July 22, 2016
S&P SEPT FUTURES (SPm6)
258-60, 2150-2, 2137-9, 2109-10 Support
2177-9, 2183-5, 2193-4 Resistance
S&P Futures: (2-3 Days) Bullish, but upside limited at this point for S&P in the short run, awaiting signs of reversal. ( SPU6 Target-2183-5 ) Wednesday's close helped to clear the consolidation of the last week, which leaves prices stretched, yet bullish, with no meaningful resistance for S&P Futures until 2083-5 area. While risk/reward looks somewhat poor on a 2-3 week basis, for now, there remain no meaningful signs of turning lower. Stops on longs lie near 2151 initially for S&P futures, and then 2139 having a bit more importance. (2155-SPX cash)
SX5E- Bullish into 3035- Ability of STOXX50 to hold up above 2895 and then turn higher was a minor positive for the wave structure from late June, and suggests that a minor new weekly high should occur which would take SX5E up to near 3035-3050 in the next 2-3 days before resistance occurs.
Trading ideas tonight will concentrate on the Post Earnings Movement of AXP, INTC, EBAY and QCOM and analyze these below.
S&P, DJIA and NDX all cleared the recent 4-5 day range with a push higher, which has made the already bullish move from Late June now reach stratospheric levels. While structurally this move is quite positive, the combination of near-term overbought conditions with rising sentiment as breadth begins to slowly deteriorate are all mild negatives that could bring about resistance in markets over the next week.
Additionally, as discussed in prior emails, 10-year Treasury yields along with USDJPY have both jumped higher in a manner that have brought both of these near key trendline resistance right at a time when counter-trend signals from Demark's TD Sell Setup counts on daily charts could be complete within the next few days. While buy signals all appeared in these along with SPX back in late June, the signals now coming together suggest an upcoming stallout, not rapid followthrough from this point on. For now, as has been discussed, there remains no meaningful signs of trend reversal, and prices continue to hit new highs. However, it pays not to get complacent with SPX a full 2 standard deviations over its 50-day moving average while 85% of the market is trading above this same 50-day.
While SPX, DJIA, and NDX have all continued higher in the last day, other indices like the DJ Transports and Small caps RELATIVE to SPX both peaked out in mid-July. AS has been stated previously the move higher in Technology and Healthcare to "mean-revert" is a real positive, but Financials strength is now back up to trendline resistance which has held this consolidation intact since last July's peaks, and should be respected given the percentage weighting in the SPX.
Charts and additional analysis on INTC, QCOM, EBAY, and AXP below.
Intel (INTC- $35.69) INTC's ability to breakout above last November/December highs proved short-lived as the stock fell back under this week's lows post earnings and at the time of this writing, remains down $1 from Wednesday's close in the after market at $34.60. (Shown by Red line) Structurally, INTC is in very good shape with a giant two-year base which lies on top of a 10-year larger base which began back in 2004. The ability to get back up above $35.60 should help this accelerate up to December 2014 highs at $37.90, with movement over that level enabling this to begin a more serious intermediate-term advance to the mid-$40's. For now, INTC has gotten stretched as a result of its quick advance just since May lows, and the SOX index shows signs of exhaustion as it nears prior peaks near 751. The combination of these suggests limited near-term upside, while any pullbacks in the days/weeks ahead would represent attractive opportunities to buy dips for a more serious rally.
Qualcomm (QCOM- $55.82) Near-term stretched as of Thursday morning following QCOM's post-close breakout above May highs just above $56 which has helped the stock gain nearly $3 in the aftermarket or more than 5% following earnings. Near-term, any close above $58 will need to be consolidated before this can make too much more progress, but it's an encouraging sign overall for a former laggard to begin to show some uptick in momentum. QCOM has lagged the performance of another Semiconductor stock highlighted here, INTC, and the ability of QCOM to hold this breakout above Spring highs should help this make steady progress up to eventually fill the gap of the prior highs made last Fall. Overall, following a lackluster five-months of range-bound trading, a high volume breakout to finish the week on a high note is encouraging for this stock in the weeks ahead. The SOX's movement back up to near prior highs could post some challenges for this group in the next 3-5 days, so from a trading perspective, one could use near-term strength to sell into. However, any pullback from early Thursday gap opening levels should constitute an excellent chance to buy dips for an acceleration to areas back up above $60.
EBAY (EBAY- $26.99) EBAY's post close surge has brought it within striking distance of last year's highs of $29.83. (At the time of writing, EBAY was trading $28.75, or 6% over Wednesday's close. ) EBAY had been slowly carving out a larger base since bottoming back in 2009 and rising steadily to 2013 before flattening out over the last few years. Its former breakout attempt was consolidated into last year on the pullback down to the low $20's. Now this latest rally and surge post-Earnings should help to jumpstart the stock's momentum in a way that makes a test of just below $30 likely in the weeks ahead. Overall, EBAY looks quite positive, and dips from Thursday's opening gap should be used to buy, technically speaking.
American Express (AXP- $64.48) Post close, AXP traded right up to near $65.80 at the area of this trendline before reversing course and trading back down nearly $2 to its current $63.65 , or around -0.80 cents under its Wednesday closing price. The stock looks likely to pullback after its recent run, and looks difficult to buy until it reaches $61.50-$62 in the short run. Momentum has gotten stretched while its daily pattern reflects evidence of counter-trend signals present following Wednesday's close that should allow for at least a bit of consolidation before this can rise. The broader two-month consolidation is bound by $66 on the upside and until AXP can get above this area, it's doubtful that the stock can make much more progress in the short run.
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