX Cash index
SUPPORT-  2769, 2743, 2717
RESISTANCE- 2822,2860-2


LINK TO TECHNICAL WEBINAR from last Thursday 10/4: https://www.youtube.com/watch?v=NQtSxfx4P1o&t=1s

 

SPX - (3-5 Days)- Bearish- While tempting to try to take quick profits after such a plunge, the time counts simply don't line up just yet with price and will take a few more days most likely before any meaningful support is in place.  Overnight futures show prices down near 2760, or near the 50% retracement of the move up from early April. 

EuroSTOXX 50  Neutral-  Not as negative here with prices down near two former lows-  3250-60 importnat and feel that max downside on this first go-around lies near 3100.  On a break of 3250, its right to hold off on buying, but for now, watching and awaiting buy entries

HSCEI-  Close to support-  Pullbacks have hit 9972, the 61.8% Retrace, and should be close to trying to bottom- For now, no need to try to pick lows, as the downtrend in Asia is pretty severe overnight and need some stabilization before trying dips, but shorts aren't as great of a risk/reward here.


Trading Longs: PEG, CMS, XLE, XLU, EXC, NEP

Trading Shorts:  ALK, AAL, DAL, JBLU, LUV, OC, XBI, RHT, AMBA, MNK, DGX, WYNN, LVS, MHK, M, JWN, LB, WGO, ADNT, UPS, R, CAR, VMC


TECHNICAL THOUGHTS

Prices plunged after breaching support of 2874 yesterday, getting briefly below 2800 in a move that many haven't witnessed in years.  Breadth and volume expanded on the move, yet it appears to have taken many off guard and happened so quickly that many didn't hae time to react.   Fear looks premature on this move, and is an essential ingredient to putting in a meaningful low.   Several gauges are useful when trying to identify lows during spike declines.  One of course is VIX backwardation which we've clearly begun to see in the last day.  However, others like TRIN readings above 2 (ARMS INDEX) with an outsized amount of volume to the downside vs upside remain premature.  Additionally, Demark indicators are still early in signaling any type of downside exhaustion.  Moreover, sentiment polls were largely pretty bullish heading into the last week, and will take time before turning immediately bearish.   Finally, we'll need to see some evidence of positive momentum divergence with prices pushing to new lows, while momentum holds up.  This normally occurs on a sharp bounce attempt which fails and then moves back to new lows.  At present, while prices might have reached near-term oversold levels on hourly and two-hour charts, daily charts aren't yet oversold, and the Percentage of stocks trading above their 10-day moving averages haven't gotten down under 10% yet which might bring about a low.

Overall, breadth yesterday came in a very heavy 8-1 negative while volume was even heavier.  However, despite very poor breadth, TRIN was still relatively mild and did not register any real capitulation.  VIX spiked higher, yet also looks early to think it's peaking.  Half of all the 11 sectors were down 3% or more, and ideally we'll see prices close meaningfully up from lows (Hammer formation, using candlestick lingo) before thinking even a trading bounce is upon us.  Financials ended up breaking prior range lows which is a concern, and Technology was very hard hit.  These two sectors make up nearly 40% of the Market, so essential to see some evidence of stabilization here.  The one potentially promising sign deals with Technology ETF's getting down to two-year trendline support which began in 2016, and so one can make the case that the Tech decline (in the very short-term) is getting overdone and could find some support. 

 

ACTION PLAN-  

Long XLU, with upside target at 47
Long XLE with targets at 79
Long XOP targeting 45.50
Short KBE, adding under 46.77 with targets at 42.50 and stops at 48
Short XLI targeting 76.50 , adding under 78.13, with stops on a daily close over 81


 

Additional charts and thoughts below.

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The weekly SPX chart puts yesterday's selling into perspective as trends from the Spring were violated, putting prices now right above the 2-year area of weekly trendline support.  This seems important in coming together to cause some stabilization in the next 2-3 days to SPX and the key for Bulls is the ability to rally up sharply without pulling back to get down under recent lows.  Thus, the longer-term trend remains bullish.  The flip-side to this, however, is that momentum has begun to turn down sharply on weekly charts, at a lower level then where momentum hit back in late January.  This so-called "negative momentum divergence has the potential to be a problem going forward and could mean that lackluster bounces should be sold.  For now we'll take the combination of near-term oversold conditions, weekly trendline support and await (what should be ) the return of fear into late week/early next to try to buy dips on this decline.  
 

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Financials have undercut lows near 27.50 via the ETF and are now trading at the lowest levels since July.  This looks to be a damaging break in this group as there were minor signs of rebounds last week which made many quite optimistic that the banks could start to follow yields.  Overall, Breaking 27 would cause further selling pressure down to 26.50.  For real optimism, we'll need to see evidence of not just absolute strength (movement back over 27.50 and really over 28.40.. but of relative strength with XLF/SPX starting to trade better and break its downtrend.  At present, this has not happened and still early in many respects. 

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Weekly charts of XLK give some minor reason for "hope" as the decline has now taken XLK all the way back to test its two-year area of trendline support near $69.  This has been tested now nearly 5 times in the last couple years and should result in at least some type of stabilization in this sector.  However, it's important to note that weekly MACD has turned sharply lower and is doing so at lower levels than what happened earlier this year.  Thus, evidence of negative momentum divergence is present, and it will be important for any stabilization in the next 3-5 days to turn back up sharply.  Any failure of this which then turns back down to break 69 would be far more negative for the intermediate-term picture.   Also, moving up far slower than the pullback would be a further concern for longer-term momentum.  For now, this looks to be an important area and we'll see if XLK can hold in the days ahead.

Minor stabilization, though trend, momentum still Negative; Energy remains the best sector Overweight

October 10, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

SPX Cash index
SUPPORT-  2862-3, 2850,  2835, 2817
RESISTANCE- 28984-5, 2902-3, 2917-9, 2940-5


LINK TO TECHNICAL WEBINAR from last Thursday 10/4: https://www.youtube.com/watch?v=NQtSxfx4P1o&t=1s

 

SPX - (3-5 Days)- Bearish- Minor stabilization attempt, but insufficient to think lows are in.  Above 2895 could allow for 1-2 days of bounce, but the most likely is a break of 2874 bringing about a move down to 2830 into early next week before a low

SX5E- EuroSTOXX 50  Neutral- Expecting that prices likely do try to stabilize and hold early September lows which also lies near March lows.  However, still a bit premature to call for a big rally just yet.  The next 2-3 days should bring about some stabilization attempts and this would be used to consider covering some shorts in Europe.    Support lies near 3250.

HSCEI-  Neutral, with expectations that longs can be attempted by end of week/early next.  For now, still a bit premature but shorts aren't as great of a risk/reward here.


Trading Longs: APA, HAL, DNR, XLE, ITT, CME, CBOE, MCS, OKTA, VZ, LNG, TSS, PX, ZTS, VNOM, NEP

Trading Shorts:  ALK, AAL, DAL, JBLU, LUV, OC, XBI, RHT, AMBA, MNK, DGX, WYNN, LVS, MHK, M, JWN, LB, WGO, ADNT, UPS, R, CAR, VMC


TECHNICAL THOUGHTS

Yesterday brought about just minor stabilization in prices, which have held for the past couple days near the same level, but yet no convincing argument of a low.  Evidence of Industrials weakening was very much present given Airline underperformance while many Brokers and Asset managers suffered, which put pressure on the Financial group.   The Materials group came under severe pressure (which had been a group which was thought to be bottoming) and yesterday's decline here postpones this a bit longer.  Utilities, meanwhile, gained ground, as did Energy which remains our preferred long sector right now for outperformance.    Technology still looks to weaken into next week and given this drop to new weekly lows, and as discussed previously, given this huge weighting in the SPX, this will be the most important sector to monitor for signs of finding support.

Meanwhile, outside the US, weve seen very persistent selling in Europe and Asia, which has been much greater than the minor drop we've seen thus far in US.   Even the Japanese NIKKEI has made a minor peak and has been backtracking.  Importantly, given signs of downside exhaustion, many European indices look close to trying to bottom out and could do so by end of week in the short run.   China in particular is starting to look more appealing to buy dips, and one could consider buying into Japan if /when the NIKKEI gets down to 23000.   Europe also could stabilize, but this is the worst of the three choices in my view, given the combination of their ongoing poor technical structure and lackluster growth.  


 

ACTION PLAN-  

Long XLU, with upside target at 47
Long XLE with targets at 79
Long XOP targeting 45.50
Short KBE, adding under 46.77 with targets at 42.50 and stops at 48
Short XLI targeting 76.50 , adding under 78.13, with stops on a daily close over 81


 

Additional charts and thoughts below.

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The S&P's bounce attempt on Tuesday largely failed, but it also didn't make much progress lower.  However, the pattern on hourly charts here still can allow for a retest and minor break of lows, which is expected in the days ahead.  Movement down under 2874 would be a real negative, allowing for the start of a decline which could take prices down to 2825-35 into early next week before a bottom.   The key for Bulls will be to regain 2920 initially, while for the bears, prices will need to violate Tuesday's intra-day lows.  At present the odds still favor weakness, but on early strength that closes near the highs tomorrow, that could bring about 1-2 days of gains before some final selling pressure into next week.  
 

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Airlines have come under severe pressure in recent days, and are nearing their first important area of support which could come about by end of week.  While this group still looks to face selling pressure into Thursday/Friday of this week, stocks like DAL, UAL, JBLU and LUV can all be looked at to find support by early next week and attempt to bounce.   Near-term momentum has gotten oversold in this group, and Demark exhaustion is close to forming which should be in place by end of week.  Overall, while weekly charts remain under pressure for the Airlines, this group should at least face some minor letup in the selling and a bounce should be right around the corner next week.  

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Crude oil came storming back in the last couple days, and whether one gives more credit to hurricanes or the threat of Supply coming off the market, this remains something to favor for further gains in the days/weeks ahead leading up to the Iranian sanctions on Nov 4.  Yesterday's gains managed to regain this uptrend and XLE, OIH and XOP should be favored for further gains in the days/weeks ahead.  Apache (APA) was just added to the Bloomberg Long/Short portfolio yesterday,  (YTD performance 34.05% through 10/9/18)  (For those who would like to view longs and shorts in this portfolio, please let me know, and will forward.

Equal-weight Technology dropping to new relative lows could make correction extend

October 9, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

SPX Cash index
SUPPORT-  2898-2900, 2883-5, 2864-5,  2835, 2817
RESISTANCE- 2940-5,  2848-50


LINK TO TECHNICAL WEBINAR from last Thursday 10/4: https://www.youtube.com/watch?v=NQtSxfx4P1o&t=1s


SPX - (3-5 Days)- Bearish- Prices have now closed down for three straight days.  While SPX has breached its daily Bollinger band, the trend is bearish and one should look to use rallies to cut long exposure, with resistance near 2918-20 and downside potentially to 2825-35

SX5E- EuroSTOXX 50 Bearish- Support near 3250 which was hit in early September and also in March, yet trends remain negative-  Near-term, shorts could be covered in Europe given what looks to be a poor risk/reward near former lows, but underperformance is ongoing and rallies should be used to sell.

HSCEI-  Bearish but nearing support which should materialize at 10200-10300-  Pullbacks into end of week should translate into buying opportunities given the test of former lows from September which have held since July. 

Trading Longs: ITT, CME, CBOE, MCS, OKTA, VZ, HAL, DNR, SM, CRC, XLE, LNG, TSS, PX, ZTS, VNOM, NEP

Trading Shorts:  ALK, AAL, OC, XBI, RHT, AMBA, MNK, DGX, WYNN, LVS, MHK, M, JWN, LB, WGO, ADNT, UPS, R, CAR, VMC


TECHNICAL THOUGHTS

The selloff which started last week still looks damaging in the short run technically, and despite the late day rally attempt, failed to rally back sufficiently to think any sort of carrythrough should happen on Tuesday.  NASDAQ still managed to breakdown under September lows, and S&P and DJJIA have both violated uptrends from June.
Breadth came in flat, which even at the peak of Monday's selling was just 2/1 negative, improving to unchanged by end of day. US stocks have attempted to rally up off early lows both yesterday and last Friday, yet have been unable to recoup the damage done last week.  Momentum is bearish and not oversold, while trends remain pointed lower with no evidence of any exhaustion.  

