April 14, 2016
S&P JUNE FUTURES (SPm6)
2045-7, 2020-2021, 2004-5, 1975-6- Support
2090-1, 2102-4, 2123-5, 2135 Resistance
S&P Futures: Bullish but extended, raising stops to 2050- ST target 2090-2
SPY: Bullish- Upside resistance 207, then 211-212; Support 203, Under leads to 200
US 10-Year Yields: Bullish- 1.86 important; Over leads to 2.00%- Under 1.70% Negative
German Bund Yields- Bullish-Gains above 14p should lead to 24-25bp
Euro STOXX 50- At key resistance on downtrend from last Nov,but over 3100 allows for large move- For now, more apt to buy pullbacks- Rise in last two days sufficient to change near-term trend
HSCEI- Hang Seng China Enterprise index- Extended but near 9400 initial target- now pullbacks buyable
WTI CRUDE: Stalling out a bit near-term,but pullbacks should prove limited, and overall Bullish- Reclaiming Tuesday's highs allows for45
USDJPY: Counter-trend bounce could occur given today's rebound from oversold conditions, with initial targets near 111- Important to exceed this to have confidence of Yen Drop- -First Target 107.70 reached, eventual target 102
Attractive Technical Risk/reward Longs
NXPI, TXN, ADI, SWKS, LSCC, JOY, FIT, WB, FXI, GRMN, FEYE, AKS, X, RIO, VALE, VNTV, MRO, WMB, HES, APA, NAVI, SWN, LGND, MDT, KMB, SBUX, SAFM, BCR, BSX, DVN, ELLI, MSFT, NKE
Bullish, but extended- Buy Pullbacks- MBT, AEM, NEM, FCX, GDX, GG, TRXC, EBF, DG, CHD, OC, PM, MCD, AVGO, SONC, POOL
Attractive Technical Risk/reward Shorts: T (36.75 tgt), SQ, DF, TSN (low 60s) ADS, KO (44.5 Tgt) GPS, BBBY, FL, MNK, NOV, P, RL, CROX, CF, FOSL, JWN, HOG, HTZ
Bottom line, Wednesday's gains were a positive for US Equities, with SPX, DJIA and NASDAQ COMP/NDX all moving to new closing highs for the year. The NYSE Advance/Decline has just broken out to new all-time highs in its Cumulative version, while the NYSE "All Stocks" is making progress in that regard after last month's false "Head and Shoulders" breakdown(which has since been recouped) While momentum is certainly lagging this recent move to new monthly highs given the recent consolidation in place, that's not too much of a bearish concern to think that stocks need to immediately reverse.
In the short run, SPX has now reclaimed the area in late December that proved to be the high directly proceeding the 13% drop over a 16 trading day period in early January, as SPX fell at a rate of nearly 1% a day. Now in just two trading days time, SPX has broken out of an area of range-bound consolidation, rising 40 points in 2 trading days, or over 2%. Breaking the highs failed to lead momentum higher, despite the improvement in Financials, and SPX lies near resistance highs of its entire consolidation which started at last May's highs in 2015.
Overall, i view the breadth of this move since February as extremely impressive, and the comeback has proven to be far stronger than anything that would normally resemble a bear market snap-back rally. Sentiment is slow to turn positive, while we're just now seeing evidence of "Risk-on" sectors like Financials, Discretionary and Industrials start to outperform, something which was largely absent during the first full month of gains. Ironically, the momentum and breadth were stronger during the period between mid-February and March, despite defensive sectors like Utilities outperforming. Now, we see Advance/Decline moving back to new High territory and Industrials, Tech, Financials churning higher, albeit on lesser momentum than initially. Overall, the price action has to be respected, as the consolidation gave ample warning signs of potentially failing, but no selloff proved to be longer than a 2-3 day affair. Rallies back to new all-time highs appear likely from a technical perspective into May, and whether this is delayed, or happens right away largely has to do with whether Financials can lead the charge.
At least on a short-term basis, Wednesday's move was a breakout type surge in relative and absolute terms that lends a lot of credence to that thinking, despite the SPX being up against strong resistance. We'll see. The next few days will be key to see whether the market stalls out and slows a bit, giving some of the weaker sectors a change to play Catchup. Resistance for SPX futures lies near 2090, so another 15 points higher, which looks likely to occur without much trouble, but yet could serve as formidable resistance
Charts below illustrate some of the bullishness of the Financials sector in having moved back higher in a manner that now suggests this could accelerate.
S&P futures have now risen back up to challenge late December highs, and just below areas that were achieved last May at all-time highs. While stretched here after a quick 2% run in the last couple days, pullbacks should prove minimal and allow for further upside- Key support lies near 2030.
This is the structure that ended up leading to the sharp rally back up to April highs, which as of Wednesday's close, were exceeded. Prices are extended, but little resistance lies right here above 2070 until near 2090.
The large move of the day happened within Financials, which rose sufficiently to breakout of near-term range patterns vs SPX, as seen by the upper chart and the Blue relative line guiding this relationship between XLF and SPX. Breakouts in this sector relatively speaking should fuel stocks as a necessary tailwind given more than 15% representation. A definite case can be made for oversold bounces in some of the large but technically weak European Banks like BCS, or RBS, and CS, all of which seem to be attempting to stabilize near-term. Money center US Banks have been quite weak, but C and BAC both look likely to rally a bit more. Stocks like MS, GS, SLM, RJF, STI, LNC all seem poised to rally further in the near-term, technically speaking.
Semiconductors look poised for a move back to highs with only last December peaks near 693 standing in the way. Intermediate-term forecasts target 740-750 and for now, additional strength still looks likely. Stocks such as NXPI, AVGO, NVDA, LRCX, ADI, TXN, SWKS look like good risk/rewards, with MU being buyable technically above 11.20.
NXP Semiconductor, NXPI, is a prime example of how its typically wise to pay attention to longer-term trend breakouts, with this stock showing evidence since last Summer of turning down. Now both daily and weekly support the notion that NXPI gets back to the mid- $90s technically, and would be one to favor among the group.