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Monday's selling turns Short-term trend bearish- with 2764 being important for Bulls

November 12, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com

Monday mid-day Video- Click the link directly Below

Mid-day Technical Video


Trend bearish UNDER 2764, and Bullish OVER.

S&P violated 2764 early on, turning the trend more negative, and now 2755 was also violated near the gap from last week's 11/6- Overall, this suggests a full retest of 2709-11 is likely before any real turn back higher, in my view. Minor rallies should be used to lighten up for a further pullback into today's close and the days ahead. Failure to recoup any of these losses tomorrow would allow for potential weakness into key cycle date 11/16 before any rebound. Breadth is down "only" around 2/1 negative, but far more volume is starting to flow into Down vs Up stocks, something which eventually (once the ARMS index gets above 2) should lead to fear finally coming back into the markets.



In recent hours, there seems to be far more discomfort with the market than has been the case initially in late October and this is slowly but surely causing sentiment to become MORE negative. However, we don't seem to be at "fear" just yet, and this looks to still take some time.



Specifically, i would note the NASDAQ extending its breakdown vs SPX in relative terms. This is a negative for thinking that stocks should bounce right away, given the Technology and Biotech weakness making up the NASDAQ. Seven sectors out of 11 today are down more than 1%, with Technology down nearly 3%. Given its 20% weighting in SPX, it's difficult for other sectors to pick up the slack.





SPX- HOURLY Chart-

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S&P hourly shows the break of the trend from late October and now Friday's lows being violated. This latter point is a negative structurally and argues for a deeper retracement down to test the 50% level of our rally from 10/29 which hits at 2709. Under this level, it's likely that stocks test 2600 from late October before any low is in place.


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NASDAQ vs SPX broke down last Friday and has extended this break in today's selling. This goes a long ways towards showing why no immediate snapback is likely given this breakdown given the importance of Technology to the US Equity market. Until there is evidence of downside exhaustion, and/or this chart moving back up to recapture the area of the break, this should weaken more and is a negative for stocks.

Rally still holding up well- & Friday/Monday gains are still possible into next week before stalling out- Link to Thursday's Technical Webinar & charts of interest

Link to today’s Technical Webinar

https://www.youtube.com/watch?v=M0QTkufNncA

 

4 sectors up more than 1% today with Materials up nearly 3% alone with the Dollar pulling back and Mining stocks and many chemicals acting well.

Breadth is about 3/1 positive, and yields have moderated a bit after early gains.  

Stocks making very good moves which are on the radar:   IIN, TNDM, CQQQ(Chinese Tech), HRTX, HUBS, TOWR, ELY, ZFGN, HD, LULU, MJ

 

Daily S&P-  Continued progress..  SPX broke the downtrend and oct 11 former lows.. now has extended back to yesterday’s highs

Closing here should help this move to 2743-5 area and ultimately near 2775 initial targets

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S&P HOURLY-  note the appearance of 1 hourly Demark related sell. But the other is early-  thus, I expect this to continue to push higher until both are present.  At that time, markets might stall and consolidate

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XLF, XLI-  as mentioned.. both ETFs managed to get back above former LOWS.. making for a bullish snapback that is a constructive move in this pattern.

This is a bullish development and likely tailwind for further market gains near-term

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AAPL-  Ahead of earnings-   Apple made a very good snapback move yesterday that rebounded back above this uptrend that had been violated.  This largely invalidates this as being a Head and shoulders pattern and more just consolidation..   I expect a move back to highs, and AAPL is stronger than the FANG group and should be favored.

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Bottoming Process Has Begun & 10 Negative Factors Which Led to Selloff

