December 15, 2017
S&P MAR FUTURES (SPh8)
2645-8, 2620-2 Support
2677-8, 2686-8 Resistance
https://stme.in/d2eyxXTni - LINK TO TECHNICAL WEBINAR from yesterday, Thursday 12/14/17
SPX - (2-3 Days)- Prices down to make-or-break near-term support at 2645-50- Leaning Bullish unless 2645 is breached, which would cause pullback to 2620.
SX5E- EuroSTOXX 50- Bearish- Pullback to multi-day lows suggests SX5E might have a difficult time making it to 3638 right away and sideways and/or down is more likely- A Retreat looks likely to 3524 which will need to hold. Under causes acceleration
HSCEI- Bullish- No change- Movement up to near 11165-750 looks likely with stops at 11100. Positive price action given the US Dollar having turned lower.
Trading Longs: GDX, SLV, GLD, URA, SQ, MYL, ABB, TRN, PKX, ZEUS, MO, VLO, PSX, ABT
Trading Shorts: XRT, GPS, AIG, FLS, M, AAP, WHR, AZO, EUO, TRIP, NVDA,VFC, USG, SJM, URBN, EXPE
ACTION PLAN- Thursday's pullback in the Healthcare sector should provide buying opportunities in stocks like ABT, BMY, BAX, ALXN and many Healthcare stocks are still preferable over much of Technology which has begun to lag substantially given the downturn in Semiconductors, which despite the recent NASDAQ gains, still have yet to really gain any footing. Given the direction from ECB and Fed meetings this week, focus should be on the Metals stocks which gradually look to be trying to bottom out, while avoiding/shorting the Retailing space, as this looks to be peaking. Metals ETF's like SLV, GLD, GDX look attractive to buy, while XRT looks like a technical short and lower prices are likely into January.
ECB's hawkishness with regards to growth certainly wasn't reflected in their inflation forecast, and at 1.7% by 2020, Draghi still will have underachieved in his goals. While many question rightly why the ECB remains in an easing mode with the US having turned towards tightening with a potential three hikes next year while growth is similar, Europe looks like a laggard with regards to being slow to normalize as well as suffering ongoing stock market underperformance, which has underachieved with regards to keeping pace with the US.
Overall, Thursday's setback in healthcare was larger than expected, but failed to do much meaningful damage and the SPX pulled back right to what should be key trendline support to buy dips. Financials on the other hand have now suffered two straight back-to-back declines, confirming daily TD Countdown sells in the process. This could provide some backing and filling in this sector after having gotten overbought, and the combination of both Financials and Semiconductor weakness should be a concern to investors given their weighting in the SPX, and as stated previously, Financials and Tech combined make up close to 37% of the SPX.
Nothing in Thursday's pullback seemed too extreme, and while the SPX did break to new multi-day lows, it has not yet violated trendline support from Mid-November and both DJIA and NASDAQ still lie near all-time highs, having weaknened just enough to test prior days lows, but no meaningful weakness.
Additional charts and thoughts below.
S&P FUTURES- Pullback to Trendline Support is key to Hold near-term
Daily S&P charts show yesterdays pullback still holding above important near-term trendline support from mid-November. This area is important to hold given the recent backtrack in Financials along with Semiconductor stocks which might prove problematic come January. At present, S&P has not violated trendline support and remains higher by nearly 100 points from when it bottomed last month. Breaks of this trend could cause a move down to test December lows near 2620, a more important area to hold. However, it's more likely that S&P stabilizes and turns back higher into year-end.
Financials have shown two straight days of selling, bringing prices down to levels under the lows of the last week, and threatening the start of near-term underperformance for this group after its steep run-up from November. Counter-trend sell signals per Demark were confirmed yesterday, and argue that this might suffer some near-tem underperformance. Longer-term Trendline support hits near 450, so still quite a ways below which will be important on any larger selloff.
Retailing ETF, XRT looks set to engulf the prior week as it looks set to make a new weekly low after having rallied up to a very important area of resistance from two different trendlines. Given the negative seasonality that affects Retailing during the next 4-6 weeks, one should expect some backing and filling after this recent gain, and near-term weakness down to near 42 looks likely, with breaks of that leading to a more pronounced period of weakness which could lead to a test of this past Summer's lows.
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