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Tech, Industrials start to give way, as SPX gives back 50% of April rally

April 25, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2684-6, 2662-4, 2655-6, 2636-7, 2620-1    Support
2718-20, 2724-6, 2747-50                          Resistance


LINK TO TECHNICAL WEBINAR from last Thursday, 4/18/18- -https://stme.in/yadt92dtNf

 

SPX - (1-2 Days)- Bearish-  The early rally failed and getting under 2657 turns the near-term trend down.  While it was thought to start the week that prices should fall this week, i had held out hope given  might hold up into 4/25, the market clearly had other plans and this drawdown in technology ended up metasticizing into other sectors.   Im expecting a test and break of 2600 and likely challenge of February/April lows into early May, if not sooner

SX5E- EuroSTOXX 50- Bearish-Trend reversal looks imminent for Europe which rallied into its 61.8% retracement level of the prior decline from January, which coincidentally hits right at the flattened 200-day moving average, while TD SELL SETUPS are now complete per Daily charts.   Pullbacks down to 3400-30 look likely initially. 

HSCEI- Still Neutral short-term after churning near the lows for the last month.  HSCEI requires a move back over 12450 to have a shot at a larger rally, which for now is subdued with prices locked in range-bound consolidation.  Downside under 11850 would bring about a selloff.   

Trading Longs:  VXX, QID, GLD, DBC, SOXS, NDAQ, DXC, TWLO, GDX, PGR, AOS

Trading Shorts:  MU, MCHP, SWKS, WDC, STX, SWKS, NTAP, IBM,  TUP, SAFM, FDC, BEN, XRAY, DRQ, CMI, HSY, HOG, LUV, SIG, FL, BBBY


TECHNICAL THOUGHTS


ACTION PLAN-  

Short SPY from 265, with targets down at 256.  
Long TLT from 117.50-118.25, with TBT having reached targets,  expecting 10-Year Treasury yields to fall after the rise to 3%
Long DBC for commodity exposure- targeting $17.85
Short SMH with target 93.88-94.25

Awaiting entry on GBPUSD- Looking to buy 1.3785-.90 in 3-4 trading days-  Had hit earlier target near 1.4370 and reversed sharply, so awaiting entry- No position

While it was thought that this week as a whole should be lower on a 3-5 day basis, the hourly divergences seemed to point towards strength on Tuesday.  Well that happened but proved incredibly brief and the reversal breached key support of the last few days which caused some extreme acceleration down into end of day before just a minor bounce.   S&P lost around 80 handles from 7 am until 2 before regaining 15, but trends are quite negative at this point on daily charts, and it looks wise to use any early strength to sell into, technically, expecting a test and possible break at this point of April lows.  

Semiconductors continued lower after breaking April lows, and the FANG weakness resulted in Technology breaking trends vs the SPX which likely will serve as a headwind in the short run.  While Financials were "less bad" and have been relatively holding up better given Treasury yields making a run on 3%, this group remains negatively sloped vs SPX relatively, and doesn't look ideal to pick lows in the Banks given a lack of real stabilization.  The other shoe to drop came out of Industrials Tuesday with stocks like MAS, MMM, PCAR, CAT, LMT, ALK, DE, PH all falling more than 5% in Tuesday's trading alone.  XLI has dropped down to test monthly lows which should be a real point of importance for Industrials over the next couple weeks.   The defensive sectors managed a decent bounce yesterday, as this stock market weakness helped to spur the trend towards safety, and Telecom stocks in particular managed some good relative strength, while Utilities and REITS also bounced, despite no real rally in Treasuries.  

The one change occurred with US Dollar reversing its recent strength on Tuesday, which resulted in precious metals rallying while Treasury yields look to be stalling out near 3% at a time when everyone unanimously is eyeing this as being psychologically important, and thinking that the rate rise is a key reason for equity weakness.   Technically we've seen evidence over the last week that warned of a possibility of a stalling out given weaker than expected breadth and momentum on this bounce, while Semiconductor and Financials weakness served as a definite catalyst, sector-wise.  


Additional charts and thoughts below.

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S&P-Trend has begun to accelerate lower, indicating that the highs for this particular cycle are likely in, and weakness into end of month/early May is likely.   Daily charts had already turned negative late last week on the initial weakness, so it looked to be just a matter of time before the entire trend started to weaken.  One should utilize any intra-day strength Wednesday to lighten up on longs, adopt hedges, or consider shorting for the tactically aggressive, expecting an upcoming test of April lows.  Given the bearish structure since late January, these might hold initially, but should give way to weakness down to near 2450 before any low of magnitude is in. 
 

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Technology looks to have broken down under the trend from mid-February, which could result in a serious headwind for Tech in the weeks ahead given its percentage weighting in the SPX of greater than 25%.    The longer-term trend remains very much in effect, but relative charts show this trend break as having a good chance of violating April lows in the days/weeks ahead.  

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Transports breakout attempt ends in failure- The Decline yesterday in Airlines and Rails was quite damaging to the TRAN, and we've seen prices now pullback into this range which had been ongoing from mid-February.  Resistance came in near the same levels that had been hit over the last couple months, just below 10850, and sets up  for a pullback down to 10k-10100 over the next 2-3 weeks.  Overall, this breakout failure does look important and negative in the short run, and it looks early to buy dips in the Trannies.   

Semiconductors , Airlines break down, but SPX manages to hold

April 24, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2684-6, 2662-4, 2655-6, 2636-7, 2620-1    Support
2718-20, 2724-6, 2747-50                          Resistance


LINK TO TECHNICAL WEBINAR from last Thursday, 4/18/18- -https://stme.in/yadt92dtNf

 

SPX - (1-2 Days)- Mildly Bullish- While the trend for this week should be down, yesterday's late rally attempt kept the S&P from falling below where it needed to hold and we see some minor positive divergence.  Cyclically its possible to make the case for a peak on or around 4/25-7, which would involve a possible rally attempt Tuesday into Wednesday before any meaningful downturn.  At 2673, i can make the case for a rally to test and break 2683 and allow for some minor strength before the weight of the NASDAQ carries SPX lower.  Under 2657 means this is wrong and its right to bet on a move down to near 2600 initially.   

SX5E- EuroSTOXX 50- Europe looks to have reached resistance, with the combination of Monday's gains hitting the 200-day ma while Demark Sell setups were due to complete as of Tuesday's upcoming close above 3490.89.  One can look to underweight Europe by shorting the VGK, or EZU and expecting upcoming underperformance. 

HSCEI- Neutral short-term after churning near the lows for the last month.  HSCEI requires a move back over 12450 to have a shot at a larger rally, which for now is subdued with prices locked in range-bound consolidation.  


Trading Longs:  CIT, NDAQ, NOC, DXC, TWLO, XME, VEEV, SPLK, PGR, AOS, MPC, PLNT, DBC

Trading Shorts:  MU, MCHP, SWKS, WDC, PSA, REG, IBM, HOG, LUV, SIG, FL, BBBY


TECHNICAL THOUGHTS


ACTION PLAN-  

Looking to sell SPY at 270-1, or on evidence of this turning down under 265, which should cause pullback to 260
Long TLT from 117.50-118.25, with TBT having reached targets,  expecting 10-Year Treasury yields to fall after the rise to 3%
Long DBC for commodity exposure- targeting $17.85
Long ITA with target raised to 208-210
Short SMH with target 93.88-94.25

Awaiting entry on GBPUSD- Looking to buy 1.3785-.90 in 3-4 trading days-  Had hit earlier target near 1.4370 and reversed sharply, so awaiting entry- No position

The breakdown in SOX yesterday was a negative technically, violating April lows and closing near the lows of the session which looks likely to lead to additional weakness.  However, this didn't seem to affect markets as negatively as might be expected just yet.  Stocks had a chance to implode in the final hour of trading, but ended up rallying instead to finish the day just fractionally negative.  While NASDAQ did in fact begin to show more weakness, S&P held steady and relatively outperformed with some evidence of positive divergence on yesterday's dip while TD Combo buy signals were confirmed at the close on hourly charts. So S&P managed to hold above last Friday's lows, with Healthcare strength along with Consumer Discretionary, while Industrials just finished fractionally negative.   This suggests there still could be a rally attempt into Tuesday/Wednesday, and the close helps the trend from having turned bearish too quickly.   But make no mistake, as a leading sector, the SOX violating April lows is bearish for the market and likely could see SOX pullback to 1200 before any real low is in.

Overall, it remains right to avoid Semiconductors and this weakness likely will start to affect all of Technology which should be a concern for equities into May.   Airlines also broke down under key five-month trendline support and this area also appears like an area to avoid in the short run.  Meanwhile the Dollar's gains caused Emerging markets to underperform while Metals stocks suffered their second straight day of weakness.  Treasuries fell, as yields got closer to 3%, but still didn't match the global bond selling abroad as UK Gilts and German Bunds both saw yields rise at a much stronger rate.   It appears likely that Bund yields likely should close some of the gap to US Treasury yields in the days/weeks ahead.  

Bottom line, this looks to be a market of quite a few moving pieces and trends look to be slowly but surely turning down across the board for quite a few sectors.  While Semiconductors have taken the lead which likely will lead to eventual broad-based weakness across many sectors, for now, markets have a chance to squeak out 1-2 days of rally to peak out during the exact 90 day cycle from 1/26/18 highs.  While trends are negative now from January, March and look to have broken the uptrend from early April, it's tough to rule out a bounce attempt Tuesday, which is based largely on intra-day positive divergence, counter-trend hourly exhaustion, while cyclical peaks still looked premature for last week and have a better fit with Wednesday-Thursday of this week.  Pullbacks right back down under 2650 would postpone any thoughts of a bounce and the selloff should begin in earnest.  


Additional charts and thoughts below.


S&P-Trend turned more bearish late last week, but successfully held above Friday's lows in Monday's trading.   Prices attempted to stabilize yesterday in S&P Futures, failing to break down under last Friday's lows like what happened with the NDX and DJIA.  Signs of positive momentum divergence looked to occur during Monday's dip to test last week's lows while evidence of hourly counter-trend Exhaustion was present on the close which pointed to the chance of this trying to bounce.  Overall, S&P could attempt to rally in Tuesday//Wednesday as a result of these factors which would bring about a better cyclical high, but trends seem to have worsened based on last Thursday/Friday's decline so it's right to look to sell into this move. 
 

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SOX- PHLX Semiconductor index-  Yesterday's pullback broke the lows from April, which should bring about further weakness down to 1200 in the weeks ahead.   The larger pattern remains challenged given the deep retracements since last Fall, and yesterday's break violates the longer-term uptrend, which should soon lead to Semiconductors weakness leading the Technology sector to likely break the larger uptrend vs the SPX.   This could lead to Tech starting to weaken relatively, as FANG weakness of late combined with Semiconductor declines could bring about a larger period of Technology underperformance.

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Airlines break of support should lead to further underperformance-  Airlines (XAL) weakened below key support yesterday, with the pullback reaching the lowest area since mid-February, violating the entire uptrend from last November.   Given that this area was already tested once before, yesterday's break looks particularly negative and could allow this to serve as a meaningful drag for Transportation stocks.   Stocks like UAL, AAL, DAL, JBLU, LUV all could face further weakness into May. 