October 15, 2018

Summary:  Equities remain trending down from mid-September as part of the intermediate-term uptrend from 2016 and 2009.  While the downdraft was particularly severe last week, living up to October's reputation as a volatile month, it failed to do much damage to the long-term trends.  Thus, this is considered short-term only in nature as of now.  Momentum, however, has seen some damage as a result of the recent pullback when looking at weekly charts, with MACD crossing the signal line and turning negative.  Daily momentum meanwhile reached the lowest levels of oversold territory of the year and has started to diverge positively on hourly charts (a good signal for Bulls)  Arguably, last week's pullback never really gave the old fashioned "fear-based" BUY signal, as markets witnessed no real evidence of volume capitulation on the downside, nor outsized Equity Put/call readings.   Thus, it remains a tough market near-term to have much conviction that any low into mid-October is sustainable.   Seasonality argues for a sharp rally into most mid-term Election periods in early November.  Yet, seasonality this year has been remarkably unpredictable with better than average August and September performance while Q4 has gotten off to a much worse start than normal.  Overall, there stands a good likelihood that we haven't seen the last of the volatility this year, and it pays to monitor the sector rotation carefully for evidence that Technology and Financials can begin to make a more sustainable comeback after recent weakness.  Bottom line,  Long-term trends are fine, but some definite signs that markets could be entering a new stage, with momentum and growth rolling over as the search for new leadership has begun.  Failure to mount a strong rally in the weeks ahead that turns down to challenge last week's lows would be a mild concern. Yet until the long-term trends are broken, this should remain a dip to buy into, as oversold conditions as part of long-term uptrends give way to opportunity near-term.  
 

Warning Signs that gave us proper “Heads-up” about Stocks turning lower


1) Market breadth peaked in late August-  NYSE "All stocks" advance/decline along with Summation index both moved steadily lower throughout September
2) Divergences between US stocks and the rest of the world started to widen materially in August/September
3) Technology underperformance- This proved to be the true technical catalyst (25% of SPX) and peaked relatively in June and has lagged over the last few months with Semiconductor weakness particularly troublesome
4) Defensive outperformance - Looking back one month ago, Utilities had outperformed both Financials and industrials Year-to-date while showing better one-week performance vs Technology
5) Sentiment indicators like Investors Intelligence widened out to a Bull/Bear spread of +40 heading into September which largely persisted the entire month (Stock indices peaked 9/21) 
6) Stocks hitting new 52-week highs began to steadily drop off, but became particularly pronounced right before the early October part of the Decline, with stocks hitting new 52-week lows expanding to a greater number than New highs.
7) Negative momentum divergence on daily charts of SPX, DJIA, NASDAQ-  Prices had pushed back to new highs, yet momentum was lower and had failed to keep up pace
8) VIX diverged positively with the higher lows in September and early October failing to fall to new lows even as indices pushed higher
9) Demark's TD Sequential and TD Combo indicator had both signaled exhaustion signs right at the peak where stocks had topped out at 9/21, forming 9-13-9 patterns
10) Trend violation on 10/4.  While many of the factors above were in place throughout September, prices had held up in resilient fashion up until 10/4 when S&P, NASDAQ and DJIA all violated three-month uptrends from late June.  This was the first real warning sign that price was finally confirming what breadth and momentum had been suggesting for some time.  

What are the Technicals suggesting should happen now?

 

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Quick thoughts ahead of Call- SPX, NASDAQ breaking uptrend

Thursday mid-day call-   Webinar starts in 30 min- Details below

https://www.youtube.com/watch?v=aaa9kMW2Fl4

 

 

S&P, DJIA and NASDAQ all down more than 1%.  NASDAQ 100 down nearly 2%. 

Breadth is 4/1 negative-   Crude falling back to 75.   Discretionary, Healthcare, Tech and Communications all down more than 1%

Only Financials and Utilities positive but Financials were up more than 1% and have given back all of earlier gains


SPX, NASDAQ have broken uptrend lines from late June while DJIA is right there.  UNDER 26349 in DJIA and 7400 in NDX will be important.

But a break given this ongoing negative breadth and momentum is the first sign that price is rolling over to AGREE with what’s been going on in momentum and breadth for the last 2-3 weeks. I would view as a negative on any failure to recoup today’s decline

S&P Futures have broken 2907 the late Sept lows and also the trend from late June-   this happening at a time when breadth and momentum have already been quite weak likely means that our long-awaited pullback is likely here.  Closing today UNDER 2907 in Dec S&P Futures and 2903 in SPX cash is important and looks to be a technical negative

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NASDAQ also breaking its multi-month uptrend today under 7535..  with 7400 being a more important line in the sand

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TNX-  2nd day of spike in Yields.. which have definitively broken out of the 24-year downtrend

Near-term stretched.  Expect short-term PEAK in rates 2-3 days.. and down to 3.12-3.15 which should be a chance to sell Treasuries