Sector-wise, technology has still underperformed dramatically as the NASDAQ has taken the lead in this decline, while yesterday saw dramatic outperformance in both Utilities and Staples, as the flight to Defensives got underway. While the US outperformed both Europe and Asia, this has been an ongoing theme, and even with US weakness, still early to think US is catching up with the amount of underperformance being seen in Europe.   
 

ACTION PLAN-  

Long XLU, with upside target at 47
Long XLE with targets at 79
Long XOP targeting 45.50
Short KBE, adding under 46.77 with targets at 42.50 and stops at 48
Short XLI targeting 76.50 , adding under 78.13, with stops on a daily close over 81


 

Additional charts and thoughts below.

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The decline extended yesterday with SPX pulling back to test September lows.  Near-term, prices are stretched on hourly charts after 3 straight down days, but the trend is definitely negative.  SPX requires a move back up over 2918, the same area which was violated last Thursday morning, to improve the trend.  At present, downside looks likely to 2825-35, and it looks right to sell into strength on Tuesday/Wednesday on any bounce attempt.  MACD remains negatively sloped, while RSI is trending down and not yet oversold.  No evidence of any Demark based Buys are in place on daily charts given that prices have only been lower for 3 consecutive days.  

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NASDAQ futures on daily charts violated the uptrend from early April and took the lead in getting below September lows.  This underperformed the SPX and DJIA but yet all markets closed up off earlier lows.  This snapshot of NASDAQ mid-day Monday shows the pullback getting down to the lowest levels since late July.  While an oversold rally is possible on a 1-2 day basis, trends have just turned negative given the break of multi-month trendline support.  One would use rallies up to 7500-7550 to consider hedging/selling for a potential decline back down to 7060 in NASDQ 100 which would represent a 50% pullback to the rally up from April.

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Shanghai Composite showed outsized losses on Monday, with prices falling nearly 3.5%.  Daily charts show the ongoing downtrend, but momentum turning more positive, given the crossover in MACD over the signal line back to bullish territory even with this pullback.  This suggests that further weakness in China could be buyable in the coming days and one should use any further drawdown to consider FXI, or Chinese Technology stocks into mid-to-late October.  However, for the next 3-5 days, Monday's reversal can allow for a bit more weakness, and one should anticipate a retest of 2650-2700 which will be the area to concentrate on into October Expiration.

Stocks, Bonds selloff in unison as equity rally breaks 4-month uptrend

October 5, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

SPX Cash index
SUPPORT-  2898-2900, 2883-5, 2864-5,  2835, 2817
RESISTANCE- 2940-5,  2848-50


LINK TO TECHNICAL WEBINAR from yesterday: https://www.youtube.com/watch?v=NQtSxfx4P1o&t=1s

 

SPX - (3-5 Days)- Bearish- Pullback looks to be starting-Thursday showed the first evidence of a break of 2903 in SPX cash (2907-Dec Futures) and both SPX and NASDAQ broke trendlines from June- Additional downside likely into October 13-4 before a rally

SX5E- EuroSTOXX 50 Bearish- Pullback down to 3300-5 looks to be underway.  While prices didn't technically get under 3370, it was close, and closing down near the lows makes for a negative trend in the days ahead.   

HSCEI-  Closed this week for Golden Week holiday.  Under 10769 is a green light to press shorts for a pullback to 10500.  

Trading Longs: ITT, CME, CBOE, MCS, OKTA, VZ, GDX, HAL, DNR, SM, CRC, XLE,LNG, TSS, PX, ZTS, VNOM, NEP

Trading Shorts:  XBI, RHT, AMBA, MNK, DGX, WYNN, LVS, MHK, WHR, M, JWN, LB, FB, AAL, ALK,  WGO, ADNT, UPS, R, CAR, RHT, MNK, VMC, AMBA


TECHNICAL THOUGHTS


Bottom line, we finally saw some evidence of prices pulling back to confirm what breadth and momentum had been saying was likely over the last few weeks.  S&P and NASDAQ fell to break four-month trendlines on very negative 4/1 breadth, and volume expanded.  Technology proved to be the weak link, falling nearly 2% on the day, while Consumer Discretionary and Telecom also joined suit.  Financials did show a strong showing, as did Utilities, but those were the only two of the major sectors with positive gains yesterday.    While this market has been prone to snap back violently on any sign of weakness lately, the fact that prices broke down to join an already weak breadth and momentum situation and expanded negatively on the move, adds credibility that at the very least, some type of correction should be getting underway.  Technology should be watched carefully given its weakness yesterday, while Biotechs look to weaken with XBI dropping to the lowest levels since May. In the days and weeks ahead, it's still thought that Energy might offer some of the better outperformance given that Crude's rise doesn't seem complete.  Movement back higher is likely in Crude into next week, and it's thought that Energy stocks likely follow suit. 

The real talking point over the last few days had to do with Interest rate spikes and the larger breakouts being seen in 5, 10, and 30-Year Treasury bonds, not to mention UK Gilts and German Bunds.  Near-term this move looks extended, and on a 3-5 day basis, one can make the case for yields to stall out and reverse.  However, given the extent of the rise (which on TNX broke out above channel resistance that had held since 1994) it's thougth that intermediate-term Treasury weakness (yield gains) are likely. Charts shown below. 
 

ACTION PLAN-  

Long XLB with stops at 57
Long XLE with targets at 79
Long XOP targeting 45.50
Short KBE based on Thursday's close, targeting 42.50
Short XLI targeting 76.50 with stops on a daily close over 81


 

Additional charts and thoughts below.

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The first evidence in the last couple months of prices violating the four-month uptrend, making prices pullback to confirm what breadth and momentum have been suggesting for over a month.  With Advance/Decline having peaked out on Aug 30, this recent push higher last week was never confirmed by momentum and then turned down sharply to violate support yesterday, with Technology underperforming.  While a snapback rally can't be thrown out given the nature of this uptrend in recent months, unless Tech and Financials both turn up sharply, yesterday's pullback should likely begin the process of atleast temporarily serving as a corrective process in stocks.  
 

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XBI managed to undercut the lows going back since May yesterday, something which likely causes a minor hiccup in the ongoing stellar uptrend for Healthcare.  It's likely that Biotech pulls back in the next 1-2 weeks as a result of this move, as anytime prices fall to break several prior lows spanning back 4-5  months, normally there is some follow-throughlower.  Near-term, it's likely that XBI reaches the upper $80's and this should allow for some stabilization.  At present, further weakness in this space looks likely in the short run. 


Treasury yields made the most important move of the year in the last couple days.  While yields have been prone to quite a few false moves of late, this latest yield rise is something which has occurred globally, with Bund yields, Gilt yields and US Treasury yields rising above resistance which has largely held for 20+ years.  In the short run, it's thought that 3.25% should hold and provide a peak for a near-term pullback to 3.10-5%.  Thus, in the short run, it's right to buy Treasuries, particularly as Equities are fading, as there should be some flight to quality in this notoriously volatile month.  Yet, pullbacks should be used to consider selling Treasuries given the long-term breakouts on weekly and monthly charts.  Unless this is given back completely in the next few weeks, this will stand as being an impressive long-term breakout.

Yields, Dollar and Commodities all lifting, while Financials still struggling to keep up

October 4, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

SPX Cash index
SUPPORT-  2918-20, 2898-2900, 2883-5, 2864-5,  2835, 2817
RESISTANCE- 2940-5,  2848-50


LINK TO TECHNICAL WEBINAR from last Thursday:   https://www.youtube.com/watch?v=j9Qb4M6pMNc&feature=youtu.be     

 

SPX - (3-5 Days)- Late day pullback still not sufficient to call trend bearish and requires move UNDER 2917 at minimum, with under 2903(SPX) 2907 (ES) before weighing in that prices should move lower. Negative breadth and momentum are beginning to weigh on indices.   Targets are near 2950.

SX5E- EuroSTOXX 50- Neutral until prices get UNDER 3370 which would turn trend bearish- Trend pretty choppy over last 10 days and no real directional guidance.  Europe still more negative than SPX.   Resistance at 3450, then maximum to near 3475-3500.  Under 3370 should lead down quickly to 3300, a larger area of support. 

HSCEI-  Closed this week for Golden Week holiday.  Under 10769 is a green light to press shorts for a pullback to 10500.  

Trading Longs: ITT, MCS, OKTA, VZ, GDX, HAL, DNR, SM, CRC, XLE, LNG, TSS, PX, XLE, PX, ZTS, VNOM, NEP

Trading Shorts:  MHK, WHR, M, BBY, JWN, LB, FB, AAL, ALK, JBLU, WGO, THO, ADNT, PII, IAI, TCF, TCBI, UMPQ, PBCT, FITB, ZION, BKU, OZK, UPS, CMI, JCI, JD, R, CAR, RHT, MNK, WYNN, LVS, VMC, AMBA


TECHNICAL THOUGHTS


Yet again, we faced a situation where early gains stalled and by end of day, many of the strong moves had been reversed, while the NYSE showed negative breadth on the trading session.  Bottom line, it's very doubtful markets can continue up when more stocks are moving lower than higher which now has spanned nearly two weeks.  Many had high hopes on Financials improving dramatically as the yield rise progressed, and this simply has not materialized.  The early gains in Financials yesterday gave way to late pullbacks again, and many Asset managers remain near recent weekly lows, and simply aren't appealing technically. 

The yield move was certainly anticipated by many Speculators, as per CFTC data, which shows shorts near record lows, and unusual  to trend in the favor of such a large position, which often from a contrarian perspective are right to fade.  Near-term, the movement in both 5 and 30-year yields looks to continue, while 10-year yields are showing some evidence of exhaustion, Demark wise which has been important in the past.  Overall, this move should be trusted until/unless we see evidence of yields turning back lower, which might happen on an Equity pullback starting next week.  For now, this move still looks important, and a bit early to fade.

Commodities meanwhile look to be making progress in turning back higher, and this group should be favored for additional upside in the weeks ahead after a strong pullback in recent months.  The extent of the early year commodity lift helped momentum to turn up on the commodities space vs Stocks but as the Dollar rose this past Spring, most commodities experienced corrections.  Now Commodities are starting to rally again, despite the rising US Dollar, and we've seen evidence of Energy, Meats, Grains and Softs all start to show some evidence of stabilizing and turning higher.  The few which have not yet begun to rise, but which look particularly interesting from a risk/reward perspective are Cotton, Sugar and Frozen Orange Juice.  These all should be watched carefully for a change in trend.  

 

ACTION PLAN-  

Long XLB with stops at 57
Long XLE with targets at 79
Long XOP targeting 45.50
Short KBE based on Thursday's close, targeting 42.50
Short XLI targeting 76.50 with stops on a daily close over 81


 

Additional charts and thoughts below.

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Minor weakness into the close, and after hours, which took prices down to near Monday'slows.  While breadth has been abysmal lately, the late selling still isn't sufficient to think prices need to pullback.  S&P needs a move under this few week uptrend (in white) and for the most conviction, requires a pullback under late September lows.  If Financials and/or Technology start to lift into end of week/early next, this should result in yet another test of highs.  The next 5-7 trading days will be key and a couple minor cycles point to October 14.  At present, selloffs seem around the corner, but yet cannot be called imminent based on a lack of technical damage.
 