Semi decline troublesome, yet insufficient weakness to turn bearish just yet

April 20, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2684-6, 2662-4, 2655-6, 2636-7, 2620-1    Support
2718-20, 2724-6, 2747-50                          Resistance


LINK TO TECHNICAL WEBINAR from yesterday, 4/18/18- Thursday 4/5- 

 

SPX - (2-3 Days)- Mildly Bullish- Yesterday seemed to be a "Shot across the Bow".. important in many ways. though still could lead to another retest of highs or slightly above into early next week before a turn lower.   Overall, i think upside is limited.  But difficult turning bearish just yet given incomplete Demark counts, cycles which point to next week and trendlines from early April that have not been broken.   Look to sell strength Friday and into Monday, while respecting breaches of 2660 as turning trends bearish.   Upside should be capped near 2748. 

SX5E- EuroSTOXX 50- Mildly bullish up to 3525-  Gains likely to prove minor into next week and right to underweight Europe vs US-  Minor strength for Europe, and getting above 3500 allows for fractional strength to 3575-3600.  For now, still expect this area is important and can hold.   

HSCEI- Make-or-Break after pullback-  Breakdown from trendline resistance keeps trend down and now a necessity to hold 11680, or else this results in a larger break which would violate uptrend from last May.  Important for immediate stabilization.   


Trading Longs:  NDAQ, NOC, TWLO, XME, VEEV, SPLK, PGR, AOS, WYNN, ROL, WIX, MPC, PLNT, DBC, FXB, TJX

Trading Shorts:  VNQ, PSA, REG, XLU, AZO, CLX, IBM, HOG, LUV, UUP, EUO, SIG, FL, BBBY


TECHNICAL THOUGHTS


ACTION PLAN-  Still looks right to be long commodity space and fade the US Dollar (Long Pound Sterling( while favoring strength in Aerospace/Defense and Transports while fading the interest rate sensitive areas like the REITS and Utilities.  Interest rates can rise a bit more, but the risk/reward is growing worse for Treasury shorts, and longs should be assumed if rates jump over 2.95%

Long SPY with initial targets 270, then 274.25-275
Long TBT, expecting 10-Year Treasury yields to rise to 2.95-3.00% and then stall
Long DBC for commodity exposure- $16.94 with targets $17.85
Long GBPUSD with target 1.4370, 1.50
Long IYT with target 195
Long ITA with target 205.50-206
Long XLK to 67.24 up to 68.20 this week

Long GLD 125-126 adding above 127 with targets initially 129.50, and stops 125
Short VNQ with expectations of a test of 72.65 and breach which could lead to 70-  Stop at 76.70
Short XLU with targets down at 47.88-48.25, Stop at 51


Yesterday seemed important and a "Shot across the Bow" in many ways as the market showed its hand, with distinct weakness in Semiconductor stocks, while Financials attempted to bounce while not making much of a dent in the ongoing underperformance this group has shown since February.   Given the possiblity of ongoing Semi and Financials underperformance, this would represent over 30% of the SPX and represent a true Headwind to gains in the upcoming weeks   Markets now are approaching trendline resistance from January highs, along with being an important 90 day anniversary of former highs, often an important time frame when projected from highs or lows in the past.  This period in April represented peaks in stocks two years ago along with lows in 2013, both important anniversaries that it pays to keep track of in any given year.

Interestingly enough, the 150 point S&P rally has not been strong enough to carry prices back to intra-day overbought levels, and breadth gauges remain below where they peaked in March, and remain negatively sloped since last October, which managed to turn in a higher high than this past January (Summation index)  Near-term, we've neared a crucial time where prices have neared trendline resistance from January highs, while counter-trend signals are close to forming on this bounce.    Given that the technical structure, along with weekly momentum remain negatively sloped from January, it looks right to sell into this move into early next week technically, taking a tactical approach to this upswing given the preponderance of negative technical factors.

Additional charts and thoughts below.

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S&P- Still tough to get too negative ahead of next week- Look to sell 2740-50-  S&P reversed sharply on Thursday, yet managed to rally slightly into the close to keep the uptrend from April intact.  Counter-trend sells remain premature, so given the lack of sufficient deterioration, it still looks possible for a "last gasp" rally to test Wednesday'shighs and get over this level, rallying to the 2740-50 area into next week. S&P is now approaching the 90 day cycle from January highs, and given that the 45 day worked well in providing the Mid-March highs, this looks to be an important time for S&P   Overall, insufficient weakness Thursday to suggest imminent trend reversal, but the action in Semiconductor stocks looks troublesome for the bullish scenario.  Given Thursday'spullback, any further rally back to highs should create short-term negative divergence and provide strong resistance near the uptrend from January.   On any pullback under 2660, there would be more conviction of a high in place.  
 

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SOX- PHLX Semiconductor index-  Yesterday's pullback proved quite negative for the Chip space, with price declines stripping away most of the rally from early April.   The trend has been neutral overall since last Fall, though the extent of the selloff is troublesome with regards to the broader pattern since last Fall.   SOX is increasingly resembling a large Head and Shoulders pattern over the last six months, and the area at 1250 has importance, and under that near 1200 which lines up to be the official "neckline" to this entire pattern.  Given its leading qualities, Semis can't afford to weaken too much more without casting doubt on the entire pattern as being anything other than a giant reversal pattern to the rally in recent years.  For now, still a bit premature, but the extent of the declines both into February and into early April have been lengthy and damaging.  

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Financials-  Bounce doesn't eliminate the degree to which this sector has lagged since mid-February.  This group has been under an increasing amount of pressure since violating the uptrend from last Fall.  Financials peaked a few weeks following the market top i late January, while contributing directly to the negative momentum from March highs.   Most of the Banks have struggled in the last few months, despite stellar earnings and have been a source of real confusion to the fundamentally oriented.  Overall, this group has lagged all but Consumer Staples in the last month of the major S&P sector groups, while also underperforming in the past week, despite yesterday's 1% gains.  This bounce shows how despite the strong gains yesterday, this trend remains very much negative.  For those seeking attractive stocks in Financials, the Exchanges and E-Brokers look to be some of the better areas of relative strength within the group, with stocks like NDAQ, CME, showing good strength, or others like AMTD, or IBKR.     

Energy and Metals strengthen further, while Financials, Semis lag

April 19, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2684-6, 2662-4, 2655-6, 2636-7, 2620-1    Support
2718-20, 2724-6, 2747-50                          Resistance


LINK TO TECHNICAL WEBINAR from Thursday 4/5- https://stme.in/tBobOtxUYL

 

SPX - (2-3 Days)- Bullish- Upside likely is capped near 2748 next week, but for now, still looks early to pull the plug.  Further upside makes sense given the premature Demark counts on Daily and many intra-day charts, but one should be more selective about what to buy in the upcoming days.  The area starting at 2740-50 should serve as strong resistance at the 90 day, three month anniversary of January highs.  Near-term weakness on Thursday/Friday should be buyable for a final push up into early next week. 

SX5E- EuroSTOXX 50- Gains likely to prove minor into next week and right to underweight Europe vs US-  Minor strength for Europe, and getting above 3500 allows for fractional strength to 3575-3600.  For now, still expect this area is important and can hold.   

HSCEI- Make-or-Break after pullback-  Breakdown from trendline resistance keeps trend down and now a necessity to hold 11680, or else this results in a larger break which would violate uptrend from last May.  Important for immediate stabilization.   


Trading Longs:  URI, NOC, TWLO, XME, VEEV, SPLK, VRSK, WYNN, ROL, WIX, MPC, PLNT, DBC, FXB, NDAQ, TJX, STZ, BURL

Trading Shorts:  VNQ, XLU, AZO, EXPE, TSCO, HOG, LUV, UUP, EUO, SIG, FL, BBBY


TECHNICAL THOUGHTS


ACTION PLAN- No changes heading into Wednesday but on evidence of stalling out, might revisit

Long SPY with initial targets 270, then 274.25-275
Long DBC for commodity exposure- $16.94 with targets $17.85
Long GBPUSD with target 1.4370, 1.50
Long IYT with target 195
Long ITA with target 205.50-206
Long XLK to 67.24 up to 68.20 this week

Long GLD 125-126 adding above 127 with targets initially 129.50, and stops 125
Short VNQ with expectations of a test of 72.65 and breach which could lead to 70-  Stop at 76.70
Short XLU with targets down at 47.88-48.25, Stop at 51


Evidence of some splintering in the rally lately, as Financials and Semiconductor stocks were both negative in Wednesday's trading, and while prices still managed to close positive on the session, this kind of dropoff in participation from leading sectors is normally important to monitor after the last couple weeks of rally. Breadth has proven mildly positive in recent days, though lacking the upward thrust that would be necessary to see to have conviction of a larger move higher back to highs.  The 150 point S&P rally has not been strong enough to carry prices back to intra-day overbought levels, and breadth gauges remain below where they peaked in March, and remain negatively sloped since last October, which managed to turn in a higher high than this past January (Summation index)  Near-term, we've neared a crucial time where prices have neared trendline resistance from January highs, while counter-trend signals are close to forming on this bounce.    Given that the technical structure, along with weekly momentum remain negatively sloped from January, it looks right to sell into this move as of Friday/next Monday technically, taking a tactical approach to this upswing given the preponderance of negative technical factors.

Importantly, there are a few interesting and positive developments taking place in stocks despite Financials having lagged in recent weeks.   Energy has turned sharply higher, and followed suit to WTI Crude's continued strength.  Sector ETFs like XLE, OIH and XOP all look to still trend higher into early next week, and taking profits at current levels looks premature, technically.  Additionally, the metals trade looks to be close to starting on a more widespread basis, as Silver has gained ground on Gold lately (confidence in precious metals turning higher) while the Metals and Mining ETF (XME) has broken out of trendline support.  Given that unease remains par for the course in the Middle east right now, this very well could lead to some volatility in the upcoming couple weeks which might be blamed for causing weakness in equities, while at the same time, leading WTI Crude and Gold, Silver higher.  Overall, diversifying away from Financials and into the Metals and Energy space, (along with commodities as a whole) looks correct.  

Additional charts and thoughts below.

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OIH vs SPX-  Further strength likely to test January relative highs into next week.
Energy continues to gain ground in the short run, with yesterday's surge in WTI Crude back to new highs coinciding with XLE, OIH and XOP all showing above-average outperformance and extending higher to new weekly highs.   Relatively speaking,  the upturn in this group began back in February when it bottomed out, not unlike the extremes witnessed two years ago in February.  However, the acceleration has been most dramatic this past month with Energy showing dramatic outperformance.  Due to its weighting in SPX, this sector doesn't have much effect these days. But just in the last couple days, the push back above former highs after a TD Sell Setup was logged has helped this relative strength to continue.  Further outperformance looks likely in the short run, and XLE, OIH and XOP all look to offer above-average gains between now and next week before any short-term resistance.  Relatively, the OIH vs SPX chart is likely to test prior highs from mid-January which is the first meaningful area where this could stall out.  
 

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XME- SPDR S&P Metals and Mining ETF Breakout-   Metals and mining sector looks to be beginning a new period of acceleration after yesterday's gains successfully broke out above a key area of resistance that connected highs since mid-January.  While Gold has struggled in its attempts to breakout recently, Silver has begun to gain ground rapidly, while Aluminum has been showing stellar outperformance of late.  Technically, this area should be favored for outperformance again, as this consolidation from January looks to be giving way to strength yet again, (after strong performance last year) and should lead XME back to test and exceed January highs.  An upcoming decline in the US Dollar index should coincide with this strength, and could serve to help the commodity trade in general.  