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Financials snapback, but breadth still thin- Wed mid-day Technical Video- CNBC today 2:25pm EST

Wed mid-day Technical Video

https://www.youtube.com/watch?v=iQShsTX9QNg

 

Into mid-day. We’ve seen US equities largely hold onto early gains with S&P and DJIA trading back up to new all-time highs while NASDAQ still below its all-time highs made back on Aug 29

Key to note for today-  Financials trying to bounce, and have gained some momentum in the last couple hours. Now up 1.4% for the day.  This group has been under relentless pressure over the last couple weeks, so its tough to make too much of today’s move, but is helping markets to rally a bit more.  Breadth still only higher though by 3/2 and 4 groups down on the day-  Utes, Staples, Real estate and Materials

 

Importantly. We’ve seen Treasury yields move back up to new highs for the year today on 10 and 30yr yields.. yet 10year TNX shows counter-trend SELLS in yields.  So we’ll see if this matters in meaning that this yield move reverses.

But the combination of these counter-trend signals ALONG with sentiment are two important reasons to be not as bearish on Treasuries, expecting that rates could peak out.  Not extend to 3.25-3.50

We’ll see.  For now, its right to trust this yield move until/unless it reverses.. but there are now signs.. and pays to be aware of that before initiating any new bearish treasury bets

 

Commodities seem to be staging  a comeback.  And more on this in the daily piece tomorrow am.  BUT CCI has made a major snapback in the last couple weeks and some decent price action not only out of Energy but also Grains, Softs , Meats

I am eyeing COTTON, SUGAR and OJ as being on the verge of reversing their downtrends and ones to buy here that have been trending down .   The Coffee bounce looks to have just begun

I will be on CNBC TODAY, 2:25 PM EST


Charts below

  

S&P back to new highs.  Bullish technical structure.  But Counter-trend sells based on TD COMBO with Sequential 3 days away.

Thus. Not as bullish of a move given these signals. Which have caused markets to stall in the past.  For now. Seems like Friday/Monday important

But have to trust the move until/unless we see prices get under 2917 

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TNX-   Rising back to new 2018 highs.  A bullish technical development.

However, getting TD SEQ sells and COMBO sells while sentiment is very bearish.  2 factors which put a bit less ammunition in this bearish TY move

I do not like initiating new TY shorts here.  But will trust the yield move for now until reversed.

Both 5 yr and 30 year look MORE likely to have yields extend over the next 3-5 trading days.  So Favor the longer end of the curve for 30yr bearish move to 3.32-3.35%

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Commodities on the comeback trail.   Expect we see further gains.  But will need to see Dollar back off

CCI INDEX.  The equal-weight commodities index..  Old CRB

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Mid-day Technical Thoughts- 100218- Precious Metals showing strength while Retailing fades- Tuesday mid-day Technical Video, charts of interest.. and some Shorts to consider within Retailing

Tuesday Mid-day Technical Video

https://www.youtube.com/watch?v=C2Z8gV4ZsqI&feature=youtu.be

 

 

Mild rally in US while most of Europe closed down 0.75%.  Breadth negative again on rally..  more Declining than Advancing issues..

Discretionary suffering today, the largest laggard, with Retail weakness-  Dollar strength still looks to continue for 2-3 more days.. while Yields have begun to consolidate.  This move in yields LIKELY taking the form of a triangle pattern and probably can still allow for yields to move a bit higher.  But expect that both TY YIELDS and the US DOLLAR likely reverse back lower at some point in October.  For now.  Dollar moving higher today.. while yields lower.

Crude and most of Energy still positive and while getting stretched.. still right to stick with Energy

Precious metals having big session today, with both Gold and Silver up more than 1.3%..   This is increasingly looking like a good place to position for October.  More on this below

 

Minor bounce from earlier lows and S&P up about 15 points from earlier lows.   This pattern remains constructive unless we see prices move back down UNDER 2917 which is not expected right away today

Areas of focus-   2938-42  on upside.  While 2917 and then 2907 on downside-  with bullish bias for today

 

Precious metals index spiking after it looks to have formed a reverse Head and Shoulders pattern and breaking out of that today

This should be good for the Gold miners-  See GDX, NUGT as ways to potentially play this move.. or potentially considering Gold and silver futures.. for those where that’s appropriate based on appetite for risk