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Treasury yields staged a pretty important breakout in the last couple days, which happened in 5, 10 and 30 year yields, while Japanese JGB's, UK GIlts, and German Bunds also have been moving higher.   While sentiment has been very negative (expecting yields to rise) and has been correct, it's important to wait for evidence of this trend failing before stepping in to fight this move.  Counter-trend exhaustion signals look close for 10 year yields, yet remain 3-5 trading days away for both 5 year and 30-year yields.  Thus, additional Treasury weakness does in fact look likely into early next week before any stalling out. 

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Commodities have begun to lift in the last couple weeks, with CCI index rising to the highest levels since July.  Energy, Grains and softs have begun to make headway, and this bounce looks to continue in the month of October.  Interestingly enough, this latest lift has occurred with Dollar strength, which now looks to be nearing important overhead resistance.  Any pullback in the Dollar in the latter part of October would help Commodities to lift at a quicker pace.  At present, commodities seem to be rallying much more with Treasury yields lifting coinciding with Powell's hawkish speech, rather than paying attention to the Dollar.  Specific commodities which have been trending down, but are close to support and/or trend reversal are : Sugar, Cotton and Frozen Orange Juice.

Favor Gold miners, while avoiding Retailing near-term; Market breadth remains an issue

October 3, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

SPX Cash index
SUPPORT-  2918-20, 2898-2900, 2883-5, 2864-5,  2835, 2817
RESISTANCE- 2937, 2940-5,  2848


LINK TO TECHNICAL WEBINAR from last Thursday:   https://www.youtube.com/watch?v=j9Qb4M6pMNc&feature=youtu.be     

 

SPX - (3-5 Days)- Still looks like minor bullish retest and breakout of 9/21 highs can occur before reversal, but market getting tired.  Insufficient evidence of market reversing, but negative breadth and momentum are beginning to weigh on indices.   Targets are near 9/21 highs at 2942 initially with a possible brief overthrow to 2950.

SX5E- EuroSTOXX 50- Prices still more bearish than S&P- Down last 2 of 4 trading sessions with resistance at 3450, then maximum to near 3475-3500.  Under 3370 shouldlead down quickly to 3300, a larger area of support. 

HSCEI-  Closed this week for Golden Week holiday.  Under 10769 is a green light to press shorts for a pullback to 10500.  

Trading Longs: GDX, HAL, SM, CRC, XLE, LNG, TSS, PX, GWR, GIL, NRG, ELY, XLE, PX, ZTS, VNOM, NEP

Trading Shorts:  MHK, WHR, M, BBY, JWN, LB, FB, AMZN, AAL, ALK, JBLU, WGO, THO, ADNT, PII, KBE, KRE, IAI, TCF, TCBI, UMPQ, PBCT, FITB, ZION, BKU, OZK, UPS, CMI, JCI, JD, R, CAR, RHT, MNK, WYNN, LVS, VMC, AMBA


TECHNICAL THOUGHTS

Not much price action in S&P, NASDAQ and DJIA actually managed to make a new all-time high.  Yet the divergences are becoming more pronounced, and negative breadth and new lows escalating seem to be a definite issue with indices making progress in any sort of robust fashion.  Financials continued to drop yesterday, with KBE, KRE losing further ground (though getting to near short-term support- We'll see if this matters)  Meanwhile, Retailing has started to rollover as of yesterday, dropping to new weekly lows, with stockslike BBY, JWN, M, LB, GPS, AN making new multi-day lows.

Our colleagues at SentimentTrader reported that yesterday the DJIA closed at new all-time highs, yet the NYSE showed 3 times as many stocks hitting new 52-week lows as 52-week highs.  That has only occurred on one other occasion in the last 50 years:  December 28, 1999, which happened to be close to when the market peaked out in early January 2000.  While it's not impossible for stocks to rise from here, we'll need to see some slowdown in the downside acceleration in Financials, and some broadening out in this rally with some evidence of upward thrust in breadth.   

Gold miners is an area to consider for those seeking longs after Goldman Sachs reaffirmed their backing of Gold near-term.  Both Gold and silver had 1.3+% positive days yesterday, while the gold mining group looked to be breaking out of a reverse Head and Shoulders reversal pattern.  (More on this below)  While more work needs to be done on an intermediate-term framework, this looks attractive for a 2-3 week trade, and Miners are bullish near-term technically.  


 

ACTION PLAN-  

Long XLB with stops at 57
Long XLE with targets at 79
Long XOP targeting 45.50
Short KBE based on Thursday's close, targeting 42.50
Short XLI targeting 76.50 with stops on a daily close over 81


 

Additional charts and thoughts below.

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The S&P's stalling out after its minor breakout isn't that big of a negative just yet, and stilllooks to likely try to climb to test and briefly exceed 9/21 highs.  Yet Financials are moving to near the lowest levels seen in four months, while more stocks are moving down than up, which has been an ongoing issue for this market.  Key upside lies at 2938-45, while 2917 is initially important for S&P and above keeps this rally intact.  Below would test the more important 2907 in Dec Futures (2903 SPX cash) and under that kicks off our first real correction of the year.   For now, the structure needs to be relied on a bit more heavily than breadth and one would stay positive until this trend is broken.  
 

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Gold miners look set to make a larger bounce which is shown by the Daily GDX chart testing highs made last week.  This reverse Head and Shoulders pattern will be confirmed over 19.11, and long positions are recommended technically speaking, looking to add over 19.11 for a move up to 21-21.50.   While the US Dollar and Yields should be moving down to allow for the precious metals trade to work properly, it looks right to position now, expecting that the Dollar's gains should prove short-lived.   Rates on the other hand, still don't show meaningful signs of pulling back.  This could mean our Gold move is short-lived into end of October.  However, it's right to favor the miners given the combination of extremely bearish gold sentiment, very bullish seasonality for October for the Metals while near-term technical patterns have turned constructive. 

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Retailing had one of its largest down days in months yesterday, breaking the trend from early Spring and now challenging the larger area of importance just below at 48 whichmarks both the highs of the consolidation base from 2015 along with a one-year uptrend.  Overall, near-term weakness still looks likely in the next 2-3 days out of this group, and stocks like BBY, JWN, GPS, AN, LB, M all likely underperform.   However, the bigger "line in the sand" for Retailers lies directly below, so technically I expect this area to be challenged sometime this week or next, providing greater clues about the intermediate-term.

Energy continues to work well; However, New lows expanding in markets, & more negative breadth

October 2, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

SPX Cash index
SUPPORT-  2918-20, 2898-2900, 2883-5, 2864-5,  2835, 2817
RESISTANCE- 2937, 2940-5,  2848


LINK TO TECHNICAL WEBINAR from last Thursday:   https://www.youtube.com/watch?v=j9Qb4M6pMNc&feature=youtu.be     

 

SPX - (3-5 Days)- Minor Bullish given minor breakout above 2928-  Breadth was negative, but yet still a bullish price move and over next few days, still looks likely to trend a bit higher.  Targets are near 9/21 highs at 2942 initially with a possible brief overthrow to 2950.

SX5E- EuroSTOXX 50- Upside limited to 3475-3500.  A bit of churning in the last week, but yet no meaningful evidence of prices turning down.  Upside should not get much above August highs before reversing course.   

HSCEI-  Closed this week for Golden Week holiday.  Under 10769 is a green light to press shorts for a pullback to 10500.  

Trading Longs: RST, SM, LNG, PX, GWR, GIL, NRG, ADSK, ELY, MPC, XLE,  V, PX, ZTS, VNOM, NEP

Trading Shorts:  WGO, OC, THO, ADNT, PII, KBE, KRE, IAI, TCF, TCBI, UMPQ, PBCT, FITB, ZION, KBE, BKU, OZK, JBLU, ALK, AAL, UPS, CMI, JCI, JD, R, CAR, RHT, MNK, WYNN, LVS, MHK, VMC, AMBA


TECHNICAL THOUGHTS

Overall, a seemingly bullish breakout on the part of the SPX, and for most that don't study the internals, it seemed like a pretty positive day for stocks.  However, the IWM Russell 200 was lower by over 1.3% while S&P Mid-cap 400 index also fell greater than 0.75%, and has been down for the last two weeks.  Why some might write off the breadth deterioration as being solely a Treasury move (as the bond components of NYSE have caused some of this damage) is partly correct.  However, the movement in Financials continues to worsen, and KBE is down at the lowest closing level of the year.

Overall, this divergence is starting to grow, and US stocks are showing increasingly more erratic price behavior , with Airline weakness greater than 1% while TRAN was positive yesterday.  Technology has shown some impressive ability to snapback, but indices like the NY FANG are now nearing resistance which should be in place by Wednesday of this week.  Energy remains the area to overweight  and XLE now looks to be playing some catchup with the bullish moves seen recently in XOP and OIH.  Overall this outperformance should continue to work this week and potentially next, and its right to have sectorlongs in Energy vs looking to sell into the recent bounce in Technology.

The real key for those who utilize Demark's TD Sequential and TD Combo indicators, is waiting for when S&P and TNX both align with counter-trend sells which looks to be a possibility later this week, potentially on Thursday or Friday on a bit further gains in both.  This confluence likely will be important and allow for both to turn down into the second week of October.  For now, it's right to hold off on fading the stock market rally, but yet keep a close eye given the degree to which this recent breadth and momentum dropoff has occurred. 


 

ACTION PLAN-  

Long XLB with stops at 57
Long XLE with targets at 79
Long XOP targeting 45.50
Long CQQQ with initial target 50.65
Short KBE based on Thursday's close, targeting 42.50
Short XLI targeting 76.50 with stops on a daily close over 81
Long EURUSD with initial target at 1.1935


 

Additional charts and thoughts below.

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The S&P's breakout of its minor consolidation from last week is seen as a small positive, despite the negative breadth with more declining than advancing issues, along with more stocks hitting new 52-week lows than highs.  The area of importance on this chart lies near 2925 which is the first peak on this ascent from last Friday.   Under that would bring in last Thursday/Friday lows at 2907.  For now, it still looks more likely that the S&P can rally out of this and move slightly back to new highs into mid-to-late week.  But the degree to which Small-caps, mid-caps are now not participating could prove problematic and the negative breadth on a 0.30+% rise is typically not something to utilize to initiate new long positions in the indices.  For now, longs should be placed in Energy and Healthcare, with some evidence of Materials being ready to start moving higher. 
 

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XLE looks to be starting to play catchup with OIH, XOP lately and yesterday's gains back above 76.50 represent the highest daily close for XLE since July.  This downtrend in the group was exceeded last week on an absolute basis, and now the consolidation has begun to start to ratchet higher in recent days.  This goes hand in hand with our recent theme about Energy outperformance given the recent upside acceleration in Crude, and bodes well for additional gains in the days/weeks ahead. 

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Small caps have started to turn down quite sharply lately, with four out of the last five days of weakness in the Russell 2000 while relative charts of IWM/SPY show this to have peaked out in June.   The degree of downside acceleration in Small-caps vs the broadermarket has reached the lowest levels since March.  For those seeking preferences on what capitalization size to favor, it's still right to overweight Large-Cap, instead of Small, and recognize that both Small-caps and Mid-caps lately have begun to weaken relatively.

Financials and Industrials show evidence of breaking trends

September 25, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

SPX Cash index
SUPPORT-  2898-2900, 2883-5, 2864-5,  2835, 2817
RESISTANCE- 2937, 2940-5,  2848


LINK TO TECHNICAL WEBINAR from last Thursday :  https://www.youtube.com/watch?v=VYeGsALMtp4&feature=youtu.be              

 

SPX - (3-5 Days)- Mildly bearish-S&P made just fractional weakness, but yet again, Sector rotation is at work, erasing gains in Industrials, Financials, while Tech bounces- Market breadth and new highs remain a concern- 2883-6 is key support to breach to turn the trend bearish

SX5E- EuroSTOXX 50- Bearish SX5E given TD SELL SETUP in place now after Monday with its close at 3410.44 and prices still lie in a downtrend from earlier this year, keeping Europe in an underweight situation vs US

HSCEI-  Range-bound near-term with highs at 11189 and lows near 10300.   Odds favor a pullback now after last week's rally to near the highs. 