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Silver gaining ground rapidly on Gold, eliminating divergence-  The ratio of Gold to Silver has started to drop off rapidly in the last couple weeks given Silvers outperformance, which had been sorely lacking in recent months.  Gold's attempts to breakout thus far have been thwarted, yet the metal remains in striking distance for a larger move higher.  Yet the strength in Silver is encouraging to think the precious metals trade can in fact work, as prior efforts showed the divergence between the two that made investors suspect, rightly so, that gains might not occur right away.  Bottom line,, the start of Silver turning up should help to gain conviction that the precious metals can begin to strengthen and in turn, the metals and mining stocks.   

S&P looks to have Upside to 2730-50 into end of week before Reversal

April 18, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2684-6, 2662-4, 2655-6, 2636-7, 2620-1    Support
2718-20, 2724-6, 2747-50                          Resistance


LINK TO TECHNICAL WEBINAR from Thursday 4/5- https://stme.in/tBobOtxUYL

 

SPX - (2-3 Days)- Bullish- S&P now getting closer to areas where a stallout is possible, after 7 of the last 10 UP days.  Until evidence of exhaustion and/or trend deterioration occurs, the trend remains bullish, and it's thought that 2740-50 is possible into 4/20, 4/23 before reversing lower.. 

SX5E- EuroSTOXX 50- Make-or-break for Europe on the upside-  Can't be broken - 3500 without expecting additional gains to near 3575-3600.  For now, still expect this area is important and can hold.   

HSCEI- Make-or-Break after pullback-  Breakdown from trendline resistance keeps trend down and now a necessity to hold 11680, or else this results in a larger break which would violate uptrend from last May.  Important for immediate stabilization.   

Trading Longs:  VEEV, SPLK, VRSK, WYNN, ROL, WIX, MPC, PLNT, DBC, FXB, NDAQ, TJX, STZ, BURL

Trading Shorts:  VNQ, XLU, AZO, EXPE, TSCO, HOG, LUV, UUP, EUO, SIG, FL, BBBY


TECHNICAL THOUGHTS


ACTION PLAN- No changes heading into Wednesday but on evidence of stalling out, might revisit

Long SPY with initial targets 270, then 274.25-275
Long DBC for commodity exposure- $16.94 with targets $17.85
Long GBPUSD with target 1.4370, 1.50
Long IYT with target 195
Long ITA with target 205.50-206
Long XLK to 67.24 up to 68.20 this week

Long GLD 125-126 adding above 127 with targets initially 129.50, and stops 125
Short VNQ with expectations of a test of 72.65 and breach which could lead to 70-  Stop at 76.70
Short XLU with targets down at 47.88-48.25, Stop at 51


Ongoing bullish uptrend and follow-through still ongoing, but still lackluster price action out of Financials which is a concern unless we can see some signs of Financials starting to catch up with Technology into end of week.  S&P is now nearing what i believe is important price and time based resistance to this move which could come about into the time from 4/20-28, and key area to focus on will lie just above current levels into Friday and/or the following Monday of next week at/near 2740-50, so its right to play for this area in price and/or time and look to sell into gains by end of week.  Trends are bullish, but getting overdone and we're now seeing intra-day charts growing closer to showing signs of Demark based exhaustion.  Daily charts however, which take precedence for the larger trends, remain bullish and early to fade given the lack of weakness

Technology has continued to show decent strength and the NASDAQ has broken out relatively vs SPX , so given the percentage of Tech representation in the SPX, should keep any downturn to a minimum for at least another 3-5 trading days.   Outside of the Tech space, the key area of focus lies with the Gold and Silver miners as Precious metals have begun to show better than average relative strength of late and the Middle East uncertainty coupled with weakness in the Dollar should bode well for gains into May in metals and Metals stocks.  Gold looks attractive for outperformance and Gold miners are an area to overweight heading into late April/May, thinking that this group should shine.  

Additional charts and thoughts below.

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S&P has now extended up to the first area of interest, near 2710, and intra-day charts are beginning to line up to suggest the possibility of this stalling out in the short run.  (However, most 60, 120, 180 and 240 minute charts along with daily still pinpoint 4/20-7 as producing a change in trend.   Movement that breaks this 3-day uptrend should hold 2660 if this rally is still intact, and then turn up further towards 2730-50.  For longs, the first area of downside support lies at 2684-5 and then below at 2662-4.  S&P cannot break 2660 without thinking a larger pullback could get underway.   For now, it's still right to be bullish going into Wednesday unless this trendline is violated, but one should use the first break as a chance to buy dips into end of week, as the larger area of price and time resistance still looks to be higher.    
 

NASDAQ Composite has now broken back up above important downtrend line resistance vs the SPX which is thought to be bullish for Biotech and Technology shares, and still looks to have upside in the days to come.  This bodes well for our thinking that Technology's bounce could help stocks hold up without much pressure into next week.   For now, any minor pullbacks should create opportunities to favor NASDAQ for outperformance into the end of April before any peak.  

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Gold and gold stocks should still be favored in the days/weeks ahead as they've been trading quite resiliently despite what's thought to be the end of the current Syria strike.   Given the recent downward pressure on the Dollar and Rates still churning over the last month, Gold and precious metals remain attractive and GDX is an ETF which offers attractive long exposure to the Gold miners group.  Further gains look likely in GDX, which should manage to exceed $24.25 in the next couple weeks.  One should consider positioning long in Gold mining shares.. and momentum, trend support this view.  

Transports, Aerospace/Defense both breaking out near-term

April 17, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2662-4, 2655-6, 2636-7, 2620-1,  2606-8, 2584-7     Support
2708-10, 2724-6, 2747-50                                          Resistance


LINK TO TECHNICAL WEBINAR from Thursday 4/5- https://stme.in/tBobOtxUYL

 

SPX - (2-3 Days)- Bullish- S&P finally managed to close up above the highs of the last three weeks, which should help prices gain more ground into end of week/early next before finding strong resistance, based on time and price.  Stay long S&P for a move to 2720-50 while being on alert for any failure which breaks the April trend and undercuts 2644 which would be a larger negative.  For now, more strength likely first

SX5E- EuroSTOXX 50Mildly Bearish as evidence of SX5E peaking out looks to be happening.  Upside should be limited to 3496 while any move under 3400 jumpstarts the decline back to 3250.   Prefer Europe short to US.   Fractional upside possible, but should underperform the US on this rise and face resistance at 3400-3500.    

HSCEI- Make-or-Break after pullback-  Breakdown from trendline resistance keeps trend down and now a necessity to hold 11680, or else this results in a larger break which would violate uptrend from last May.  Important for immediate stabilization.   

Trading Longs:  VRSK, WYNN, ROL, WIX, MPC, CAR, PLNT, DBC, FXB, NDAQ, TJX, STZ, BURL

Trading Shorts:  VNQ, XLU, AZO, EXPE, TSCO, HOG, LUV, UUP, EUO, SIG, FL, BBBY


TECHNICAL THOUGHTS


ACTION PLAN- 

Long SPY with initial targets 270, then 274.25-275
Long DBC for commodity exposure- $16.94 with targets $17.85
Long GBPUSD with target 1.4370, 1.50
Long IYT with target 195
Long ITA with target 205.50-206
Long XLK to 67.24 up to 68.20 this week

Long GLD 125-126 adding above 127 with targets initially 129.50, and stops 125
Short VNQ with expectations of a test of 72.65 and breach which could lead to 70-  Stop at 76.70
Short XLU with targets down at 47.88-48.25, Stop at 51


A decent follow-through price-wise in equities Monday after the Syria targeting proved quick and potentially complete, which was viewed by markets as a positive and not one which would lead to complications.  SPX managed to exceed the highs of the last three weeks which had served as resistance since late March.  Whether this indeed is "Mission Accomplished" or not remains to be seen, but the aftermath very well could prove volatile for Syria over the next couple months, and something the market might be overlooking.  Stocks and bond yields have been pressing higher, while the Dollar has turned down over the last few days.

For now, stock trends remain positive, though lackluster in the short run.  Volume remains muted as yesterday produced the lightest trading day of the year thus far and breadth has been abnormally flat for the bounce starting from early April.  While price action, momentum and breadth have turned up fractionally, we haven't seen the price thrust that would help to add conviction to this bounce.   After a 21 calendar day decline from 3/12/18, we've had 14 days higher, but yet have barely regained 50% of the prior move.  An additional push up seems likely given the rebound in Industrials and Technology, while the Banks performance remains something of concern.  For now, we'll emphasize the positive, as given a lack of price weakness and trend deterioration, there still seems to be upside in this move in the short run.

Two sub-sectors stood out in showing above-average strength in Monday's session that are worth noting:  Transportation stocks and Aerospace and Defense, both important parts of Industrials which managed to bounce  more than 1% in trading.  As charts below will show, both sub-sectors look to have made meaningful near-term signs of strength that can carry these groups higher, and should be overweighted this week.  


Additional charts and thoughts below.

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ITA, the Aerospace & Defense ETF, managed to close up above the highs from early April, reaching the highest levels since mid-March yesterday.  This occurred on strength from names like TDG, MOG, HRS, ATRO, LMT, RTN, NOC.  While this group has lagged since mid-February, yesterday's gains should help to fuel further acceleration in this group, and it's right to be long and add in the days ahead, expecting further near-term strength.   Names like BA, GD, NOC, UTX rose less than 1% yesterday and might be considered better risk/rewards to participate than the leaders like TXT, TDG, HRS and others.   Overall, given GE's recent woes within Industrials, this group looks to show some solid outperformance and could be favored within this Sector and overweighted near-term.
 

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DJ Transportation Avg has broken out of the downtrend which has kept this group largely lower since peaking in late January, not dissimilar from the broader market.  Yet yesterday's move gives some hope for the "Trannies" and should spark some outperformance, particularly in the Rail stocks, while the Airlines might underperform relatively speaking given recent turbulence.   Bottom line, this breakout yesterday has helped the Average to regain its 50% level of the decline from January while likely producing further strength which should help this reach 10800-900 in the short run.   A welcome boost to Industrials which had been suffering of late and Transports should be favored.  

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The Dollar looks to be turning back lower, as seen in the Bloomberg Dollar index which fell sufficiently to violate the lows of an ongoing consolidation pattern which had been ongoing since late February.  Given its lower percentage ratio vs the Euro than the DXY, this index should be trusted to help view a purer form of the Dollar in trading.   Sharp gains in Pound Sterling have taken place recently as the more hawkish BOE has diverged from the more dovish ECB lately.  But Euro also managed to turn higher yesterday in a fashion that should lead higher, and staying long Pound and Euro seems correct, while continuing to fade the Dollar.   Yesteday's stalling out in the Dollar vs Yen also was suggestive of the Yen starting to turn back higher vs USD, and bodes well for this weak Dollar thesis.  
 

Treasury Yields and stocks both showing near-term breakouts

April 13, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2624-6, 2606-8, 2584-7, 2552-4, 2532-4     Support
2659-61, 2676-9, 2688-9, 2708-10               Resistance


LINK TO TECHNICAL WEBINAR from Thursday 4/5- https://stme.in/tBobOtxUYL

 

SPX - (2-3 Days)- Bullish- Thursday's lift to the highs of the recent range shows no signs of slowing this time around, and it's thought that higher prices are likely into next week.  Initially a move over 2700 is likely before this comes to an end with ideal targets being near 2750-60.