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Retailing getting hit hard today with stocks like BBY, FL, GPS, KSS, JWN all down more than 2%  . Closing at lows should invite further selling and with NFLX now out of Discretionary sector..  This sector might begin to lag more meaningfully.     Overall,  stocks like LKQ, M,  BBY, LB, JWN, AZO all look like good technical shorts.. for those looking-  GPS, FL both down a bit too much for comfort today to initiate.  But those also laggards and should be considered shorts on bounces, technically 

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Crude/Energy extending, Financials still weak- Silver on the rise- LINK to this week's Webinar, today's video, and CMT presentation on time

Friday technical Video

https://www.youtube.com/watch?v=a_TdsPC3Il4&feature=youtu.be

 

Link to my presentation on “TIME in TECHNICAL ANALYSIS”  -  1 hour in length-  Given to CMT Association on Wednesday  9/26

https://cmtassociation.org/video/the-use-of-time-in-technical-analysis-demark-fibonacci-gann/

 

 Thursday Technical Webinar- 20 min-  Yesterday -  Discussion on S&P, TNX, DXY, XLF, XLI, XLK

https://www.youtube.com/watch?v=j9Qb4M6pMNc&feature=youtu.be-   

 

NEW TECHNICAL LONG IDEAS:   TSS, GOLF, CWT, SKYY, COLM, EXPO, WRB, ICLR, OGS, DNR

NEW TECHNICAL SHORT IDEAS:  AAL, JBLU, ALK, VMC, PCAR, FB (down to 155) , MCO,

 

Key points heading into the weekend-  

-Europe rolling over given Italian election results.. and SX5E falling to new 5-day lows

-Dollar moving higher for 2nd straight day into resistance.. and should be an area to buy EURUSD, GBPUSD and also buy some EEM, Materials.. as its thought that the Dollar should be on the cusp of turning back lower

-Silver has taken the lead in making a good breakout.. and Gold might be finally soon to follow- Key will be Yields stalling out along with DXY. But unusual for Silver to take the lead and strengthen materially ahead of Gold

-CRUDE extending higher again.   And CL being over 73.25 should allow for continued gains to 75-76 at a minimum.   Right to be long Energy and overweight

-Healthcare outperformed all other sectors for the month of September and continues to strengthen relatively.  Now tops on a 1 month and 3 month basis

 

S&P-  No man’s land-  Above 2930 positive.. any failure this afternoon and movement back UNDER 2918 is negative and particularly under 2907

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NYFANG -  FANG basket.. which does include TSLA.  Has reached key area after this week’s bounce.

Expect the start of some turn back lower and FB, TSLA  weakness could spread to others .  

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Energy continuing to shine, and with CRUDE pushing up above 73.25.. this sector should be overweighted for a further push higher

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Key area for the Dollar-   Expect this likely stalls and turns lower

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SILVER-  Very good move out of Silver today..  and with yields having stalled and Dollar up to good resistance

Silver taking the lead might help Gold also begin to strengthen-  I like being long on today’s move. But important to keep an eye on precious metals

If Dollar starts to weaken.. this group should begin to finally work.. both stocks and commodities

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Thursday Technical Video, charts of interest- Gold breaking support

Thursday Technical Webinar-  15-20 min.  S&P.. XLF, XLI, Bonds, Breadth

https://www.youtube.com/watch?v=j9Qb4M6pMNc&feature=youtu.be

 

Stocks losing some steam in the last hour..but only if this RED SUPPORT TRENDLINE is broken would this end up like yesterday

Though back to back days down into the close would definitely tilt the odds towards a selloff and decline tomorrow into early October

Overall.  OVER 2936- yest lows would be POSITIVE for stocks into early next week-  while UNDER 2900 tilts trend negative and specifically under 2883 as has been discussed.

 

Breadth is flat which is disappointing for the Bulls again.. and Transports, IWM lagging badly. Both flat..   Telecom and Utilities gaining the most ground today..

Financials negative again.. Materials down and industrials just barely positive.