Trading Longs: ELY, SM, MRO, MPC, XLB, ZFGN, EMN, PX, ZTS, RL, MRTX, TTD, VNOM, OLLI, HD, LOW, NEP

Trading Shorts:  GE, AAL, UPS, OC, CMI, JCI, JD, EUO, R, CAR, RHT, ADSK, MNK, AMZN, WYNN, LVS, MHK, VMC, FB, ANTM, AMBA


TECHNICAL THOUGHTS

S&P and DJIA were much harder hit than NASDAQ, which managed to show some stability in FANG issues, with NFLX, FB, GOOGL, AMZN all bouncing from early lows which started right around the market open.  However, a net negative day overall for stocks, with breadth coming in near 2/1 negative, and the Dollar and Yields were largely uneventful in showing much volatlity.  

It's thought that the market has begun a gradual period of weakening given the pullback seen in Financials and Industrials, with Transports leading as Airlines pulled back sharply.  WTI Crude managed to finish over 72, so this coincided with fairly broad-based weakness in many Industrial stocks and caused Financials to erase its recent breakout above four month highs.  

While the indices haven't begun to show all that much weakness, some of the breadth gauges are showing alarming readings of late while New highs have begun to plunge.  The NYSE new high reading for Monday stood at 44 new highs which is down from 128 seen in late August and the lowest since early August.   Addiionally, the 20-week cycle is due to peak out here which last hit in mid-May and prior to that, drove the runup into January when this bottomed in late December.  Finally, some evidence of time-based cycles hitting during this week is at hand, with a 90 day projection from late June, 225 day from early February lows, a 240 day period from late January and a 315 day cycle from mid-November 2017.  All of these hit this week, suggesting that some type of more meaningful turn is due.  Should this be a low?  It's tough to rule this out.. but given the degree that breadth and momentum have been slipping of late, it's right to keep a close eye on support trendline areas, which for NDX lie at 7400 and for S&P are at 2883-6 area. 

 

ACTION PLAN-  

Long XLB with targets at 64 initially
Long XOP targeting 45.50
Long CQQQ with initial target 50.65
Short XLI targeting 76.50 with stops on a daily close over 81
Short XLK, with stops at 76.60, and targets down near 70
Long GDX with target 19.40 initially, then 21
Long EURUSD with initial target at 1.1935


 

Additional charts and thoughts below.

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S&P turned down over the last few days as part of this ongoing uptrend and as momentum gauges like MACD show, we're experiencing "negative momentum divergence" on daily charts with prices having pushed higher, but momentum not following.  Overall, pullbacks must violate 2883 before any real concern, but its thought that the reversals in Industrials and Financials look important and are worth paying attention to.

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Financials is specifically one of these sectors which was thought to outperform as rates were rising.  However, yesterday's pullback moved back under the former area of the breakout, which is normally a warning sign that all is not what it seems.  Pullbacks look likely in the short run, and any larger gains in Financials will take some time after yesterday's reversal.  Overall, near-term weakness looks likely as many are forced to sell out of gains for those that bought on the expectation of a larger breakout.  


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The Airline weakness also looked particularly troubling yesterday, and hurt the Transports as the XLI, DJ Transport Average and XAL all made similar moves, breaking minor trendlines in a manner that likely should give way to further weakness in the near-term.   Given that Crude's push above 72 shows no real exhaustion and looks to extend to $75 or higher, Airlines could come under further pressure if yesterday's pullback was solely due to fears of Energy moving up.   Overall, Airlines should be a group to avoid within the Transports near-term.  

Healthcare breakout positive, though overall breadth/Financials underperformance a concern

September 14, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

S&P 500 ETF Trust SPDR (SPY)-  
290, 2.88.30, 286.5, 283, 281    Support
291.16-19, 292.19-.25                Resistance


LINK TO TECHNICAL WEBINAR from yesterday: https://stme.in/wR2HSRdZBa

 

SPX - (3-5 Days)-Bullish above 2900/Bearish below-  Trend has improved on move back up over 2895 (2900 for Dec Futures) While breadth is a concern and Financials have struggled, trends will be positive over 2900 and negative UNDER.   Violations of 2900 should lead to 2865, while strong overhead resistance lies near former peaks at 2917-  Watchful for signs of reversal given mid-month tendencies, particularly in the bearish month of September

SX5E- EuroSTOXX 50-Bearish- It's right to sell into STOXX50 and consider shorting here via FEZ, or VGK as structurally nothing has changed technically despite a few days of gains.  Trends remain quite negative and prices are a good risk/reward to consider fading gains.  Ongoing underperformance likely

HSCEI-  Bullish- Minor bounce likely given Dollar downturn.  Move to 10800-10950 before stalling out. 


Trading Longs: ELY, PLNT, WIX, PRAH, SM, VNOM, NBR, DATA, HD, LOW, ANSS, CCE,  SQ, SAIL, PS, D, NEP, EXC, NRG, ES, ETR

Trading Shorts:  WYNN, LVS, MHK, VMC, FB, AAPL, AMZN, MLM, NTES, BF/B, JD, ANTM, AMBA


TECHNICAL THOUGHTS

A decent ability of S&P to get back up above 2900, which has held largely for the last three weeks, both as support and up until yesterday, resistance.  Yet now this area becomes key to hold on any retests and given the seasonally bearish part of September that lies directly ahead of us where most Mid-term Election Septembers show strength in the first half of the month and then weakness in the back-half, it's proper not to get too excited about a one-day move in S&P.

A couple reasons for concern revolve around the lack of performance from Financials which hit multi-day lows on Wednesday and have been this past week's worst performing sector (while Tech was also down for the last week heading into yesterday)  Daily momentum indicators like MACD are still negative and breadth peaked out in June (See Summation chart below)  However, the strength in US indices is impressive compared to the rest of the world and we'll need to see this start to deteriorate to really care all that much.  For now, shorts should be placed in Europe as bounces have not gotten back the damage that's been done.

China meanwhile looks set to bounce given the Dollar downturn in recent days, and Emerging markets have begun to bounce with Turkey's decision to hike rates.  This big surge yesterday in EM currencies is temporarily helpful to the recent pullback in the Emerging markets and should drive these markets higher for a bounce (which would turn into a larger rally if and when the US Dollar starts a larger decline.  For now, a bounce is likely.  
 

ACTION PLAN-  

Long IYT- with targets at 212
Long XRT with target at 54
Long XLU with targets at 55
Long XLP with targets 55, Stop at 53.98

 

Additional charts and thoughts below.

The divergence between SPX and SX5E has grown even more pronounced, so we'll simply stick with US markets and avoid Europe until this changes.  Uptrend lines for S&P would be at least partially broken on movement back down under 2875 while 2900 is the first line in the sand.  Meanwhile, Europe's STOXX 50 has bounced up to levels that are right to sell into and short on Friday heading into next week.  One should consider fading Europe via the FEZ, or VGK and simply wait for more evidence from SPX before caring all that much.  But something should happen in this regard in the next two weeks of September and it will pay to watch carefully. 

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Healthcare should continue to be favored, as was written in this year's ANNUAL piece back in January as one of the top sectors of the year to favor.   The breakout the other day keeps these thoughts still very much fresh and this group has been steadily gaining strength in recent months and is now above Technology on 6 month performance.  Stocks like DVA, CI, ABBV, BSX, ZBH, ABT, REGN, CELG, RMD and VAR were all up more than 2% yesterday and quite a few stocks look attractive within this group.  Technically it's right to favor healthcare over Technology in the near-term, as Tech has still been weaker than preferred for a full bullish stance and is thought to correct in the next 2 weeks.    
 

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Breadth has continued to wane in the last couple weeks, despite stocks pushing higher, which coupled with the divergences to Europe and Asia still keeps us on high alert for a pullback into the back half of September.  While technical trends have improved slightly in S&P, it's important that the index hold its gains over 2900 and not give back anything into early next week.  Given that breadth was yet again flat on Thursday with Financials underperforming, we'll watch this carefully in the days ahead.  The graph above is a smoothed version of breadth called the Summation index, developed by McClellan.  As daily charts show, this peaked out in June, so it tells a far different story than the overall Advance/Decline right now and should be paid attention to. 

S&P move above 2900 a minor positive, but Financials still not cooperating- MID_DAY TECHNICAL VIDEO, links to Technical webinar, and charts of interest

Thursday Technical Video- Mid-day

https://stme.in/PAKp654GUN

 

 

Link to today’s Technical Webinar-  20 min-  Best longs and shorts to consider-  SPX structure, and TNX, Dollar, Gold and Oil analysis

https://stme.in/wR2HSRdZBa

 

 

S&P picture after today’s open-  S&P had broken out above 2900 in Dec Futures.  This was equivalent to the 2895 level for Sept mentioned as being important

Going forward.   2900 will be the line to watch separating a bullish from bearish view.  Holding above this gives markets a chance to test highs.. and can’t afford to be broken without expecting weakness down to 2875, , and then 2865-7.  US Dollar pulling back to what needs to hold for the bullish view..  and Yields have pulled back a bit to erase early week gains.  Crude giving back some of the last couple days gains.. but overall this move should be used to buy, technically-  Gold meanwhile has attempted to bounce, but it looks like this will require more time and near-term its right to sell into 1220-30 Gold until this can show more proof

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SM-  SM ENERGY attractive given what WTI CRUDE has done this week-   Breakout likely can lead higher, and like owning technically within energy

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Callaway Golf- ELY- stands out as an attractive technical long and this flag pattern likely gives way to higher prices

 

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WYNN and the casinos have bounced a bit providing good technical shorting opptys.  This group remains quite weak and right to sell into gains, expecting another move back to new monthly lows

I like shorting WYNN and LVS

 

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Energy strength can continue as CRUDE gets over 71 while Financials might weaken further

September 13, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

S&P 500 ETF Trust SPDR (SPY)-  
286.5, 283, 281    Support
290.45, 291.16-19         Resistance


LINK TO TECHNICAL WEBINAR from Wednesday, 9/5:  https://www.youtube.com/watch?v=WwyKpRK1hR4&feature=youtu.be

 

SPX - (3-5 Days)- Trend bearish unless 2895 exceeded on an hourly and more importantly, daily close.   2895 is key-  Over would necessitate a minor bullish stance, but UNDER 2895 keeps the near-term trend negative.   Initial support 2879 and under drives prices down to 2865 which is very important.  Any violation of 2865 should have no real support until 2817 with the potential for 2800 before prices stabilize.

SX5E- EuroSTOXX 50- Quite a bit weaker and still right to concentrate shorts in Europe-  Bearish over next 1-2 weeks, with max upside near  3350.  Wave structure should result in additional weakness to take out lows in SX5E.  Underperformance still likely.

HSCEI- Possible to make the case for stabilization here with max weakness likely taking this to 10200 before rebounding.  Look to cover shorts under 10250 on weakness over next couple days


Trading Longs: WIX, PRAH, SM, VNOM, NBR, DATA, HD, LOW, UBNT, ANSS, CCE, KSU, CSX, URI, LB, TOWR, SQ, SAIL, PS, D, NEP, EXC, NRG, ES, ETR

Trading Shorts:  VMC, FB, AAPL, TWTR, AMZN, MLM, NTES, BF/B, JD, ANTM, AMBA


TECHNICAL THOUGHTS

The last week has, if anything, begun to show the degree that markets have began to move in many different directions, which for most of this year, has concentrated on the degree that US has outperformed Europe and Asia.  This time around, we're talking sub-sector divergence, and the start of weakness in two of SPX most important sectors:  Technology and Financials.  While Industrials has been able to avoid weakening as Transports have pushed back to new high territory, FANG stocks, Semiconductors have been weakening steadily which have caused a real dropoff in Tech.  Most were eagerly awaiting AAPL's product launch, yet the stock has been showing more weakness than strength lately and yesterday wasn't any different.  The stock has been lower by nearly 3.5% in the last 7 trading days and many stocks like this have gotten overbought and are now beginning to turn lower.  Financials might be the next example, as this sector pulled back to multi-day lows yesterday, undercutting the last five trading days.  So while only three sectors were officially "down" on the day, and most were higher, breadth was flat and over 40% of the market (Tech and Financials, traded lower.  