SX5E- EuroSTOXX 50- Fractional upside possible, but should underperform the US on this rise and face resistance at 3400-3500.    

HSCEI- Rally up to trendline resistance and move above 12500 would result in acceleration higher.  Make-or-break on a 1-2 day basis-  
  
Trading Longs:  WYNN, VEEV, ROL, WIX, MPC, CAR, PLNT, DBC, FXB, NDAQ, SQ, TWTR, AKAM, TJX, STZ

Trading Shorts:  VNQ, XLU, AZO, EXPE, TSCO, HOG, LUV, UUP, EUO, SIG, SLB, FL, BBBY


TECHNICAL THOUGHTS


ACTION PLAN- 

Long SPY with initial targets 267-8, with over leading to 275.
Long DBC for commodity exposure- $16.94 with targets $17.85
Long GBPUSD with targets1.4370, 1.50
Long XLK to 67.24 up to 68.20 in the next 2-3 days
Long XRT with target 47
Long XME with target 37

Long GLD 125-126 adding above 127 with targets initially 129.50, and stops 125
Short VNQ with expectations of a test of 72.65 and breach which could lead to 70
Short XLU with targets down at 47.88-48.25


Thursday's rally helped prices get back to the highs of the consolidation, and in the case of S&P and NASDAQ, above highs from earlier this week on a close, which bodes well for further upside into end of week/early next week before any peak.   Given that Financials and Technology both led in trading and made meaningful "mini" breakouts of the prior range, it's thought that these groups combined have a >40% weighting in SPX,and should lead at least marginally higher.  Bottom line, while its been right to fade movement to the highs of this consolidation in recent weeks, this time around shows signs of being able to extend, and long positions look correct technically, holding off on selling until prices get back up above 2700.  

The Dollar bounced yesterday while Gold sold off sharply as yet another breakout attempt might have been put on hold.  Key developments center on the US 10-Year Treasury note yield, which exceeded 2.81%, paving the way for a move up to 2.95%-3%.  So a bond selloff looks to be underway and coincidentally, the ranges in both bond yields and Equities look to have been broken out of to the upside Thursday.  Bottom line, it looks right to trust this move for now, and sell Treasuries /buy TBT for a move higher in the days/weeks ahead.   German bund yields look close to also turning up and  could begin to narrow the spread between Treasuries and Bunds.  Upon hitting spread widths of 2.35-7, its right to sell Bunds vs Treasuries, expecting this to narrow.

Given the push up in yields, most yield sensitive stocks should underperform and its right to avoid and/or short XLU and VNQ and many of the constituent stocks within these ETFs.  Both XLU and VNQ broke down under support while the relative charts to SPX also began to weaken.  


Additional charts and thoughts below.

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The QQQ, or NASDAQ 100 ETF, looks to have made a solid move back over the highs of the recent consolidation and should lead higher into early next week before any peak in price.  Technical targets lie near $164 initially and then 167.

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Treasury yields look to have achieved their own breakout yesterday, similar to what happened to equities in moving above the highs of the recent consolidation..  Movement up to near 2.90% looks possible and could be used as a chance to sell Treasuries, sell TLT, and/or buy TBT given a good likelihood of further yield gains in the days ahead.  
 

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The REITS along with Utiltiies look to be near-term sources of weakness given the Treasury yield breakout yesterday and the bond selloff likely coincides with yield sensitive stocks pulling back in the days ahead, showing underperformance vs the broader market.  Relative charts of VNQ to SPX have violated uptrends from February as of yesterday's close, and this group should be avoided and/or considered as a possible area for technical shorts in the next 1-2 weeks as yields rise. 

Rally helps to gain some conviction as Tech turns higher

April 11, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2635-8, 2622-4, 2606-8, 2584-7, 2552-4, 2532-4     Support
2666, 2676-9, 2688-9, 2708-10                                 Resistance


LINK TO TECHNICAL WEBINAR from Thursday 4/5- https://stme.in/tBobOtxUYL

 

SPX - (2-3 Days)- Bullish- Meaningful progress Tuesday, but Wed/Thursday could be more difficult until prices get over 2672-7, which is the area of upside importance.  Remains correct to bet on an upside breakout of this recent consolidation and prices aren't yet at resistance, but expect the next few days could bring about some resolution for both Technology and Financials

SX5E- EuroSTOXX 50Mildly bullish for another 2-3 days of gains, but stallout looks likely as prices near 3450-75 into end of week/early next.  Bearish SX5E vs SPX and expect European weakness relatively speaking.   

HSCEI- Bullish-  Additional gains look likely up to 12811, near the 50% retracement and March highs.   US Dollar downturn could serve to help prices stabilize now that HSCEI has reached February lows.   Long here with upside near 12811 initially and over that near 13114.    

  
Trading Longs:  ORBK, ROL, WIX, MPC, SHOP, DDS, CAR, DBC, FXB, FXE, NDAQ, RHT, PM, SQ, TWTR, AKAM, FSLR, GOOS, FIS, TJX, STZ, SHAK

Trading Shorts:  UUP, EUO, SIG, CRK, SLB, PCAR, FL, BBBY


TECHNICAL THOUGHTS


ACTION PLAN- 

Long SPY 261 with initial targets 267-8, with over leading to 275.  Stops under 258.
Long DBC for commodity exposure- $16.94 with targets $17.85
Long GBPUSD (1.4123) for move to 1.4370, 1.50, and Long  EURUSD 1.2324 for a rally up to 1.265
Long XRT 43.50-44.50 for a move in the weeks ahead up to 47
Long XME 33.50 to 34.50 for a move to 37

Long XLV 81.50 or better with targets near 85
Long XLP 52.83 up to 54.50
Long GLD 125-126 ad
ding above 127 with targets initially 129.50, and stops 125


Tuesday's rally helped to add some conviction to the idea that stocks can move higher in the short run, and managed to successfully close up near the highs of the range, vs failing and closing lower like the prior two days.   This bodes well for groups like Semiconductors within Technology and Financials to now make their own push higher and break out of key resistance.  As noted in recent reports, both breadth and momentum has begun to turn higher in recent days, and we've seen some evidence of Technology making its first meaningful turn back higher relatively speaking since mid-March peaks which looks important.  Overall, while some work needs to be done with regards to resolving this consolidation for S&P, technically yesterday's rally helped many of the charts start to look just a little bit better in the short run.   Much work remains to be done to have any sort of hope that this will turn out to be more than just a temporary rally, and the longer-term momentum and trend at this point remain under pressure from mid-March highs.  However, given the hit-and-run mentality that's a necessity given this new era of volatility, it still looks right to play for upside, and all eyes will be in Financials, Tech and upside resistance in SPX over the next few days.

One of the more interesting developments in the last few days concerns the sudden surge in Energy which saw ETFs like XLE, OIH and XOP all make meaningful short-term breakouts after nearly two months of sideways consolidation where Eenrgy stocks had all but ignored the move in WTI Crude.   The ability in WTI to bottom out late last week and its strong rebound helped XLE hit new weekly highs, and quite a few stocks showed meaningful strength, such as COP, APC, MPC, HP, and some of this year's best performers are still the ones to own in the short run.  Bottom line, this sector's bounce doesn't look complete, and right to selectively buy.

Additional charts and thoughts below.

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Technology looks to be turning back higher, as relative charts of Tech/SPX have broken back up above downtrend that have guided these relative charts down since mid-March.  This looks to be an important near-term positive that can allow for additional upside over the next week.   While SOX has some work to do in breaking out above its own downtrend, this sector should be favored for a bounce in the days/week ahead. .  

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Financials have formed a similar pattern as S&P n the short run, and this consolidation is likely to allow for at least a minor breakout and move higher into mid-to-late April before any peak.  Key areas of importance lie near $28 and the group should be favored for a breakout above this "Red line" highlighted above, and when this happens, XLF is likely to show some near-term acceleration higher.   This Hourly chart shows the area of importance that should be watched carefully given the XLF's exposure within SPX.  
 

Energy's breakout bodes well for some additional short-term strength out of this sector, as many stocks have begun to follow the bounce in Crude oil higher.  Upside targets for XLE lie near $72 up to $72.75 which would be the first real area to consider lightening up into this rally by end of week/early next week.   Overall, after many stocks showed Demark exhaustion along with ETFs  in February, there wasn't much upside acceleration until the last week, when Energy finally began to rally to follow the move in WTI Crude. 

Despite ongoing unrest, stocks still largely resilient and range-bound

April 12, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2624-6, 2606-8, 2584-7, 2552-4, 2532-4     Support
2659-61, 2676-9, 2688-9, 2708-10               Resistance


LINK TO TECHNICAL WEBINAR from Thursday 4/5- https://stme.in/tBobOtxUYL
Note-  I will be attending the CMT Symposium in NYC today, 4/12, so there will be no Weekly call

 

SPX - (2-3 Days)- Bullish- Still difficult to make the minor decline on Wednesday out to be bearish and something that leads S&P lower.  The trend of rising lows from 4/2-4 should still point to S&P moving higher to test and exceed recent highs at 2666-70.  UNDER 2605 would negate this and warrant hedging

SX5E- EuroSTOXX 50- Neutral/mildly bearish-   Wednesday's stalling out near the highs of the recent range wasn't that compelling for the bullish case, and one can make the case for some minor weakness.   In the event, prices rise back above 3450, this would certainly change things for the better.   Until then, Europe remains a difficult area to be long, particularly relative to the US. 

HSCEI- Make-or-break on a 1-2 day basis-  HSCEI has risen to 12420 which hits a trendline from January highs.  Above would be quite constructive, driving prices up to 12821, while there could easily be some backing and filling after this recent rise.  Overall, low conviction here,  but above 12420 on a close would turn the near-term trend back to bullish.    

  
Trading Longs:  ORBK, ROL, WIX, MPC, SHOP, DDS, CAR, DBC, FXB, FXE, NDAQ, SQ, TWTR, AKAM, FSLR, GOOS, FIS, TJX, STZ, SHAK

Trading Shorts:  AZO, EXPE, TSCO, HOG, LUV, AAL, MGM, UUP, EUO, SIG, CRK, SLB, PCAR, FL, BBBY


TECHNICAL THOUGHTS


ACTION PLAN- 

Long SPY 261 with initial targets 267-8, with over leading to 275.  Stops under 258.
Long DBC for commodity exposure- $16.94 with targets $17.85
Long GBPUSD (1.4123) for move to 1.4370, 1.50, and Long  EURUSD 1.2324 for a rally up to 1.265
Long XRT 43.50-44.50 for a move in the weeks ahead up to 47
Long XME 33.50 to 34.50 for a move to 37

Long XLV 81.50 or better with targets near 85
Long XLP 52.83 up to 54.50
Long GLD 125-126 ad
ding above 127 with targets initially 129.50, and stops 125


Yet again we seem to have entered a time when quite a few "distractions" are happening at once, and yet stocks seem largely resilient to it all.  The trade war possibilities might have diminished to some extent vs what was initially expected, but now geopolitical strife seems to have reared its ugly head yet again, and Trump's comments on Syria seem to have coincided with weakness in equities on Wednesday, while bonds rallied and gold threatened a larger breakout of 1365.  The Dollar's decline seems to have found at least temporary support in trading meanwhile, while Crude oil broke out to the highest levels since 2014.   Commodities continue to show above-average strength, and this looks to continue in the days/weeks ahead. Bottom line though, stock indices remain at levels seen back in late March, and have not sold off substantially.