Tech has to be commended for showing strength.  Still difficult to be short Tech. its slowdown thus far has not resulted in any major pullback and FANG is on the comeback in the short run and has outperformed lately

 

For now.  2932-6 important on the upside..   while 2902-7 on the downside-  See below

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The US Dollar has picked up steam over the last few hours which was somewhat unexpected given that many signs pointed to the Dollar having broken down last week

And now rallying back-  For now, the next couple days look important as resistance.. and one could contemplate

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For now. Gold being hit hard on Dollar upswing.  And looks to pullback further near-term -  Gold still difficult to own as Dollar moves higher and yields have been pretty persistently strong 

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For any with an interest in crypto-  We are seeing meaningful moves today in both Bitcoin cash and Litecoin.  Minor breakouts.  

These have failed in the past.  But this now marks the 3rd test of this trend and minor breakout for BCH- and weekly momentum is converging quickly to the signal line in MACD.. i.e. close to turning this trend positive.

Given the history of Nov/Dec being quite positive.  It’s worth paying attention again at a minimum.

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Wed Mid-day technical Video post FOMC- Areas of importance for S&P for balance of day-

Wed Mid-day technical video  POST FOMC but pre Powell

https://stme.in/ZeCcAzx7SE

  

All consensus with FOMC today-  FED hikes Fed Funds 25 bps  to 2-2.25%

FOMC sees further tightening in the months ahead.  12 of 16 say a fourth hike is warranted

Removing accommodative stance and seeing GDP picking up this year.

 

Yields have pulled back further post FOMC on the first move post Hike.  10yr at 3.066 down about 1%-   Dollar however failed to move higher given removal of accommodative stance.. which many might see as disappointment

Market ticked up a bit higher in its first move to S&P +11 and has given up a few ticks just in the last few mins.    Financials still not acting well-   S&P 500 Financials lower by 0.50%.  Breadth still flat-  Energy, Mats, Financials, Utes and Real estate all lower.    Healthcare leading -  higher by 0.90% while Discretionary, Staples also the other sectors up by more than 0.70%

 

 

S&P hourly-   Being over 2925 is positive for S&P and any reversal back under would be a negative.

For now,  spiking up post FOMC has been seen as near-term bullish  

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Financials down 4 straight days-  Disappointing for Financials not to be acting well.   For now, keeping over 28 would be a positive and allow for move back higher.

Below would be a concern 

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TNX-  A stalling out in Yields.-  trend bullish but should be strong resistance 3.12-3%.

We’ll see whether Powell’s comments cause any gyrations

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Thursday DJIA hitting new highs, and Materials breaking out- Mid-day Technical Webinar link

Thursday Technical Webinar-   20 min covering 5 Key Themes-   No daily video, as this longer video will take its place today

https://stme.in/pnC2sxrevr

  

BUY XLB-  3-4 month timeframe-  Stocks like DWDP attractive technically to own

BUY EURUSD for move to 1.1940 initially

Buy CQQQ as Chinese Tech looks more appealing than US Tech at the moment

Hold off on buying Treasuries until next week, but 3.12-4 should be very good area.. and Demark signals will line up

 

S&P and DJIA back at new all-time highs, yet the NASDAQ is still well below and not keeping up of late.   Most of Europe closed positive to the tune of 1%, but still well off recent highs, and Asia was mixed

Key development for today is the US Dollar attempting to break down which is lower by 0.60% vs Euro but down over 1% vs many LatAm currencies as well as S African Rand

This is serving to help MATERIALS breakout.. and stocks like LYB, MOS, DWDP, IFF, EMN are all up over 1.5%  (while not significant to the SPX, the Materials sector turning up is a positive and looks to be directly coinciding with the Dollar turning back lower

  

BBDXY-   this Bloomberg Dollar index breaking down to the lowest close since mid-July and arguably is coinciding with a decent rally in Materials stocks.. and affected Chinese Tech positively early in the week

One should be LONG the EURO and Pound Sterling and expect that further dollar weakness helps Materials and Energy along with many commodity names that have gotten beaten down of late

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 DJIA-  Back to new all-time highs after having missed keeping up with others earlier in the month

Prices stretched but will need a trendline break to care

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While all looks good with DJIA,   the breadth deterioration(Summation index). Technology waning..ARMS index, and Demark sells could be problematic for this rally being sustainable

But the number of stocks hitting new lows has not begun to appreciate enough for my liking..  but we have seen fewer and fewer stocks hitting new highs which has dropped off substantially

I find the SUMMATION INDEX helpful. The smoothed Advance/Decline.

