August 16, 2016
S&P SEPT FUTURES (SPu6)
2168-70, 2157-8, 2139-41, 2125-6 Support
2191-2, 2200-2, 2108-10, 2214-5 Resistance
S&P Futures: (2-3 Days) Bullish- S&P managed to rise above recent trading range of the last week and while prices fell a bit in the last hour of trading Monday, the trend remains bullish, and looks to be exceeding the recent range which could allow for a move above 2200 up to 2214-20 into end of week, which would be a more serious level of resistance. NASDAQ very well might stall out Tuesday/Wednesday and peak out Tuesday, while SPX, INDU outperform.
SX5E-Bullish, with targets near 3100-3150 into late August- Minor structural improvement on the move above 3000 in the last few days that exceeded 4 month trendline resistance and should allow for further upward progress into end of month. Only bearish on move under 2890.
HSCEI- Stretched, but bullish- Long, looking to buy pullbacks at 9250-9300 for a move up to 9750-9800.
Longs/Shorts for a 3-5 day period:
Technical Longs: A, UTX, CTXS, FIS, DFS, SLB
Technical Shorts: GOOGL (769 tgt), PM, MO, COH, STRA
Monday's rally back to new highs in S&P along with DJIA, SOX, XLI, CCMP, NDX keeps the near-term trend bullish, and should mean it's still premature to sell into this move. Breadth came in around 2/1 positive, while Materials, Industrials and Financials all led the rally. Utilities on the other hand, fell sharply, declining by over 1.5% on an absolute basis, as the defensive sectors have underperformed substantially over the last couple weeks. Technically it looks likely that S&P can make it slightly up over 2200 in the days ahead, with targets near 2214-2220 which should be important as resistance if reached this week.
Both Industrials and Semiconductor indices like the SOX broke out to new highs above early-mid July peaks, which should give both of these sectors further room to run. Semis might be held down to some extent by Technology as a whole, however, as the NDX, and NASDAQ Composite are both showing counter-trend signs of exhaustion as of Monday's close, which also appeared on the NASDAQ. While the SPX still appears to have room to run higher, the NASDAQ is showing some evidence that it might stall in the short run. Given that NASDAQ has outperformed steadily since early July, there could be a slowdown in the NASDAQ and reversal of trend that happens here before it affects the SPX, which lacks these same signals along with DJIA, which still looks strong on the heels of the Industrials sector. Bottom line, it looks premature to think the broader market rolls over just yet, but the NASDAQ specifically could stall out between Tuesday/Wednesday.
The US Dollar index's decline has paved the way for Energy's rise and Crude oil is now back up to key resistance near 46. Five Technical factors argue why this is important. 1) The area of trendline resistance from the early June highs 2) WTI has retraced 50% of the June-early August decline 3) WTI has reached the upper edge of its declining Bollinger Band 4) Crude remains under the larger uptrend from January-June that was broken, which until regained, makes rallies "sellable" 5) Demark signals on Hourly, 2-hour, 3-hour, and 4-hour charts are slowly in the process of reflecting counter-trend Sells per TD Combo, TD Sequential indicators, which should be in place as of Tuesday/Wednesday. Overall, while it's not wrong to adopt a more bullish position IF in fact Crude can shrug off these concerns, for now the better risk/reward lies with selling into this initial move.
Some charts and additional comments below
S&P's move back to new highs was constructive technically, as all three major indices managed to yet again push back to new high territory. Breadth was a meager 2/1 positive but sectors like Industrials and Semiconductors both broke back out to new highs. While many investors are now lamenting having missed this move and looking for reasons to sell, or buy the VIX, it still looks premature in the near-term. This S&P rise should allow for S&P to move to 2214-20 by the latter part of this week before stalling, and keeps the near-term trend bullish. Only a move back down under 2167 would be sufficient to cancel the bullish implications of this rise.
The Industrial SPDR ETF, XLI has just moved back to new all-time high territory as of today, which provided a much needed lift in this sector after it had largely consolidated following its July rise. While PCAR, LLL, AAL, UAL all showed outperformance of more than 1.5%, it's the Transports that bear watching carefully for signs that DJ Transportation Avg. can get back over 8050. For now, Industrials outperformance on Monday looks to continue in the short run ,and this sector should be favored given Monday's breakout.
The push higher in Crude in the last month has now reached an area which should cause some stalling out over the next couple days, representing the first meaningful area of resistance since Crude's rally began. Five Technical factors argue why this is important. 1) The area of trendline resistance from the early June highs 2) WTI has retraced 50% of the June-early August decline 3) WTI has reached the upper edge of its declining Bollinger Band 4) Crude remains under the larger uptrend from January-June that was broken, which until regained, makes rallies "sellable" 5) Demark signals on Hourly, 2-hour, 3-hour, and 4-hour charts are slowly in the process of reflecting counter-trend Sells per TD Combo, TD Sequential indicators, which should be in place as of Tuesday/Wednesday. Overall, while it's not wrong to adopt a more bullish position IF in fact Crude can shrug off these concerns, for now the better risk/reward lies with selling into this initial move.
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