Overall, the fact that fear looks to be on the rise, while indices still haven't broken down under February lows seems to be a positive in the bigger scheme of things for now.  Breadth and momentum have begun to slowly rise, while groups like Technology have been starting to strengthen again along with Energy and Commodity stocks.  Treasuries have gone exactly the opposite as what many suspected, but the drop in yields would need to violate 2.71% to think a larger bond rally is upon us.  Interestingly enough, the bond market has been roughly just as range-bound as Equity indices have been since late March.  Bottom line, insufficient weakness has been seen to turn negative on stocks short-term, and it remains correct to bet on further gains into mid-to-late April, technically speaking.  

Additional charts and thoughts below.

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This S&P chart shows the degree of choppiness that's transpired of late, and while prices are unchanged since late March, we've experienced a ton of intra-day volatility, as well as overnight/premarket swings in Futures.  The trend from early April though shows higher and higher lows being formed, with a steady level of highs at similar peaks from 2666-2778 since the March 27 peak.  Until there is evidence of more meaningful drawdowns, it remains correct to bet on S&P rallying back to test the upside of this range yet again, which happened briefly on Wednesday before the afternoon slide, which happened again yesterday and has been prevalent the last 3 of 4 trading sessions.  However, charts still look constructive on an hourly basis while momentum is on the upswing.  Until that changes, we'll play for a move back to test and exceed the highs of this range. 

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Airlines have sold off sufficiently to test a very important area of support for the group and cannot afford to violate 111 in the XAL without causing some additional price damage and further selloffs into late April.   Stocks like AAL and LUV look to have already broken down, while others are attempting to hold support after the vicious decline from mid-March.   Yet the group has already broken down under a longer-term relative trendline vs the SPX since 2008/9 , making this group one to consider fading strength and avoiding on an intermediate-term basis, Crude's rally not-withstanding.  Overall, the next few days will shed some clues as to whether the Airlines can stabilize, or whether the group breaks support and is a drag on the Transports, which have largely been churning just as much as the broader market lately.  Stay tuned.   
 

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The 2's/10's curve is yet again flirting with hitting new monthly lows, as the curve flattened out once again after the FOMC indicated in its minutes that the pace of rate hikes could be accelerating.  While Economic data certainly hasn't been cooperating of late, whiffing vs expectations largely since December 2017, the FOMC has continued to suggest that their inflation risks are NOT tilted to the downside and will proceed with further hikes.  This curve very well could turn inverted if the Fed continues to hike another three times, and it's worth watching how this curve plays out in the months ahead. 

Commodity strength/USD weakness likely a trend for April

April 10, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2605-6, 2584-7, 2552-4, 2532-4       Support
2660-2, 2677-9, 2683-5                    Resistance


LINK TO TECHNICAL WEBINAR from Thursday 4/5- https://stme.in/tBobOtxUYL

 

SPX - (2-3 Days)- Bullish-   Monday's sharp reversal into the close failed to take prices negative, so technically it still looks right to have a positive stance and risk down to 2600 for a move up to 2672 initially, with over leading to 2750-60.     

SX5E- EuroSTOXX 50- Stallout possible at resistance- Up near important near-term levels  3400 to 3450.   Upside could be contained until prices successfully can exceed the highs of this recent range-  Bearish SX5E vs SPX and expect European weakness relatively speaking.   

HSCEI- Bullish-  US Dollar downturn could serve to help prices stabilize now that HSCEI has reached February lows.   Long here with upside near 12800 initially and over that near 13114.    

  
Trading Longs:  DBC, FXB, FXE, NDAQ, RHT, PM, SQ, TWTR, AKAM, FSLR, BZUN, GOOS, FIS, TJX, STZ, SHAK

Trading Shorts:  UUP, EUO, SIG, CRK, SLB, PCAR, FL, BBBY


TECHNICAL THOUGHTS


ACTION PLAN- 

Long SPY 261 with initial targets 267-8, with over leading to 275.  Stops under 258.
Long DBC for commodity exposure- $16.94 with targets $17.85
Long GBPUSD (1.4123) for move to 1.4370, 1.50, and Long  EURUSD 1.2324 for a rally up to 1.265
Long XRT 43.50-44.50 for a move in the weeks ahead up to 47
Long XME 33.50 to 34.50 for a move to 37

Long XLV 81.50 or better with targets near 85
Long XLP 52.83 up to 54.50
Long GLD 125-126 ad
ding above 127 with targets initially 129.50, and stops 125


Monday's late selloff isn't sufficient to expect S&P to move down to test recent lows, and if anything, it's still right to favor a rally higher in the days ahead.   Volume and breadth turned negative late in the session, but prices still eked out gains, and the act of having stabilized and moving higher Monday could help indices continue on that path into mid-to-late April.  However, given this new age of volatility, it's right to utilize stops near 2605, as hourly closes under that level would in fact postpone the rally and suggest a likely retest and potential break of 2584 and February lows.   At present, all of the positive factors mentioned in the weekly report as to why equities could stabilize and turn higher certainly were not erased by a bit of late day selling.  Both Technology and Financials were up nearly 2% at mid-day, and both sectors seem to have sold off sufficiently from mid-March which took prices down to meaningful trendline support.  Thus, it's easy to make the case for buying in small amounts here from a risk/reward perspective, with tight stops as upcoming stabilization and rallies seem more likely technically than a continued selloff (at least over the next few weeks)

Outside of equities, we saw a sharp reversal in the US Dollar Monday against many developed and emerging market currencies while commodities staged a moderate comeback.  Heading into Tuesday, it looks right to favor Pound Sterling and Euro to continue on Monday's path and rally, while the Dollar index very well could weaken in the days/weeks ahead as DXY looks to be in a seasonal period of weakness while Technically has begun to turn lower yet again after just a brief shakeout late last week.   Grains rallied sharply while WTI Crude bounced off meaningful trendline support and Gold also managed to push back higher above 1340.  Long positions in commodities in the days ahead look to be a higher conviction trade than long equities, but at present, we'll attempt to stay long both.  


Additional charts and thoughts below.

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Despite the late day selloff, equities maintained their earlier consolidation and still look likely to break out of this recent range to the upside over the next week, as S&P reaches highs near 2672 and exceeds that on its way to 2750-60.   Breadth finished negative in trading on Monday and the late weakness likely shook out many bulls who had attempted to buy during Monday's session.  Overall, from a risk/reward perspective, Monday's close looks ideal to buy dips with upside targets initially around 60 points higher, while putting stops near 2600, as under that level should lead to a test and possible break of 2584.  At present, there's insufficient technical proof to think any sort of decline is underway, based on Monday's late selling ,and a bullish stance with tight stops still looks to be correct.  

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USD weakness could continue-  BLOOMBERG DOLLAR INDEX-  BBDXY-  The original thoughts we shared about the Dollar turning back lower were tested late last week, but as of Monday look to be coming to fruition.  GBPUSD broke out to multi-day highs, while EURUSD also staged a decent about-face after threatening a breakdown last week.   We've also begun to see USDJPY pulling back a bit after breaking out of a downtrend from mid-January highs.   Overall, the move higher in Pound and Euro should continue in the days/weeks ahead, and right to bet on higher prices, while the DXY could fall back down to new multi-week lows, violating a 10-week consolidation trend in the process.   Movement back under 1116 in the Bloomberg Dollar index would suggest a likely sharp decline to near 1100, and fits in with seasonal trends for the Dollar in the month of April.
 

unnamed-20.gif

Commodities bullish-  The minor triangle pattern begun in the Powershares DB Commodity index tracking fund looks to have been exceeded as of Monday's close, and bodes well for further commodity strength in the days/weeks ahead.  Grains, energy and metals all participated Monday, and being long commodities through the DBC etf makes sense with 16.94 entry and targets up near 17.85.   In the weeks ahead, further Dollar weakness and commodity strength looks likely. 

4/9 Overnight developments in price, Charts of interest

Markets have bounced off late Friday lows.  And expect that this stabilization effort very well can start to lead stocks higher in the days ahead.

Key will be 2640 on upside  (initially early am Premkt highs 2628)   then 2672.  On downside.. important not to breach 2615 as this would lead to a retest of Friday’s 2584.

Breaches of 2584 would be problematic to the near-term bullish case for likely 24-48 hours and result in a quick retest/breach of Feb lows.   For now.. the combination of near-term oversold conditions, positive hourly momentum divergence,  HIGH TRIN readings, an uptick in fear all could be important in helping prices to hold Feb lows for now and turn back higher

Premkt movers in AVXS, RGNC, GERN, SGMO, BLUE, LUK, PTN, CENX, PCRX, AA, MRK, GM, RIOT all higher..  while on downside-   MNLO, ESNT, YNDX, RDN, MTG, MTL, MBT

 

Bounce off last Fridays lows has stalled out a bit near the lows from late Thursday  and 2620-4 area has importance.  OVER should lead to 2640..

And over that would be quite positive for a move up to 2672   -  On the downside.  UNDER 2613 would lead to 2584… and important to hold Friday’s lows to have a chance at rallying

image002.jpg

DAX-  Quite a bit weaker than US.. we see German DAX still well over 1300 points lower from late January , still 10% off its highs.   The bounce today thus far has stalled.. and closing up by the close would help this to extend, with targets up near 12662.     For now this pattern is a work in progress and most of Europe looks similar.   One would utilize dips to buy near 12k

image006.jpg

 

CONS STAPLES v SPX-   Another chart to supplement the early morning report.. we see STAPLES ON WEEKLY CHARTS having exceeded key areas of importance and could drive further outperformance in this sector in the weeks ahead.   The break of the long-term downtrend from 2016 would be even more bullish.  

Tarrifying! Futures give up Half Wednesday's gains on Trump tariff Re-raise

April 6, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2615-6, 2597-9, 2584-7, 2552-4       Support
2660-2, 2677-9, 2683-5                    Resistance


LINK TO TECHNICAL WEBINAR from Thursday 4/5- https://stme.in/tBobOtxUYL

 

SPX - (2-3 Days)- Bearish-  Post Market futures breakdown on Trump's Tariff increase proposal, and Futures at the time of this writing have given up 50% of prior break and 2615-6 important while under would allow for a likely full retrace of Wednesday's gains. 

SX5E- EuroSTOXX 50- Bearish into next week-  Upside limited after rally up to levels hit back in mid-March.  Structurally not much has changed, but similar to US, Europe now would benefit from pulling back, and 3452-60 area should be important and not give way to a huge rally just yet.   

HSCEI- Mildly Bearish-  No change as index closed 4/5-  Downside seems limited, but with a chance of pullback to 11425 while over 12400 would allow for rally.  Trend remains bearish but prices have pulled back to February lows where support might help prices stabilize in the days ahead. 