Yesterday showed Financials moving down to the lowest close in over 16 days while both the Dollar and Yields turned lower.   This looks important for commodities and Emerging markets to bounce, but we'll need to see sustainable Dollar weakness to have any sort of conviction that the EM rally can continue.  Precious metals are similar in that we've seen quite a few failed rally attempts and it's a MUST to see something more sustainable before thinking any kind of larger rally is underway.   Yields, for one, need to start pulling back a bit more meaningfully and coincide with USD weakness back to new monthly lows.  Then a more convincing Emerging market bounce can be trusted. 
 

ACTION PLAN-  

Long IYT- with targets at 212
Long XRT with target at 54
Long XLU with targets at 55
Long XLP with targets 55, Stop at 53.98

 

Additional charts and thoughts below.

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S&P's rally still looks to be near an important near-term crossroads and has been unable to make progress back over 2895 after failed attempts yesterday as well as Tuesday.  Many might view this pattern from an Elliott perspective as having completed three waves lower while having embarked on a three-wave corrective bounce into Wednesday.  We'll see if this is correct , or not, but the key level to keep an eye on is 2879 initially, the level nearWednesday's lows and then 2865-7 area also important areas of support that can't be broken without jumpstarting a move down to 2817.  Overall the next 2-3 days should shed some real light on this pattern and what might be in store.  Over 2895, particularly on a close, would suggest this breakdown is false for now, and should be worth following higher for a test of 2917.  While Tech and Financials have rolled over, its imperative to see the rest of the market follow suit and see actual index weakness, which has been tough to come by lately. 
 

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WTI Crude oil's sure has defied expectations when many expected the seasonal weakness that typically hurts Energy during this time of the year.    Near-term, this pattern still looks quite constructive, and the quickness with which this has moved back to trendline resistance could allow for a push back to new high territory which would cause a quick move to the mid-70s, helping Energy show some further signs of strength.   Most of Energy has been quite weak lately, with OIH having a very difficult time moving higher, necessitating real selectivity in this group.  XOP is the standout amoung the major Oil ETFs and one to consider owning, but plenty of stocks still look attractive, yet aren't the major ones most investors think of (not XOM, CVX, HAL, SLB !!)   For Outperformance in this sector, one should consider SM, HLX, DNR, MCF, just to name a few. 
 

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This daily XLF chart shows that 11 days after Financials pushed up to exceed early August highs, the group has largely gone lower, with yesterdays weakness taking XLF down to the lowest trading levels in 16 days.  Pullbacks to near 27.75 look likely for XLF in the short run, which mark the bottom of this minor range shown in the chart above.  While this sector hasn't been too dramatically weak of late, it certainly hasn't been a market leader and yet again looks to have failed in its breakout attempts.  XLF has failed to follow the recent push higher in yields, and now that yields are starting to turn back down in the last couple days, this sector has pulled back in lockstep.  Overall, XLF looks weak for the balance of September and longs might do well to hold off on buying dips just yet, expecting a bit more weakness before this bottoms out.  

Mild Tech-led rally has lackluster breadth while long-dated Yields break out

September 12, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

S&P 500 ETF Trust SPDR (SPY)-  
286.5, 283, 281    Support
290.45, 291.16-19         Resistance


LINK TO TECHNICAL WEBINAR from Wednesday, 9/5:  https://www.youtube.com/watch?v=WwyKpRK1hR4&feature=youtu.be

 

SPX - (3-5 Days)- Stalling out expected between now and Friday-  Above 2895 temporarily bullish, but this area very well could hold.  Turning short again under 2865--It's thought that Tech stabilizing along with Industrials and Transports extending gains are minor bullish factors for the next couple days.  Any reversal and pullback underFriday/Monday lows puts the bearish case back on the front burner for immediate pullback to 2800-7.

SX5E- EuroSTOXX 50- Bearish over next 1-2 weeks, with max upside near  3350.  Wave structure should result in additional weakness to take out lows in SX5E.  Underperformance still likely.

HSCEI- Possible to make the case for stabilization here with max weakness likely taking this to 10200 before rebounding.  Look to cover shorts under 10250 on weakness over next couple days


Trading Longs: HD, LOW, UBNT, ANSS, CCE, KSU, CSX, URI, LB, TOWR, SQ, SAIL, PS, D, NEP, EXC, NRG, ES, ETR

Trading Shorts:  VMC, FB, AAPL, TWTR, AMZN, MLM, NTES, BF/B, JD, ANTM, AMBA


TECHNICAL THOUGHTS

Yesterday's temporary stabilization in Technology helped to drive a minor rally, though breadth barely finished positive, so this wasn't any real strong showing by any means.  Tech and Energy led, while Industrials, importante, Real Estate Utilities and Staples all finished lower.  Not exactly the kind of rally markets needed to help quiet the Bears, and Futures have now pressed up to levels that will likely serve as an importnat test for the days ahead.   The area at 2895 served as support of the minor Head and Shoulders pattern that was broken last week, and prices seem to have now pushed higher to test this area.  Long-term yields showed evidence of trying to make breakouts, and the next few days will show whether this is real or not, as the last time around, yields rallied for 1-2 days, then reversed violently.  Sentiment remains quite negative, so it's thought that 3-3.05% should serve as a ceiling for yields and then produce some type of turn back lower.  Meanwhile the Dollar's gains look close to an area where they can reverse course, which should lead to a bounce in Emerging markets and precious metals.  Yet, for now, this is premature and just something to watch in the days ahead.

Overall, the near-term game plan is fairly simple given the degree that Technology has rolled over and then attempted to bounce.  Any failure in this group in the next 2-3 days likely would be important and lead lower for Tech for the next couple weeks of pullback, which this time around, might coincide with Industrials and Healthcare following suit.  It's thought that bounces in stocks like FB, AAPL, AMZN should all be used as selling opportunities for near-term trading, as technically all of these stocks have shown evidence of trying to rollover.  Meanwhile the minor breakout in Yields is interesting and certainly unusual given the degree that sentiment had turned bearish to extreme levels.  This also needs to be watched given the effects on Financials and the Yield curve heading into the FOMC meeting later this month.  For now, the first part of the selloff looks complete and has begun to bounce.  Cycle-wise the 13th-14th is a time when equities could turn back lower, and this needs to be watched carefully heading into a historically very weak time of September.  Any failure from here into end of week that results in 2865 being broken turns the trend immediately bearish and suggests a decline down to 2807-10 has begun.   Conversely, movement back OVER 2895 is needed to add some conviction to the bull case, but even here, likely would hold near 2917 given the presence of TD Combo Sells which would be finally completed on a test of highs.  Overall, while selloffs should prove muted this month, it doesn't yet seem like markets are "out of the woods" so to speak.  Extreme selectivity is still required, and it's a must to keep tight stops on longs.  

ACTION PLAN-  

Long IYT- with targets at 212
Long XRT with target at 54
Long XLU with targets at 55
Long XLP with targets 55, Stop at 53.98

 

Additional charts and thoughts below.

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S&P's rally attempt looks to be right back into an area of key upside resistance which is thought to be important heading into mid-week and mid-month when seasonality starts to turn more negative for mid-term election Septembers.  Breadth has simply not been sufficient to give much conviction to equities rallying back to new highs, and if yesterday's Semiconductor move was any guide, it's still importnat to watch these patterns carefully for any semblance of failure between now and early next week.   Overall, the area at 2895 is important, and above would be a mildly positive development that could allow for a more meaningful retest of highs.  Conversely, dropping back down to test lows would also be significant, and under 2865 turns the trend bearish quickly.   

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Technology has bottomed at the first key area of support, and now attempted to turn back higher.   Given the extent of the selling in XLK, which managed to nearly retrace the entire rally up from early August, a very strong rally back is needed (But might not occur given how weak Semis have been lately)  Any stalling out in the next 1-2 days that turns back lower would be thought of as negative for the technicals on most Tech stocks, and would result in recent lows being violated.  This in turn would violate the entire uptrend from Spring, casting doubt on the longevity of Technology even more during this seasonally weak time.   Overall, Movement up to 75-75.75 should be used to take profits and sell rallies, while any movement back under the lows from earlier this week would be a real negative technically.  But Technology looks to hold the key given its weight, and has to be scrutinized carefully for the balance of September. 

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The breakout in 10-year Treasury yields looks important to monitor given the structure of this formation since early this year.  It was thought that yields had a chance to break down to new low territory and sentiment certainly still seems quite bearish on treasuries (thinking rates have to move higher )  So while the breakout has to be respected until proven false, it's not thought that yields get meaningfully over 3% before reversing back lower.   The next 3-5 days will speak volumes as to what's happening with yields ahead of this month's end of month Fed meeting.   

Defensive positioning on the rise as S&P should start to follow Europe's weakness over next couple weeks

September 6, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

S&P 500 ETF Trust SPDR (SPY)-  
286.5, 283, 281    Support
290.45, 291.16-19         Resistance


LINK TO TECHNICAL WEBINAR from yesterday: https://stme.in/NEOsL45We3

 

SPX - (3-5 Days)- Bearish, Under 2891 on a close should start the trend back lower,  if not Thursday, than by next Monday and upside should prove limited.  Short position recommended, looking to add on any gains Thur/Friday and Downside targets initially at 2860-3 and under to 2807.

SX5E- EuroSTOXX 50Bearish- SX5E has broken prior monthly lows, arguing for immediate acceleration down to test and likely break March lows at 3261.  Overall,  Short/avoid, expecting this recent weakness to persist, and to underperform S&P

HSCEI- Bearish- Move down to test 10200 looks likely, with max downside to near 9975 before stabilzing and turning higher for a bounce.  Near-term, additional weakness is likely and shorts recommended.  


Trading Longs: PM, CLX, CHD, HRL , HSY, NEP, EXC, NRG, ES, ETR, 

Trading Shorts:  FEZ, VGK, TUR, MU, NTCT, CQQQ, EEM, DBC, MHK, WHR, HIG, GT, HBI, BWA, LVS, CVS, AMBA, AVGO, SF, DE, ITW



TECHNICAL THOUGHTS

US Equities are slowly but surely beginning to weaken a bit more in recent days, yet still not nearly as much as is being seen around the globe.  This drip-drip process can still continue until groups like Financials and Industrials begin to join the fray, which as of now, have not done so.   Yesterday's action saw Technology finally showing some evidence of weakening, and it's thought that the other parts of US equities likely put in tops by end of week.  For now, most of Europe remains far weaker, and the breakdowns seen Thursday in SX5E, DAX, CAC and UKX  make these indices likely to underperform the US in the days ahead.

Defensive rotation looks to be starting up yet again, if Thursday's price action was any guide.  Both Utilities and Staples rose more than 1%, with both SPDR ETF's moving to multi-day highs.  Meanwhile Industrials and Financials have stalled in recent weeks, failing to follow-through on recent breakouts.  Yet these sectors both have not yet turned down to the extent that would signify the start of more broad-based selling.  Financials might depend on yields and the yield curve turning back down after the recent bounce, and it's possible to make the case that US 10-Year yields are close, but the next 2 days should give lots of clues in this regard.  Both TNX and XLF could record the same counter-trend exhaustion that happened near the top in Technology and SPX last week, so both of these might peak out by Friday/next Monday.   This would in turn allow for a more robust period of selling into next week and the week after before any real bottom.  At present, a defensive stance remains the preferred way to go, but for those looking to short, both Europe Asia still look like better candidates than US stocks just yet.  My feeling is this will change next week
 

ACTION PLAN-  

Short XLK at 75.75, with targets near 72.50
Long XRT with target at 54
Long XLU with targets at 55
Long XLV with targets at 95, 100
Long XLP with targets 54.60-55, Stop at 52.95
Short EURUSD with targets 1.15


 

Additional charts and thoughts below.

