April 6, 2018
S&P JUNE FUTURES (SPm8)
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
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 adding 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.
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.
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
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.