  
Trading Longs:  PM, PANW, XME, XRT, AEO, CAR, CNC, CELG, STZ, SHAK, HRTX, GTXI, AAN

Trading Shorts:  SIG, DO, CRK, SLB, SYY, BBBY, FB, DB, XLI, EZU, FEZ


TECHNICAL THOUGHTS


ACTION PLAN- 

Short SPY on any hourly close under 264 for a move down near 259-260 at a minimum and potentially a quick test of 255
Long XRT 43.50-44.50 for a move in the weeks ahead up to 47
Long XME 33.50 to 34.50 for a move to 37

Long XLV 81.50 or better with targets near 85
Long XLP 52.83 up to 54.50
Long GLD 125-126 ad
ding above 127 with targets initially 129.50, and stops 125


TARRIFYING!!   Well, futures have now dropped 1.4% following Trump's tariff Re-raise to 100 billion post market close Thursday, sending futures down to retrace about half of the gains made from Wednesday's lows.   Unless immediately recouped, this would turn the near-term bearish, suggesting an above-average chance of a possible full retest of lows into early next week (Mon/Tuesday) before our rebound can continue.  Key levels for those looking to buy dips lie at 2615-6 in June futures, but under would cast doubt that Friday can recover right away, regardless of NFP numbers.  Overall, this volatility looks here to stay

Yesterday managed to churn modestly higher, albeit with several pullback attempts which all failed. Breadth increased into the close to near 3/1 from early 2/1, and despite some consolidation after early gains, there wasn't much heading into the bell to suggest it was right to abandon a long stance.   However, as discussed in yesterday's morning reports, after a 1000 point gain in the DJIA and 100 point S&P gain since Wednesday's lows, prices had neared overbought territory on hourly charts, while momentum was negatively sloped on daily and weekly.   Bottom line, a technically bullish move on Wednesday to break out above the downtrend from mid-March and breadth and momentum had improved.  Yet, a bit too much too soon, and pullbacks into early next week should offer better buying opportunities. 

Outside of Equities, we've seen both the Dollar and bond yields turn higher in the last few days, and what looks to be a meaningful breakout in the Dollar vs the Yen, along with breakdowns in GBPUSD and EURUSD, which ran counter to our thinking of how April might play out.  It's proper to keep stops tight on these, and Thursday's close should have stopped out Euro and Pound Sterling longs.   US 10-YR Yields, meanwhile look to be close to reversing course vs Bund yields after widening out substantially in recent weeks, and Bunds are very close to resistance to sell, thinking yields begin to rise at a quicker pace than TNX, and might have more near-term upside over the next couple months, while TNX likely is capped near 3.00% (which would be the first real technical and psychological target on a yield move over 2.92%) 

Additional charts and thoughts below.

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The post close reversal back lower managed to violate the trendline which had just been exceeded as of Thursday's close.   While failure to recoup this pullback would be a negative heading into Friday, the gains in breadth and momentum we've seen over the last few days are encouraging for the bulls in April, and along with Seasonality positives, dips into early next week should be used to buy weakness, thinking the POTUS rhetoric yet again will prove short-lived and simply could be a negotiating ploy.   2615-6 is important.  Under raises the odds of a complete retest.
 

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XME- Metals and Mining ETF- BULLISH-  Metals and Mining is another group which looks to be trying to bottom out, and yesterday's gains managed to clear the highs of the last week after bottoming right near former lows.  This is bullish for this group, and rallies in XME look likely with initial targets near $37.  One should consider using any Friday/Monday weakness to buy XME

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RETAILERS bullish-  Look to buy selectively and add on weakness-  Retailing took a meaningful jump yesterday, breaking the trend since January, and quite a few stocks in this sector are beginning to look quite attractive technically.  LULU, FIVE, TLRD, TJX, KSS, M, DG, URBN all look attractive here technically, and if the post market Futures dump erases some from these into early next week, many should be good risk rewards to consider buying dips.  XRT shown above, should make it to the high $40s, so dips here should be considered in the coming days.

Snapback rally encouraging, but work needs to be done

April 5, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2618-21, 2597-9, 2584-7       Support
2660-2, 2677-9, 2683-5         Resistance


LINK TO TECHNICAL WEBINAR from Thursday 3/29- https://stme.in/0aEXIgQYR

 

SPX - (2-3 Days)- Mildly bullish, but looking to sell into strength near 2660 Thursday/Friday, expecting to have a chance over next week to buy dips after yesterday's strong surge. Still tough to rule out a complete retrace of the sharp move from Wednesday, but feel market overall is beginning a bottoming process. 

SX5E- EuroSTOXX 50- No change-  Neutral-  Very choppy overlapping pattern since mid-February and difficult to get too enamored with SX5E until/unless prices get back over 3450.  Most of the near-term swings over the last few weeks are still largely inconclusive and trendless, but SX5E still quite a bit weaker than the S&P, so remains a laggard and one to underweight via EZU.  Buy SX5E near 3260 while looking to sell 3400-3450.  

HSCEI- Mildly Bearish-  Downside seems limited, but with a chance of pullback to 11425 while over 12400 would allow for rally.  Trend remains bearish but prices have pulled back to February lows where support might help prices stabilize in the days ahead. 

  
Trading Longs:  PM, PANW, AEO, CAR, CNC, CELG, STZ, SHAK, HRTX, GTXI, AAN, MU, STX, FIVE, VICR

Trading Shorts:  SIG, DO, CRK, SLB, SYY, BBBY, FB, DB, XLI, EZU, FEZ


TECHNICAL THOUGHTS


ACTION PLAN- 

Long SPY up to 265-  Above 270 look to Short SPY 273 for a move back to 255  
Long XLV 81.50 or better with targets near 85
Long XLP 52.83 up to 54.50
Long GBPUSD 1.408 with stops 1.40 and target 1.45
Long GLD 125-126 ad
ding above 127 with targets initially 129.50, and stops 125


Yesterday's shakeout keeps the trend near-term bullish, but now approaching the first meaningful upside target near 2660 and hourly momentum has gotten overbought given the 85 handle move in S&P from early lows to over 2640.. while Daily and weekly momentum along with the trend from mid-March remains negative.   

So while yesterday DID look to be a strong reversal, it's still tough to think there's immediate followthrough, and technically it's right to think this volatility very well can continue, and right to use strong rallies to sell into, while looking to buy dips if given the chance over the next few days.   

On a 6-8 week basis, technically it's right to think that there is a definite bottoming "process" at work, which has been noted in recent days given the start of breadth turning up, while momentum is getting "less negative" on a daily basis.  The protectionist worries which have gripped this market of late have caused anxiety during a time when prices have pulled back to right near February lows, yet the larger uptrends remain very much intact from 2016.   Until we can see some evidence of trend damage on a large scale, it should be right to use weakness to buy, thinking a larger rally can happen into the month of May.   For now, technically there remain issues with chasing yesterday's move, as this volatility isn't any different from what we've seen in recent days, and the 2-3 week structure right now remains bearish and has NOT yet changed to positive, despite the large reversal from yesterday.   Overall, a hit-and-run mentality remains prudent. 

Additional charts and thoughts below.

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Yesterday's dramatic about-face keeps the thinking intact that S&P has begun a bottoming process, yet at current levels, price looks to be up against important levels from mid-March.  While it's likely correct to be long here on a 4-6 week basis given the recent stabilization attempt and increase in positive breadth, in the near-term prices might not have as much upside, and it looks right technically to consider selling into this move near 2660 just about 10 points higher, which is a definite "stone's throw" after the 85 point rise from yesterday's early lows.  So tactically, flattening out into Thursday/Friday looking to buy dips makes sense.  Or for those with a lengthier time horizon, making sure Shorts are covered and having small long positions, looking to add on any weakness into early next week also is practical.  
 

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Homebuilders looked to have managed a very sharp reversal yesterday that exceeded two prior highs when going back since early February.   This is a bullish development technically that bodes well for additional gains in the weeks ahead.  While the near-term momentum has become overbought based on yesterday's move, it's right to have  a bullish stance on the Builders, looking to use weakness to buy dips in the days/week ahead.   Favorite Builder and builder related stocks include LEN, MHO, and MHK.   The ITB, shown above, should be bought in small size at current levels, looking to add on pullbacks down under $40. 

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Healthcare looks to be turning higher, as seen by XLV confirming counter-trend Demark related buys, along with meaningful upside progress and structural improvement out of both XBI and DRG in the last couple days.   The DRG, or AMEX Pharmaceutical index, shown above, will successfully break out above the downtrend on movement above 535, which i expect likely happens in the next week.  Favored stocks overall within Healthcare include: ALGN, ZTS, CELG, GILD, UNH, & ANTM.

Wednesday 4/4 Overnight developments and 3 charts of interest

Trend back under 2600 is a negative for today  and will need to be recouped to put rally back on track.. preferably back above 2607 for S&P Futures

Longs if not stopped on this early am weakness, would certainly be closed under 2568, the lows of the past hour.. as this would lead back down to test and likely break recent lows.  

Any buys here have stops at a close 2568 for 9 points of downside..  Getting back above 2607 is necessary and failure to do that today would likely suggest further selling late this week down to test Feb lows

US futures down over 1.3% this am, though off earlier lows after china’s retaliation attempts on tariffs, though this should not been seen as any sort of shock to the market, as it was widely expected.  Wilbur Ross making the point that Tariffs will only amount to 0.3% of GDP.    The real key is the implementation and how much this can lead to true negotiation.  Most of Europe also down more than 1% and Asia being hit harder when looking at Hong Kong, HSCEI, KOSPI, while Bonds are rallying, Crude lower while Gold higher.   The real volatility in commodities being seen in Grains, which were targeted under Chinese tariff threats, and Soybeans lower by over 4% this am, slipping back down under $10/bushel.  As Hourly charts show below, the failure to follow-through on yesterday’s gains is a negative this morning structurally speaking, and important to gain this back in todays’ session.  Failure and/or closing down at lows would argue for a break under Monday’s lows, taking prices down to test February lows.  

 

S&P-  The range of importance at this time lies at today’s lows.  2559, up to right near where stocks peaked late yesterday-   2607-10.

S&P requires a move back up today and back into this range to make the trend back to positive in the short run.

We’ve seen some minor rallying off early lows, but more needs to be done

 

image003-2.jpg

 

Soybeans pulling back sharply this am after recent breakout turned out to be false.   ETFs like DBA, which represent the Powershares Agriculture fund,  could weaken near-term and pullback to 18.22 from current 18.60.  

Treasuries have rallied this am, recouping yesterday’s loss. And given the weakness lately.  It’s a must to consider 2.70 as being very important given this trend.

Any further market volatility which causes a break of this trend would result in further TY strength and yields pulling back to 2.60

image009-2.jpg

Trend shows mild improvement on rise back above SPX-2600

April 4, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2584-6, 2556-8, 2532-4                      Support
26430-3, 2640-2, 2647-8, 2550-5       Resistance


LINK TO TECHNICAL WEBINAR from Thursday 3/29- https://stme.in/0aEXIgQYR

 

SPX - (2-3 Days)- Bullish-Trend near-term bullish on ability to get through 2600 on the upside, which bodes well for a push up to 2640-60 into Wednesday/Thursday- Use minor intra-day weakness to buy near 2600, 2584-5

SX5E- EuroSTOXX 50- Neutral-  Very choppy overlapping pattern since mid-February and difficult to get too enamored with SX5E until/unless prices get back over 3450.  Most of the near-term swings over the last few weeks are still largely inconclusive and trendless, but SX5E still quite a bit weaker than the S&P, so remains a laggard and one to underweight via EZU.

HSCEI- Mildly bullish-  It's right to make a stand after recent weakness down to lows just below 12,000 but which has resulted in some stabilization in the last week. But after the drop of nearly 2,000 points since late January, HSCEI is in dire need to hold 11800 and a bounce to 12,500-12600 looks possible.