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Some real evidence of Technology selling arrived Wednesday, with XLK turning down to multi-day lows.  This daily XLK chart shows the confirmed TD Signals yesterday and should give rise to further near-term price weakness to test the bottom of this four-month pennant.  Breaking $72.80 would allow for more meaningful tech weakness to get underway, which might serve as the catalyst for the long-awaited Fall correction.  For now, it's important to relay that Technology, after having spent most of August trending higher, gave up about half that performance just yesterday alone after having reached important upside resistance.  Keeping a close eye on XLK, the NASDAQ and Tech makes sense in the days ahead, but technically additional weakness here looks probable. 

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Consumer Staples turned up sharply in the afternoon on Wednesday, something which argues for a test and likely breakout of highs sooner than later.   The switch to defensives came after a rapid pullback in most of these groups throughout August.  Given the start of Technology's decline, which technically should continue in September, money should start to flow into Defensives given the market weakness, so this trade made perfect sense.   Stocks like KMB, MO, CHD, CL, CLX, SJM, were all up more than 1.5% yesterday, and this group has taken on a new attractiveness near-term.   Its right to overweight Staples over the next couple weeks. 

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The selling in Europe looks to be a much bigger deal than what's being seen in the US at present.  SX5E broke down to the lowest closing levels since early Spring, while DAX, UKX, CAC also made meaningful support violations which should allow for further weakness in the days ahead.   While the US looks close to starting its own decline, the European markets are a far weaker area right now, and one to avoid and/or consider shorting technically for those trying to hedge Long US exposure.   SX5E is likely to test and break the Spring lows in the weeks ahead.
 

NASDAQ on brink of violating entire trend from April as SOX turns down

September 7, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

S&P 500 ETF Trust SPDR (SPY)-  
286.5, 283, 281    Support
290.45, 291.16-19         Resistance


LINK TO TECHNICAL WEBINAR from Wednesday, 9/5:  https://www.youtube.com/watch?v=WwyKpRK1hR4&feature=youtu.be

 

SPX - (3-5 Days)- Bearish, pullback got nearly to the first target, and there is some trendline support here which has spanned the last few months, but breaks of this look likely in the next few weeks, with Downside targets near 2807.

SX5E- EuroSTOXX 50Bearish- SX5E now within striking distance of March lows at 3261, but this might hold just temporarily before a breakdown under.    Overall,  Short/avoid, expecting this recent weakness to persist, and to underperform S&P

HSCEI- Bearish- Move down to test 10359 likely with additional targets found near 10200.  Near-term, additional weakness is likely and shorts recommended.  


Trading Longs: JNJ, HD, PM, CLX, CHD, HRL ,HSY, NEP, EXC, NRG, ES, ETR, 

Trading Shorts:  FB, FEZ, VGK, TUR, MU, NFLX, NTCT, CQQQ, EEM, DBC, MHK, WHR, HIG, GT, HBI, BWA, LVS, CVS, AMBA, AVGO, SF, DE, ITW



TECHNICAL THOUGHTS

US Equities look to be finally joining the selling seen in most of the world, yet the majority of weakness is still coming from Technology, definitely an important area, but not as much yet out of other sectors like industrials or Heatlhcare.  Financials were down yesterday, so the selling looks to be gaining some momentum, but yet indices like the DJIA still look in good shape technically and have not really weakened.  Further deterioration in Treasury yields next week to challenge and break 2.806% would help Financials join some of the selling seen in Financials, and create more volatility for US equities overall.   For now the balance of the selling is still largely abroad, with Asia and Europe leading down, while the US continues to trade a bit better, despite trading lower in recent days.  

Yesterday brought about more pronounced selling in Semiconductors, yet still not much in DJIA , and this chart is vey different than ones being seen in the NASDAQ, and most certainly much better than Europe, with SX5e and DAX having broken down.  While SX5E and NASDAQ look to be near important levels, this market continues to have a defensive tone and it's still right to avoid and/or consider shorting, thinking little rally is likely ahead of 9/9-9/21

ACTION PLAN-  

Short XLK at 75.75, with targets near 72.50
Long XRT with target at 54
Long XLU with targets at 55
Long XLV with targets at 95, 100
Long XLP with targets 54.60-55, Stop at 52.95
Short EURUSD with targets 1.15


 

Additional charts and thoughts below.

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NASDAQ 100 has now weakened by more than 200 points in the last five trading days, selling off to test meaningful trendline support from late March.  Given the weakness in SOX as well as XLK having begun to weaken but not yet at support, it looks likely that NASDAQ does in fact break support in the coming weeks and would represent the first real weakness in the indices to violate multi-month support.   Overall, a rally is necessary for the bulls nearly right away and any failure from here would argue for a move down to test the lows seen in late July just under 7200.   Bottom line, additional weakness out of Technology looks likely, and it's right to avoid Tech and avoid the NASDAQ for the next few weeks. 

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Semiconductor stocks made meaningful weakness Thursday which suggests additional downside Friday into next week before this finds any bottom.  Yesterday's selloff stripped nearly 2.7% off the index, causing weakness to greater than 10 day lows.  Pullbacks to near 1325 look likely for SOX, so any rebound attempt Friday should be a shorting opportunity for a further pullback in the weeks ahead. 

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A strange market these days.  Indices like Europe's SX5E or the German DAX have accelerated lower to new monthly lows, while Emerging markets have been hemorrhaging.  Technology seems to have finally begun to peak out.  Yet the DJIA finished positive yesterday and the chart is still quite constructive with prices having made new four-day closing highs.  It's thought that much of this global selling should affect the DJIA as well and as Industrials and Financials start to join Technology that the DJIA weakens, breaking 25805 from earlier this week.   This in turn would cause roughly a 400-500 point decline to more meaningful support, but might be delayed until next week and/or the following.  Overall, stocks like HD JNJ, KO have all held up admirably this week, and until we see DJIA weaken, this remains a better long vs some of the weaker indices and certainly vs Europe and Asia. 

VIX signaling a good likelihood that an Equity downturn is near

August 31, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

S&P 500 ETF Trust SPDR (SPY)-  
289.8, 288.50, 286.1   Support
291.16-19, 292.5         Resistance


LINK TO TECHNICAL WEBINAR from yesterday: https://www.youtube.com/watch?v=KTA02Ng_gRo&feature=youtu.be

 

SPX - (1-2 Days)- Bearish, looking to sell into any end of month recovery attempt Fridaythat gets to 2917 or above to 2925 which seems unlikely, but can't be ruled out given pre-holiday- Under 2898 should lead lower to 2876 and under that level, S&P likely falls to 2861, and under to 2807.

SX5E- EuroSTOXX 50- Bearish- with stops on shorts above 3458.  It looks like Europe took the lead in turning down, as might have been expected given the ongoing underperformance.  Thursday's decline means there likely isn't another stab at new highs, and Movement uner 3423 should lead down to 3340 initially near late June lows.   Short/avoid, expecting yesterday likely served as the technical catalyst for this to start to turn lower

HSCEI- Mildly bearish, looking to sell rallies while under 10900 should lead to a test or recent lows below 10500.  


Trading Longs: NRG, ES, ETR, BIIB, ABMD, TLT, EUO

Trading Shorts:  TUR, WDC, STX, MU, NTCT, CQQQ, EEM, DBC, MHK, WHR, HIG, GT, HBI, BWA, LVS, CVS, AMBA, AVGO, SF, FEZ, VGK, DE, ITW



TECHNICAL THOUGHTS

S&P reversed right in the price window of where it should have Thursday, and time factors support the notion of a peak in stocks within the next 3-5 days and can allow for the start of at least a minor correction to this recent upswing.  Europe looks to have gotten a head start in this regard, and sold off to multi-day lows, while Emerging market weakness followed through, particularly in the currencies.   While a end of month bounce can't be ruled out, we're likely to see more selling pressure after Sept 7, but which is thought to be getting underway in most US indices in the next 3-5 days.  For S&P, getting under 2898 on a close at this point would be a negative with movement under 2876 leading to acceleration. 

Markets have reached the final day of the month, in pretty good shape thus far, and despite yesterday's selling, still are positioned to close out the month with one of the better Augusts in four years and for the NASDAQ, in 18 years.   While not wishing to rehash the old arguments of why stocks likely should fall, it's still importnat to relay that this timeframe in late August/early September is important for US Equities for a possible change of trend, and that very few seem to be positioned for any sort of setback, if sentiment is any gauge.   The non-technical reasons that many might give regarding a selloff likely will revolve around one of two things:  Either the Trump tariff "re-raise", or else the Emerging market currency meltdown, which seems to be back on the front burner.   Both could serve to shock the system at a particularly sensitive time.  Technically we've seen the minor stabilization in the US Dollar having led to pretty large selloffs in many Emerging market equities and also the currencies, with Lira, Rand and Rubel weakness, all which look to extend.  Crude looks to be near a short-term area of resistance just below 71, while Gold is stubbornly turning back down given the Dollar's attempts to stabilize.

Overall, a pullback in commodities during the first part of September makes sense, and the key themes for the days ahead seem to center on whether Technology peaks out, and whether this EM currency implosion could spread to trouble for the US.  The VIX seems to be sniffing out trouble, like it normally does and managed to close at new multi-day highs yesterday, in a very bullish-looking bottoming formation.   Remember, this kind of thing also happened in late January just prior to the market peak, so it's always wise to be onguard when volatlity is hit hard into the Fall period and then stabilizes and holds up relatively well as stocks move higher.   Near-term, the next 3-5 days should prove telling, but should likely bring about a bond rally with yields back lower and stocks showing their first signs of any kind of weakness in the last couple weeks.  While the US equity markets should outperform Europe, they're still likely going to experience declines into mid-to-late September.   

ACTION PLAN-  

Short XLK at 75.75, with targets near 72.50
Long XLU with targets at 55
Long XLV with targets at 95, 100
Long XLP with targets 54.60-55, Stop at 52.95
Short EURUSD with targets 1.15


 

Additional charts and thoughts below.

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S&P Futures have pushed all the way down to test critical near-term support, and while 2894 was relayed as an area to officially get under to have concern, any daily close under 2898 likely will kick off the start of the decline down to test 2800-7 with just minor support near 2861.   Momentum has nearly gotten oversold on hourly charts now given the 25 point S&P pullback from earlier highs yesterday, yet prices are holding above the uptrend from mid-August.  Therefore, S&P right now is in a bit stronger shape than Europe and likely to hold up a bit better.   Until this trend breaks from mid-August, it's tough to rule out a minor bounce.  Yet rallies should be used to sell, and upside should prove limited into next week.  

CBOE Volatility index, or VIX, looks to have bottomed out, and rose to the highest levels since mid-August yesterday, closing higher than the last eight trading days.  This should be the start of implied volatility turning up for a seasonal correction and pullbacks should be used to buy, thinking that a move to test and exceed early August highs is likely.   

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Europe looks to have taken the lead in turning lower, as prices on the STOXX 50 indexThursday undercut the last two trading days and finished at new four day lows, violating the uptrend line from mid-August.  This should lead to momentum starting to turn down more sharply and likely lets Europe continue to underperform in the short run.  As daily charts of the SX5E show, prices made successively lower peaks from May and then July before now peaking out in late August at a much lower level.  Movement down to test August lows looks likely at some point in September.  

Healthcare extends breakout, while AMZN reaches very overbought levels

August 30, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

S&P 500 ETF Trust SPDR (SPY)-  
291.10, 290.3, 289, 288.50, 287   Support
291.16-19, 292.18, 292.88            Resistance


LINK TO TECHNICAL WEBINAR from last Thursday- https://www.youtube.com/watch?v=3gkpjm_QUZM&feature=youtu.be

 

SPX - (1-2 Days)- S&P now at upside target-2915-8-  Reversal (based on my work) should be likely within 3-5 trading days-  Avoid shorting without tight stops given the momentum, until prices reverse.  Watch for evidence of any failure given Tech near resistance, as a sharp pullback between now and next week would be one to follow.   Stops on longs at 2876- Risk/reward favors selling into gains, as Upside does appear limited

SX5E- EuroSTOXX 50- Mildly Bullish, One final thrust higher into Thursday/Friday looks correct, with rallies finding strong resistance at 3475--3525.  Look to sell into this and/or short via FEZ, VGK into end of week.  Unlikely that late July highs are exceeded, Movement uner 3404 should lead down to 3340 initially near late June lows.    

HSCEI- Mildly bullish, but expecting no higher than 11350 before turning back down to challenge lows-  Rallies should be sold into Friday on any push up above 11230.


Trading Longs: BIIB, ABMD, RP, EUO, MNST, NAV, LOGM, MPC, ANDV, VLO, C, KSU, UNP, INCY, HUBS, SAIL, NKTR, IDXX, SWN, GRMN, TOWR, TEAM, NEP

Trading Shorts:  WDC, STX, MU, OC, MDP, NTCT, CQQQ, EEM, DBC, MHK, WHR, HIG, GT, HBI, BWA, LVS, CVS, AMBA, AVGO, SF, FEZ, VGK, DE, ITW



TECHNICAL THOUGHTS

S&P has gotten up to what I believe should be a decent resistance target, so for aggressive traders, one can short with tight stops. For those who wish to wait for the reversal, a move down under 2876 is necessary before having conviction that a near-term peak is in place, and this might take between Aug 30-Sept 7.  When this is confirmed, we should have a move down to 2800 at a minimum into Sept 19-21 and potentially into early October.   Favor Defensives, Healthcare, Energy near-term, and avoid Technology and Industrials.   

Overall, stocks moved higher into near-term targets for SPX and XLK, so now the waiting game begins.   While Energy and Healthcare looks to extend on a relative basis, the near-term rally for many sectors might encounter resistance at these lofty levels.  Aggressive traders can try to short S&P at 2916-19, but closes over 2925 stop out shorts and its proper to stand aside and just favor attractive stocks, and sectors like XLV, OIH, XOP, XLE until this Futures move runs its course.  Any reversal at this point would be respected and needs to be watched out for carefully between now and Sept 7.

Demark signals are now within 2 days of being complete on SPX, NDX, CCMP, DJIA, IWM, SML, MID, for the first time since late January.   While we've mentioned the possibility of these lining up quite a bit in recent days, they are important, as at least one piece of the puzzle, and should be respected if and when they're confirmed.   Confirmation will take the form of price pulling back to new 4-day low closes and important to watch for.  180 and 240 min charts have just signaled these counter-trend signs of exhaustion and daily charts will likely have two in place by Friday.  Overall, upside risk/reward is poor in the weeks ahead.  Until this happens it's best to favor a mild DXY rally and look to sell EURUSD, EEM an most Emerging market currencies, while using the mild bounce in Treasury yields to buy Treasuries on the long end for what should be a crack of recent support at last week's lows.  

ACTION PLAN-  

Long XOP with targets at 45.50
Long XLU with targets at 55
Long XLV with targets at 95, 100
Long XLP with targets 54.60-55, Stop at 52.95
Looking to short XLK at 75.50-75.80
Short EURUSD with targets 1.15


 

Additional charts and thoughts below.

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The Healthcare SPDR ETF, XLV has just pushed back to new all-time high territory as of last Friday and accelerated yesterday, which keeps this ETF in a positive near-term technical state.  The act of following through vs finding resistance at former highs should likely allow for at least a bit more near-term technical strength before any reversal.  Minor pullbacks that stall out near the base of the breakout should be buyable with targets up near $95 and then $100.  Until XLV breaks its uptrend from late June, this sector should still show decent absolute performance, and on a broader market setback in September, this might hold up relatively better given the defensive Pharma sector.  
 

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Healthcare just in the last two weeks has made sufficient progress to exceed the entire relative downtrend from 2015.   This could be a potentially very big development for Healthcare starting to show some above-average outperformance at a time when Technology could pullback into September.  A break of a 3-year relative downtrend is impressive, and we saw outperformance from some of the laggard Biotechs today like ALXN, CELG which made impressive continuation follow-through moves.  This sector was mentioned in the Annual Technical report as being one to favor for 2018, so fortunately this group managed to show decent enough strength to make it above the 3-year downtrend.  Relative charts show XLV having pulled back after its huge rally from 2011 into 2015 and looks to have stabilized right near the base of the breakout.   This has bullish implications for this sector, and looks like one to continue favoring and overweighting for relative and near-term absolute performance.  

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AMZN has now rallied nearly 8% in the last 8 trading days, or over 100 points to within striking distance of 2000 for the first time ever.  Morgan Stanley helped this stock accelerate today with its target raise to 2500, and coincided with some of today's acceleratoin that helped the NDX along with the Consumer Discretionary sector given its weighting.   Overall, technically, it's very difficult to avoid this stock, as we've seen over the last few years, but the MS upgrade seems ill-timed , largely on the extent that momentum is now as overbought as we've seen in nearly 20 years.  After doubling in price since this bottomed last August, AMZN now is showing weekly RSI over 84 which historically has been a difficult time to consider buying the shares, despite the ongoing uptrend, since 2015.  Of course, for those that can weather 15-20% corrections and buy more, one has survived in good shape.  However, monthly RSI is now at an 89.5, the highest since 1999, from where the stock, along with countless others, fell into 2002/2003.   Moving above its weekly and monthly Bollinger band makes this unattractive to consider, and a better area to buy lies near 1650, which is about 15% below current levels.  The data below shows when RSI peaked on weekly charts and the resulting decline which in many cases, happened within 1-3 months and saw the stock lose 10-20% or more.  There's no guarantee that this marks the peak, as there's been ZERO signs of weakness.  But this stands out as being a technical warning sign that should be heeded in my view, and AMZN looks unlikely to have upside above 2020 into next week before the start of a correction.

7/31/15-   580 peak.   One month later was trading 451 into late August

11/6/15-   675..  and 2/2/16-   474

9/30/16-   930   and then 11/11/16  traded down to 710

6/2/17-  1008  and then  9/29/17-  931

2/2/18-  1498 peak  and then the following week down to 1265

3/9/18-  1617  and then fell to 1352 into April

 

 

Dollar bottoming might result in Emerging markets, Commodities turning down near-term; Sell Technology into Wed-Friday

August 29, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

S&P 500 ETF Trust SPDR (SPY)-  
289, 288.50, 287, 285.43,     Support
290.22, 290.67, 291.16-19    Resistance


LINK TO TECHNICAL WEBINAR from last Thursday- https://www.youtube.com/watch?v=3gkpjm_QUZM&feature=youtu.be

 

SPX - (1-2 Days)- Mildly Bullish, but very stretched here, momentum quite overbought on intra-day basis.  Overthrow of Trend might lead briefly to 2915-8 before reversing course Wednesday-Friday- Watch for evidence of any failure given Tech near resistance, as a sharp pullback between now and next week would be one to follow.   Stops on longs at 2876- Risk/reward favors selling into gains, as Upside does appear limited

SX5E- EuroSTOXX 50- Mildly Bullish, with rallies finding strong resistance at 3500-3525.   Unlikely that late July highs are exceeded, Movement uner 3404 should lead down to 3340 initially near late June lows.    

HSCEI- Mildly bullish, but expecting no higher than 11450 before turning back down to challenge lows-  Rallies should be sold Wed-Friday


Trading Longs: EUO, RP, LOGM, MPC, ANDV, VLO, C, GS, KSU, UNP, INCY, HUBS, SAIL, ABT, HOLX, NKTR, IDXX, SWN, GRMN, MYGN, TOWR, TEAM, NEP

Trading Shorts:  OC, CQQQ, EEM, DBC, MHK, WHR, HIG, GT, HBI, BWA, LVS, CVS, AMBA, AVGO, SF, FEZ, VGK, DE, ITW



TECHNICAL THOUGHTS

A trend reversal in US Equities looks near given yesterday's stallout at very stretched levels, yet the pullback under 2876 will be necessary to have any conviction in this regard.  In the meantime, it's tough to rule out a final push to SPX-2915-9 which would set up for a better risk/reward to sell gains.  Given the plethora of Demark signals now appearing on charts of multiple asset classes, it's important to pay attention.  Implied volatility diverging positively and giving some hints as to what might in store for September with a steep back end of the curve.  Meanwhile, the USD decline looks played out for now, and a pullback in both EEM and also EURUSD looks possible in the days ahead, not to mention commodities.   Bond yields likely encounter strong resistance on any further gain, and Treasuries likely turn back higher(yields lower) into September.  

Overall, three more trading days in the month of august and we're seeing the best August performance in nearly four years, with much of this having come since August 15th.   DJIA meanwhile has gained nearly 2000 points since the end of June and has rapidly played catchup to the tune of 8%, yet YTD is still only higher by 5.5% and still has yet to make a new high.   The key thoughts for the balance of the week concern the Dollar likely trying to bottom out after hitting support while EEM might pullback again (some of the weakness has already started again in the Brazilian Real and Turkish Lira

Meanwhile for US Equities, Technology will be the key to whether Indices can continue to avoid turning lower.   XLK in particular will show evidence of Exhaustion by Wednesday and given how stretched Tech has become of late, it's right to sell into XLK and consider shorting from 75.50-76 between now and end of week.  However, on a positive note, this recent outperformance in Tech has been helpful in keeping indices afloat and Tech has improved its standing given its recent relative strength

Bond yields managed to stage a decent bounce, but yet could prove short-lived given the degree of negative sentiment, with many pressing short bets in Treasuries.  One should look to buy Treasuries with yields at 2.92-3 in the days ahead if reached, and expect that yesterday's bounce should be one to buy into, not one that leads back to new highs.

ACTION PLAN-  

Long XOP with targets at 45.50
Long XLU with targets at 55
Long VNQ with targets at 85.50
Long XLP with targets 54.60-55, Stop at 52.95
Looking to short XLK at 75.50-75.80
Short EURUSD with targets 1.15


 

Additional charts and thoughts below.

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The SPX showed a few signs of stalling out, yet failed to decline in any shape or form that would make it likely that a pullback had gotten underway.  Over the next 3-5 days, any reversal that undercuts Monday's lows would be sufficient to think a short-term top was in place that would take indices lower into September.  While the promise of a possible trade deal might make some think that higher prices are likely, it's worth mentioning that none of the negative rhetoric regarding trade, tariffs or political drama had any effect in taking prices lower.  Now SPX has reached levels that have been hit already quite a few times since April.   For those that utilize Demark, there are now counter-trend sells in place on S&P, as well as NASDAQ and DJIA, but require prices to move to new four-day closing lows for confirmation.  In the event that prices push higher for another three days, an additional sell would be registered, making this likely a poor risk/reward for initiating new longs.   Of course, its not proper to be short until prices have officially confirmed that this advance has run its course.  In the meantime, owning implied volatility through protective puts, might make more sense for some vs. attempting to short.  
 

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The Bloomberg Dollar index looks to be trying to bottom near a key area of two-month trendline support near former lows.  TD counts are within 1 day of showing a completed TD Buy Setup and would allow for a bounce to unfold, which might affect EM stocks, currencies and China negatively, not to mention commodities.  Overall, EURUSD looks to weaken over the next few weeks, and many Emerging market currencies have already begun to decline back towards recent lows, such as the Brazilian Real, Turkish Lira and South African Rand.  The Ruble also stands a good likelihood of weakening further in the weeks to come if the US Dollar bounces.   