  
Trading Longs:  AEO, CAR, CNC, STZ, SHAK, HRTX, GTXI, AAN, MU, STX, FIVE, VICR, LULU, TLT

Trading Shorts:  SIG, DO, CRK, SLB, SYY, BBBY, FB, DB, CS, XLI, PCAR, EZU, FEZ


TECHNICAL THOUGHTS


ACTION PLAN- 

Buy IWM 147.50-148.20, expecting a counter-trend snapback up to 155
Buy SPY 252-4, with targets near 270.

Long EURUSD 1.2276 to 1.23 with targets 1.2650 and stops 1.2240-   Use break of 1.224 to exit, getting close to stop
Long GLD 125-126 adding above 127 with targets initially 129.50, and stops 125


Long TLT with targets 123.50


Bottom line, the near-term trend turned bullish early Tuesday on the ability of S&P to get back above 2600, which exceeded the triangle pattern in place and resulted in some short covering and a rush back into equities.  The Equity put/call which had gotten close to 1, not matching the levels of Overall Put/call (index and equity), fell sharply back down to .65, showing investors jumping in to buy calls so as not to miss the potential rally.   Breadth came in around 3/1 positive, while volume flowed into Up stocks at a 5/1 pace vs Down stocks.  All 11 sectors rose on the day, with Energy outperforming along with Healthcare and Materials showing near 1.50% gains while Utilities, Real Estate and Telecom all lagged.  Treasury yields rose for a second straight day, while the Dollar eked out further gains, threatening to break minor resistance which could see it trend further to the upside in the near-term. 

Overall, a bit more strength looks likely out of this move, and technically we can make the case for 2650-60 to be tested, which in this market, doesn't mean much these days, given the return of volatility.  However, it's important to reiterate that the trend has indeed worsened pretty substantially from mid-March, on the heels of the recent downturn from late January.  Daily and weekly momentum indicators are tilted bearish, and trends remain still down from March 12/13 highs.   So this has turned out to be a very different market than last year, or the year before, when a simple pullback could find support, stabilize, and then turn higher on good volume and breadth in a way that turned the trend back to bullish.  Now we've seen nearly a 1.5% move off the lows, yet trends remain bearish and it's imperative to be a lot more selective, and utilize a "hit-and-run" mentality until a bit more stabilization occurs.   The bullish factors of an increase in fear (contrarianly speaking) along with intra-day oversold conditions, positive momentum divergence, Demark signs of exhaustion, and a near-test of former lows from February were all thought to offer a good risk/reward to cover shorts and buy into this move, it certainly doesn't give us the "welcome mat" to stay for all that long, and the bears can very easily turn things lower in the next week again potentially if the S&P cannot successfully get back over 2660 given the uptick in volatility that this downward correction has brought about.  We'll be selectively long for right now, expecting a bit higher prices this week, and we'll see the extent that this bull rise can materialize into potentially something more robust.  


Additional charts and thoughts below.

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Tuesday's S&P push back above 2600 creates a near-term bullish scenario given the successful move back up above the two prior lows from last week.  Movement back into this range should cause near-term short-covering, and some buying as prices rise up to near 2640-60 in the upcoming days.  Specifically the break of the former lows of the past week is thought to be constructive, but yet very well could prove temporary by end of week unless prices can manage to get back up above 2660.  For now, it's worth playing from the long side into Wednesday/Thursday until/unless we reverse back to Tuesday's lows.  

unnamed-29.gif

This daily S&P chart shows a much different picture than the hourly, and shows the kind of work that lay ahead if the S&P is expected to begin a much stronger move higher.   While a 1-2 day move up seems likely, any act of creating hourly overbought conditions while the daily and weekly remain quite negative would argue for hedging any gains into mid-week, thinking that S&P still has an above-average chance of pulling back to test February lows this month.   
 

unnamed-30.gif

Commodities look to weaken throughout this week given the break of the trend from December in the Continuous Commodity index, or CCI as of the last few days.  Gold and WTI Crude have both pulled back a bit, while the US Dollar index has managed a slight upward break of the resistance that has guided DXY in the last few weeks.  While this could prove temporary, in the short run ,commodities likely underperform this week before finding more solid footing as CCI carves out a possible TD Buy Setup into early next week.  At present, despite the longer-term bullish view on commodities potentially making a larger move higher, the near-term view calls for a bit more downside this week.  

Tuesday 4/3 Overnight developments, and 3 Charts of interest

Good morning-

US stock index futures have bounced from yesterday’s lows, and as mentioned the combination of counter-trend buys, a ramping up of bearish sentiment, some positive momentum divergence on intra-day charts, signs of capitulatory volume (heavy into declining vs advancing stocks ) and near-term oversold conditions all suggested a potential low could be right around the corner.  IN fact the last two days have both been “90-% DOWN days” volume wise

Overall, MORE evidence is needed to have confidence that this is happening right away.  INITIALLY  2600 needs to be recouped.  The area near the two prior lows of the last week.  Then above 2660 would eclipse 3/29 highs along with helping to recapture the downtrend from mid-March, so this would be fairly strong proof that a rally is underway and can carry prices higher.   For now, I expect a move up to 2600.. and that’s more of a “wait and see”.   .. So given the sharp downward momentum and strongly downward trending prices.. quite a bit needs to happen to have conviction of a rally.  Buying here might help get to 2600,  but until we see structural progress, rallies could be prone to failure into Wed/Thursday…  as bottoming out often is a process.   For today.  Europe weak as it plays catchup to yesterday’s US weakness.. and most of Asia also weak.  Dollar largely unchanged..and has been in a very tight range for the last week, while both Crude and Gold are also largely unchanged and not showing much volatility.     Early am Movers in MGI, CGEN, HTGM, PLUG, TEUM, X, CGNX, BTI, TSM positive and on the downside-:   SB, CME, AKER, RIGL, SWCH, LFIN

 

S&P-  Specifically for traders.  2579 on downside and then 2552 important.. while 2600-2 on the upside-  Any failure at 2600 that pulls back UNDER 2579 likely will test and break 2552 on its way to 2532-4 area

image001-3.gif

S&P still holding above Feb lows and while yesterday is a negative price-wise on the breakdown.. there’s enough here that’s positive technically with regards to sentiment, and downside exhaustion to suggest buying in small size with stops at 2579, 2552 and Targets up near 2660

STOXX600-  SXXP index-  Europe has lagged substantially.. and after the break of the uptrend from 2016. We’ve seen some lackluster, overlapping choppy trading in recent weeks.

While from an Elliott perspective this might seem constructive.. we’ll need to see far more strength to have any real conviction that this can play catchup.  For now,  EZU, FEZ, VGK are relative shorts and a place to underweight vs US

 

image003.gif

 

 

 

Breakdown sets stage for lows/reversal potentially this week

April 3, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2532-3,  2500-2, 2465-8      Support
2600-2, 2610-2, 2550-5       Resistance


LINK TO TECHNICAL WEBINAR from Thursday 3/29- 

 

SPX - (2-3 Days)- Trend bearish until 2600 is exceeded, but it looks right to consider covering shorts and gradually putting on longs between today and Thursday, thinking a low is right around the corner.  A test of February lows looks to be imminent, but time-wise markets should be close to bottoming and attempting a counter-trend rally in the weeks ahead.   

SX5E- EuroSTOXX 50- Bearish- It's likely that Europe plays catchup to the move in US on Tuesday, and better to hold off until prices visit and/or breach recent lows until trying to buy.   Prices have attempted to hold February lows, yet the counts are not in place for any kind of low.  Therefore, one should still hold off on trying to pick bottoms here and expect a final pullback down to near 3170 near the 50% level of the rally from 2016 which should be an excellent area to buy dips.   

HSCEI- Bearish- Tough to get too bullish just yet, but the next 2-3 days could bring about trading lows and right to consider covering shorts and buying into Wed/Thursday of this week
  
Trading Longs:  MU, STX, TWTR, FIVE, VICR, LULU, TLT

Trading Shorts: SIG, DO, CRK, SLB, SYY, BBBY, FB, DB, CS, XLI, PCAR, EZU, FEZ


TECHNICAL THOUGHTS


ACTION PLAN- 

Buy IWM 147.50-148.20, expecting a counter-trend snapback up to 155
Buy SPY 252-4, with targets near 270.  A bit more weakness needed Tues/Wed

Long EURUSD 1.2276 to 1.23 with targets 1.2650 and stops 1.2240
Long GLD 125-126 adding above 127 with targets initially 129.50, and stops 125


Long TLT with targets 123.50


The acceleration lower Monday was just what was needed to try to put in a Low for Equities that had been sorely lacking last week.  After the last 4-5 days of sideways action, it was thought to be premature to expect a meaningful bounce off those levels that would be sustained.  While breadth was strong during last Thursday's session, prices did not successfully get up above levels that were important to suggest the trends were giving way to a bullish bounce.  Now, after Monday'sdecline, US indices look closer to areas that are truly make-or-break for this entire consolidation since January, as February lows are tested in the upcoming days.  Price-wise, Monday's break certainly looked negative, and it remains difficult to fight this steep downtrend that's been in place from mid-March.  

However, given the ramp up in pessimism in the last week, combined with counter-trend signals close to being triggered (not only in Indices, but sectors like XLI, XLF) as well as evidence of volume coming in in a capitulatory fashion  (Heavy volume into Down vs Up stocks, triggering a very high ARMS index ratio above 2.5) we've begun to see some of the commonly looked for technical signs to suggest a low should be right around the corner.   Bottoming out after having made a false breakdown attempt when counter-trend tools are aligned gives far more confidence than trying to buy into a dull, lifeless churning pattern such as last week, in thinking a low is at hand.  We're now also beginning to see evidence of positive momentum divergence on several time frames, as momentum has failed to match the lows from early February, even though price is well lower. 

Furthermore, the act of getting down under the 200-day moving average was seen by the Media as being "bearish to Technicians"  while as we all know there is much, much more to solving the equity puzzle than watching how price acts vs a moving average (which sometimes can work, and other times not)   Attempting to use this M.A. as a timing tool can sometimes be effective, but often when it works, most investors come up with other reasons as to why it wasn't effective ( It was CHINA !!!.. It was Trump's Cabinet shifting!!!.. it was the FED!!!! ) As we all know,  many latch onto reasons like this to attempt to explain price volatility when in reality, most of these have been in place for some time and have little to no true predictive power.   When price and time come together, we have trend change.  If one is lacking, then the moving average fails.  Moving averages tend to be far better utilized as a simple gauge of market health, or analyzing the slope of the moving average and how it's changing, or how far above and below a certain security trades in relation to the moving average, than attempting to use it in a binary "Bullish or bearish" fashion like many are prone to do.  While i respect those that utilize averages as a risk management tool, there often is far more at work to solving the puzzle as to how prices peak and trough at regular intervals.  For now, the trend is certainly bearish, but there's a few factors in place that make watching for a false breakdown important in the next few days.  Movement back above 260 in SPY, ie 2600 in S&P futures, would help get back up above the prior consolidation that was broken, raising the odds of a false breakdown in place.   Until then, the trend is bearish and difficult to advocate trying to pick a bottom, and better to await some evidence of stabilization and/or prices snapping back through important levels that were violated.


Additional charts and thoughts below.

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Monday's breakdown violated prior lows from the last week that had held prices intact in consolidation mode.  It was thought that this range-bound type movement should not lead to a true breakout higher without moving first back to new lows, and Thursday's gains, despite on positive breadth late last week, failed to surpass key trendline resistance and promptly failed.  Given the positive divergence seen on hourly charts with Demark signals appearing in the next few days in XLI and XLF together, both which were sorely lacking recently, we're getting closer to an area which could produce some type of counter-trend bounce to this decline.   From a pure price perspective only, it looks premature, but we're in a window where a counter-trend bounce could begin to play out in the next few days.  Any move back up over 2600 in S&P would be given credence as to potentially completing the decline from March 13 and lead to an above-average counter-trend bounce.   Until that happens, the trend is bearish, and could lead to further near-term weakness to challenge February lows.

unnamed-26.gif

This two-hour S&P chart shows the extent to which prices have declined down to within striking distance of February lows.  This minor consolidation from last week was thought to suggest additional weakness, and now that this has occurred, it's right to start to look for evidence of prices nearing areas where a snapback rally could occur.   Movement back above 2600 would warn of a false breakdown, along with naturally a break of the downtrend from mid-March, or pullbacks to test 2533 which produce counter-trend signals of exhaustion which might indicate some type of low.  
 

Interestingly enough, the relationship between Crude oil and Gold looks to be finally shifting in favor of Gold.  While the uptrend in WTI has been ongoing vs Gold since last Summer, the break of this uptrend in WTI/Gold this past week coinciding with counter-trend signals of upside exhaustion (Demark) should now lead to Crude underperforming Gold.  One can favor Gold vs Crude, expecting meaningful outperformance by Gold, and in turn, Gold mining stocks vs Energy stocks in the days/weeks ahead. 

Monday 4/2 Overnight developments, 3 Charts of interest

 

Early losses in S&P futures to the tune of 0.40% while NASDAQ down nearly 0.90%, Bonds also lower with yields up to 2.766,   Metals higher across the board with Gold and Silver higher, Silver by +2% while Copper also making gains-  The breakdown in Bitcoin this past weekend trying to bounce, but clearly much damage has been done here and suggests that additional weakness can happen here over the next 1-2 weeks.  -  Overall as told in the Weekly report this am.. Trends had gotten OVERBOUGHT on hourly charts based on Friday’s move, while daily and weekly trends and momentum are still negative.   Tough to make much of this being positive just yet which will take a move back over 2680, but even on a short-term basis.. getting over 2640 is important to try for a minor bounce.   Today should cause a move back lower in S&P to make a bigger retest of lows before any serious bottom is in place. 

Premkt gainers:   MNOV, ALNA, CGEN, SENS, XBIT, HUM, GSVC, TEUM, AKER, VTVT, ZN, ZSAN, QEP, IQ, OMED, PVG, while on the downside-  SORL, ALKS, OCX, ITCi, W, FIT, LFIIN, UAA, UA, TSLA, OSTK, NTAP, FRSX, IBN

S&P- 120 min  Minor triangle doesn’t bode yet for any rally. And a pullback to lows is more likely today/tomorrow before lows are in

Right to expect weakness unless 2680 is taken  out. That would be the signal that the rally has begun.  For now.. tough to make much of this as all that positive from Mid-March

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S&P 5 min still under pressure from overnight.  Tough to be bullish until 2638 even very short-term.  For now, trend negative

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BOND yields trying to bounce, but this is an opportunity to buy TY for a move down to 2.70%.. so right to still be bullish and expect yields go lower

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3/29 END OF MONTH- Post Mkt Technical Thoughts

Despite what seemed like a very strong day price-wise, S&P failed to take out areas of importance which would have turned the trend bullish.  The move over yesterdays’ highs did in fact allow for early day acceleration, and S&P got up to 2659 before reversing nearly 20 handles into the close to finish right near former highs from Wednesday.  Breadth finished at a respectable 4/1 bullish, while 6 sectors finished up over 1% and all sectors were GREEN except Real Estate.  

 

OVERALL,  its TOUGH to enter the month of APRIL BULLISH just yet..  as near-term momentum became overbought on hourly charts.. while Daily and weekly momentum are NEGATIVELY SLOPED, while the market (S&P) also still lies in a downtrend from 3/13 highs.  There has been no trend breakout and most short-term cycles pinpoint April 3-6 for a change in trend, which I believe should be a LOW, followed by a move higher in the subsequent weeks throughout April into May-

 

 

However, the fact that prices rose as much as they did helped to turn momentum UP on 240 min charts..  which means that any “backing and filling” likely could create the kind of positive divergence in momentum that will allow for a low to be formed next week.   The Alternate scenario is S&P simply presses up above 2660 and its off to the races.. which I doubt is the case.. but cannot be ruled out completely.   The factors of near-term bearish sentiment back in the market (AAII- more bears than bulls), and bullish seasonality for April, coupled with Short-term oversold conditions into this week while the larger weekly trends remain intact.. all these are positives which suggest buying dips.   The negatives of the huge momentum and breadth drawdown from late January are definitely concerns.. but until Feb lows are broken, it looks right to take a stab at thinking stocks move higher in April.  However, this will require some evidence of breaking out of the downtrend at hand which is near 2660 and getting up above Tuesday’s highs at 2680 would help add conviction.  Until that happens, the odds on favorite is for an early week retest of lows yet again, but which this time around, should be buyable.  One should keep stops tight near Thursday’s highs, but not wrong to have a few shorts after Thursday’s move.. (IWM QQQ) and expect some consolidation early next week before lows are in. 

 

 

S&P HIT 2659, then fell to 2644 with a few min shy of 4pm.  At present, we’ve sold off further down to 2635, near yesterdays highs.   TRENDS remain bearish , and while Today/Thursday was constructive.  Additional work needs to be done.

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Yields have now fallen around 20 bps from a month ago in late February.   Movement down to 2.70 is likely and its right to stay long Treasuries and hold off on taking profits until 2.70-5 is touched.   This should take another 1-2 days..  but a stalling out in yields and turning higher could very well coincide with equities also beginning a more meaningful advance.

Insufficient Signs of a low at hand, but Next week should prove important

March 29, 2018

S&P JUNE FUTURES (SPm8)
Contact: info@newtonadvisor.com

2585-7, 2561-8, 2546-8                 Support
2627-32, 2662-5, 2675-7, 2797     Resistance


LINK TO TECHNICAL WEBINAR from Thursday 3/22- https://stme.in/ErK5Yc2zM

 

SPX - (2-3 Days)- Bearish-  Still looks early to abandon a bearish stance, S&P likely has one final pullback (on this current decline) down to 2561-8 area, and would look to cover shorts into this early next week.   Use bounces to sell, unless 2634 is exceeded on an hourly close, which would postpone an immediate decline.

SX5E- EuroSTOXX 50- Bearish- Prices have attempted to hold February lows, yet the counts are not in place for any kind of low.  Therefore, one should still hold off on trying to pick bottoms here and expect a final pullback down to near 3170 near the 50% level of the rally from 2016 which should be an excellent area to buy dips.   

HSCEI- Bearish- Looks like a complete retest of February lows can occur, so 11679 is the area to consider covering shorts
  
Trading Longs:  FIVE, VICR, LULU, VNM, EWM, TLT, TWTR,

Trading Shorts: FB, DB, CS, SLB, SYY, GGP, BBBY, XLI, ITA,SIG, PCAR, EZU, FEZ


TECHNICAL THOUGHTS


ACTION PLAN- 

Short IWM 150.31, with targets 147-148.50 in the next 3-5 days
Short SPY 259.83 with targets 255-6
Short XLI 73.22 with targets 71.95, then 71.50
Short IYT with targets 179.50-180

Long EURUSD 1.2276 to 1.23 with targets 1.2650 and stops 1.2240
Long GLD 125-126 adding above 127 with targets initially 129.50, and stops 125


Short EZU with targets at 42, then 41.70
Long TLT with targets 122.50



It still looks early to abandon a bearish stance, and while it was right to consider covering some shorts early on Wednesday, by end of day, the multiple rally attempts had all failed, and SPX and most indices literally sat churning near lows for most of the day.  This kind of consolidation is not indicative of a strong trading low, and more often then not, requires a final flush which should be used to cover shorts over the next next 4-6 trading days into early April.   S&P likely will attempt a larger retest of February lows into early next week before any snapback rally, and its' right to play for 2561-8 area in June futures as being a near-term support target where possible stabilization might happen while a larger decline leading to rapid acceleration to test 2532 lows from February 9.

Overall, after the sharp bounce into Tuesday, the subsequent late day pullback failed to bring momentum back to oversold levels.   Yet, signs of fear still look to be lacking, and no outsized volume into declining vs advancing issues.  Many are hoping for recent weakness back to the lows to hold the 200-day ma for SPX, yet the price action doesn't seem as capitulatory, and yesterday's churning near the lows all day was seen technically as more of a warning sign than a low developing.   Markets likely need to see sharp rebounds by some of the key FANG names that have outperformed during this prior uptrend, and stocks like FB and AMZN don't yet look to be on the best footing. (FB in particular still looks to weaken down to near 145 before any real low in place.  Outside this group, ETF's in XLI and XLF in particularly have not shown the sufficient downside counter-trend exhaustion to call for a low of any sort.  Yet, weakness into early next week would in fact raise fear levels, while bringing about the kind of Demark TD Countdown signals that would warrant taking a stab at buying.  For now, it's still premature and extreme selectivity is needed when trying to fight this downside volatility. 


Additional charts and thoughts below.


The NY FANG index is down to what could be near-term support to buy dips.  However, much of this looks to revolve around AMZN, and GOOGL, the latter which has sold off to near February lows, vs thinking FB, and/or NFLX are at any type of meaningful bottom  This Ichimoku Cloud chart however, does seem to suggest support in this daily chart, while a TD Buy Setup (9 consecutive closes under the lows of the close from four prior) is now in place, right at the level of the trend from last Fall.   This might at a minimum, allow the FANG basket to stabilize and try to turn higher, and one should watch this carefully in the days ahead.  While the price action in the indices seems to warrant more weakness, if it is selective while Technology can outperform, this would give a decent signal to the possibility of an upcoming turn back higher.  

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Both XLI and XLF give some compelling reasons as to why it remains a bit early to consider buying dips on this equity pullback.  Patterns have not been convincing of any sort of low at hand and further weakness looks probable which should test $72, or even $71.50 in XLI before any real low.   Demark Countdowns show a current 11 count, which should lead to pullbacks to new weekly lows before any sort of low likely is at hand into next week.  For now, this churning isn't seen as bullish price action. 

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OIH- The Oil services ETF by VanEck Vectors made a fairly important breakdown yesterday which still argues for a bit more weakness in this sector, as the minor trend from early February was violated as of yesterday's close.   TD signals remain at least 2-3 days away, so this structural weakness likely will follow-through a bit in the upcoming days into next week before any sort of low.  Pattern-wise, this lackadaisical consolidation in the last month looks completely different from WTI Crude, this divergence likely could lead to WTI peaking out sometime in the next few months and following suit to what Energy stocks have done of late.  Looking back at this pattern since last Fall, the severe downturn violated this uptrend from August and churned sideways before today's breakdown, which likely leads to additional weakness.  Bottom line, this still looks premature to consider buying Energy, and yesterday's breakdown looks like a negative, technically.