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 Commodities look vulnerable in the short-run to one final flush lower in the days to come, which might coincide with the Dollar index stabilizing and trying to turn higher.  This index for commodities, the CCI, the equal-weighted Commodity index from Thomson Reuters, remains in a bearish downtrend and has not yet broken out above the trend from May highs, when this turned down sharply as the US Dollar bounced.   Demark counts for trading lows are premature, and could allow for a pullback to retest recent lows, which would negatively affect grains, softs and potentially the metals for about 1-2 weeks before these attempt to make a larger bottom.   For now, this bounce looks to have played itself out in commodity indices, so one should hold off on being too long in this space until this downtrend can be properly broken.  

S&P, NASDAQ near resistance, while Financials, industrials play Catch-up

August 28, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

S&P 500 ETF Trust SPDR (SPY)-  
289, 288.50, 287, 285.43,     Support
290.22, 290.67, 291.16-19    Resistance


LINK TO TECHNICAL WEBINAR from last Thursday- https://www.youtube.com/watch?v=3gkpjm_QUZM&feature=youtu.be

 

SPX - (1-2 Days)- Bullish, but very stretched here, momentum quite overbought on intra-day basis.  Overthrow of Trend might lead briefly to 2915-8 before stallingTuesday/Wednesday-  Stops on longs at 2876- Risk/reward favors selling into gainsTuesday/Wednesday - Upside does appear limited

SX5E- EuroSTOXX 50- Bullish, and if 3460 is exceeded, this might make another 3-4 day rally into 3500 before peaking, but it's unlikely that late July highs are exceeded, and one should be on the lookout for any reversal in the next few days.  Movement uner 3404 should lead down to 3340 initially near late June lows.    

HSCEI- Mildly bullish with targets to sell near 11400.   Prices have stalled near 11150, but Demark counts look to allow for another 2-3 days of gains before this stalls.     

Trading Longs: MPC, ANDV, VLO, C, GS, KSU, UNP, INCY, HUBS, SAIL, ABT, HOLX, NKTR, IDXX, SWN, GRMN, MYGN, TOWR, TEAM, NEP

Trading Shorts:  DSW, MHK, WHR, HIG, GT, HBI, BWA, LVS, CVS, AMBA, AVGO, SF, FEZ, VGK, DE, ITW



TECHNICAL THOUGHTS

Reversal possible Tuesday/Wednesday, but wait for the pullback to new 2-3 day lows before having any sort of conviction that a top is in.   S&P Futures have upside targets at 2916-9 for the next few days that would make for an excellent risk/reward to sell into.   Overall, Upside limited, but wait for the break before assuming shorts-   Buying Implied Volatility makes sense for September- 

The trend has grown parabolic in recent days, and we've seen evidence of Financials and industrials ETFs breaking out to attempt to close the gap.  Breadth came in at less than 2/1 positive, and volume was tepid, yet we've reached a stage of the rally where most feel sheepish expressing any sort of a bearish opinion heading into a very tough month seasonally.  Bond yields haven't really spiked sufficiently, or has the yield curve steepened to offer too much of a bullish outlook on Financials, but yet movement in both XLF and XLI, if it holds (and it didn't hold in early August) would be constructive to think these two sectors likely play catchup.   Technology, meanwhile, is nearing key resistance for XLK after its own recent breakout, and SPX, NASDAQ Comp along with a plethora of other indices are starting to line up to show counter-trend exhaustion for the first time in the last couple months.  This could be important but yet, given the parabolic acceleration, it's a must to wait for the reversal before attempting to short into this, unless S&P were to reach 2916-9 into Tuesday/Wednesday which would be a technical "Green light" to consider shorting.  

ACTION PLAN-  

Long XOP with targets at 45.50
Long XLU with targets at 55
Long VNQ with targets at 85.50
Long XLP with targets 54.60-55, Stop at 52.95


 

Additional charts and thoughts below.

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The SPX has now exceeded the upper barrier of the four-month channel consolidation, something that makes further upside likely very tough to come by.  Intra-day RSI readings were showing near 90 while counter-trend Demark based sells should finally appear in unison as of Tuesday/Wednesday in a multitude of indices and sectors, arguing at the very least, to pay attention given such stretched conditions.  Overall, upside targets lie at 2916-9 while breaks of 2874 would turn the trend bearish fairly quickly for a move down to 2800 and below.  Arrows above price on the 240 minute charts show the TD Sell setups which have been present at former peaks and yet again are present after this big surge higher.  While it's tough to fight prices in such a steep uptrend, one has to be on the lookout given such overbought conditions near-term amidst a pattern of counter-trend exhaustion starting to appear.  

The minor breakout in $XLF yesterday looks bullish, but it's a must to show some evidence of followthrough this time around, a similar breakouts failed to hold back in early August.  Stocks like C and GS both look positive for further near-term gains. However, it's important to mention that many of the Regional banks are not participating and charts of KRE and KBE look far worse than XLF.  Stocks like FITB, ZION look better to avoid/short technically, while some of the Brokers look to extend.  

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 The NASDAQ Biotechnology index looks set to make at least a minor new high given its technical setup in recent weeks.   The act of exceeding 120 would be important given that this level also coincided with peaks made earlier this year.  Gains to near 125-130 look possible, but might prove short-lived given the counter-trend exhaustion seen now on weekly charts.  While larger in scope than many of the Small-cap stocks that make up the IBB, stocks like INCY, ALXN, GILD, and CELG all showed excellent technical structure of late and evidence of trying to turn higher over the last few days.  

SPX nearly unchanged from Monday's close, yet breadth starting to worsen

August 24, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

S&P 500 ETF Trust SPDR (SPY)-  
283.37-59, 281.62, 280.16, 276.40-50          Support
286.62, 287.01, 287.40                                 Resistance


LINK TO TECHNICAL WEBINAR from yesterday, 8/23/18- https://stme.in/iJ5Ega26He

 

SPX - (1-2 Days)- Bullish OVER 2846, Bearish Under-  Prices remain within 3 ticks of levels hit on Monday's close.  While some evidence of stalling out is at hand, we still haven't seen weakness.   Thus, it's tough to rule out another 3-4 days which would bring Demark counts to completion on S&P Futures, NASDAQ and also VIX.  Under 2835 w likely leads to a retest and break of 2800 and pullback to 2755- Similarly, breaks of 7600 and 7100 for NASDAQ comp and NDX would be important

SX5E- EuroSTOXX 50- Neutral over next 3-4 days with drops under 3340 turning trend bearish.   Max upside to near 3462 into end of week-  Sell Rallies-  Minor bounces should be used to sell as Europe remains far weaker than US.  3457-62 important area for resistance.   Expect weakness down to 3340 initially near late June lows.    

HSCEI- Neutral  with breaks of 11359 leading down to 9972.   Above 11176 needed to be bullish.  Overall, minor evidence of stabilization, but it's expected this likely proves short-lived before a final washout into September.   

Trading Longs: QNST, HUBS, SAIL, ABT, HOLX, NKTR, IDXX, SWN, CRC, GRMN, MYGN, HRTX,  TOWR, TEAM, NEP, SRE, AEE, ES, MDT, LYB

Trading Shorts:  DSW, MHK, WHR, HIG, GT, HBI, BWA, LVS, CVS, AMBA, AVGO, SF, FEZ, VGK, DE, ITW



TECHNICAL THOUGHTS

Still tough to make the case that a decline is yet underway, but it's getting closer, and breadth is the guide.    Upside limited, but wait for the break before assuming shorts-   Buying Implied Volatility makes sense for September- 

Still very difficult to make much of near-term price action as prices closed 3 ticks from this past Monday's close.  Some definite evidence of stalling out, yet no real proof of a decline of any sort.  Prices remain within striking distance of all-time highs in US indices like SPX and NASDAQ, while other indices like IWM, SML, MID, TRAN have already accomplished this feat.   Breadth is starting to show evidence of withering as prices churn near the highs, while the back and forth nature of the rallies and declines intra-day is starting to bring about the feel of a very unstable market.  Yet, the closing price tells all, and in this case, there still hasn't been sufficient deterioration to think an immediate selloff is upon us.   While upside for equities is limited, it still makes sense to play from the long side from a trading perspective until/unless 2846 is broken, Wednesday's lows in Sept. S&P Futures.  

The Dollar's gains yesterday coincided with further Emerging market weakness, particularly in the currencies, with USDBRL now within striking distance of former highs, and most metals and metals stocks continue to trend lower.  Chinese Tech stocks in particular were hard hit, after just a minimal bounce in recent days, much of which occurred with the US Dollar falling.  Now that yesterday's rebound happened, we saw many (BABA, BIDU, TCEHY) stall out where they needed to technically and turn back to multi-day lows.  Meanwhile, Treasury yields have been remarkably quiet lately after the pullback to retests multi-month lows, and while an eventual breakdown in yields is expected in September, this hasn't yet occurred.    Overall, with Financials turning lower in Yield curve flattening and signs of ongoing underperformance in Technology, it makes sense to steer towards Healthcare and also the Defensive sectors, which look likely to outperform during the coming month.   Heading into end of week, as has been discussed over the last few days, selectivity is key at these levels, and it pays not to get too complacent in this seasonally weak time.  Pullbacks to new weekly lows would be taken seriously, and likely will lead to further downside, while bounces into next week should be used to sell. 


ACTION PLAN-  

Long XOP with targets at 45.50
Long XLU with targets at 55
Long VNQ with targets at 85.50
Long XLP with targets 54.60-55, Stop at 52.95



 

Additional charts and thoughts below.

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The SPX has shown increasing evidence of stalling out in the last week, with prices just a few ticks from levels hit this past Monday.  Yet we'll need to see a decline under 2846, to think prices are set to begin pulling back to test the key 2800 level.   Near-term, while prices seem toppish, and breadth is turning more negative, S&P is still within striking distance of all-time highs, coming within 5 ticks earlier on Thursday.   Given the lack of confluence in Demark counts between Futures and SPX cash, a slight rally into early next week would make perfect sense before markets peak for a seasonal correction.   Near-term, one needs to see this decline under 2846 to take action, or a push above 2874 which would lead to a likely "low participation" move to 2885-95 which would be used to sell (and short for aggressive speculators.  

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The Invesco China Technology ETF looks to be rolling over again in the short run, following dismal performance and reversals out of stocks like BABA, TCEHY and BIDU on Thursday, and makes a test of recent lows made in early August likely.   Interestingly enough, this started to turn down sharply when the US Dollar bottomed and rose starting out this past Spring, and only recently has shown some evidence of trying to stabilize.   The daily pattern since 2015 maintains an uptrend, but the recent lows are important in this regard, and if broken, would allow for even further weakness into September.   Given that the US Dollar sentiment has gotten excessively bullish and should start to turn down, some Emerging market strength between now and end of year seems likely and Chinese Tech stocks likely will benefit.  However, in the next 3-5 weeks, there remains a window where many of these can still weaken, so it's best to implement Technicals when trying to get involved in these names.  Despite the rosy, optimistic fundamental stories, the stocks have been difficult to embrace, and the trend remains bearish from June in this ETF, and will take some time to bottom out.  

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 The S&P Financials index looks to be struggling with an area of resistance that marked the highs since the middle part of May.   The drop to new multi-day lows yesterday directly coincided with the Yield curve snapping former support and flattening out, and until this index can get above 475, it's thought that pullbacks are likely into and throughout the month of September.   Given that Financials tend to be very sensitive towards Yields, the fact that CFTC data shows record shorts in Treasuries while the 10year is hovering at key support near 2.80% in TNX doesn't give much confidence that this group is about to embark on any sort of larger rally in the near future.  Pullbacks to test August lows is likely, and could get under this level down to 450 before this bottoms and turns back higher.  This group along with Technology continue to be very important to monitor for evidence of these groups "kicking into gear" which has largely been absent in the last couple months.