This shows that breadth has fallen off pretty substantially in the last couple weeks to the lowest levels since May

 

SUMMATION-  So while overall “A/D” is near highs. It did peak out in June and has pulled back


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The TRIN, or ARMS index is signaling caution with extreme upside to downside volume, which is at the lowest since late Jan/Feb, the period that led to the decline into 2/8

.53 as you can see below has taken out prior lows

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Equity put/call is showing 5 day ratio back in the mid-50s.. this is also a short-term concern

2 Calls being bought for every Put

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New highs is down to 65 on NYSE.  See the extent to which this has plummeted of late

This is a concern when stock INDICES are trying to push to new highs

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NASDAQ diverging negatively, while ENERGY breaking out- US tech should be avoided in favor of Chinese tech- Wed mid-day Video and charts

Wed mid-day Technical Video

https://www.youtube.com/watch?v=WsVq0dLd0Mk

Stocks largely mixed, with S&P just fractionally higher while NASDAQ down, as Technology underperformance continues

S&P has stalled near former highs,  but tough to call this pattern bearish.  And 2920-5 remains a key area of upside resistance.

But breadth yet again is FLAT today and slightly negative... which IS a worry.  And signs of Tech/FANG names headed lower, while most of the speculation happening in Pot stocks, as names like TLRY are making parabolic movement, up 50% today alone.     For NASDAQ, the lagging has been ongoing vs SPX since mid-June and 7400 is a very important area for NDX.  Under would allow for more meaningful acceleration

Treasury yields continuing to press higher.  With TNX now up to 3.08 and 2/10 curve up to 27 bps while Dollar shows evidence of stalling out.

Meanwhile, CRUDE is on the verge of its own large breakout above 71 and should be bought, either USO, or CL futures, or XOP and OIH for stock exposure, both of which have broken out today

 

A few key themes

  1. ENERGY-    CRUDE on the verge of breaking out-  its right to own Energy-  E&Ps and seeing more signs of Oil Services joining

  2. METALS stocks-  GDX making decent continuation move.  While this has been trending down for some time,  the gradual rolling over in the Dollar is bullish for this group

  3. China starting to re-awaken-  Chinese Tech stocks making minor breakout. As per CQQQ while SHCOMP and FXI confirmed Demark buys the other day-   Good to start favoring a rally here

  4. Yields pressing higher-  This should favor Financials.. which look to have finally come alive today.. while most interest sensitive names have been losing ground.. as might be expected

  5. Technology underperformance- 

 

S&P still holding up near the highs-  a move up to 2925 looks likely while an breach of 2883 would be problematic

But both S&P and DJIA in better shape than NASDAQ near-term

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NASDAQ 100 quite a bit weaker.. and 7400 is very important to hold for NASDQ.  Under allows for a pullback to test late June lows

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ENERGY working well.. and both XOP and OIH breaking out today.

Would favor VNOM, CRC, DNR, MRO, MPC, EGN, COP just to name a few.  But this sector likely works well, particularly with crude over 71 (WTI)

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MRO is a name I like within energy.. just starting to emerge-  

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Viper Energy Partners LP-   VNOM-  an Energy vehicle hitting new all-time highs, and something which is attractive from a trend following perspective within the group

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MPC-  Marathon Pete-  I consider today’s pullback an attractive buying oppty- Like energy and MPC in general to outperform

Would buy into today’s weakness, technically

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Conoco- COP_ Another attractive technical idea within the energy space-  Expect this to challenge former highs from 2014.. and movement up to the 80s likely

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S&P pullback back down to key 2900 area- Monday Mid-day Technical Video and charts of interest

Monday Technical Video-  5 min on S&P, NASDAQ 100, and AAPL

https://stme.in/fwzyx0BuES

  

Markets weakening with S&P back down to key 2900 area and breadth fractionally negative heading into the last couple hours of trading.

Technology and Financials both underperforming while Discretionary lagging more than any other sector with AMZN and NFLX both down more than 2%.

Other retailers showing some signs of pulling back also with TIF, JWN, KSS, GPS and M all within the 10 top worst performing stocks in the S&P and lower by more than 1.6%.

Treasury yields have largely stalled out, while the Dollar is still fairly weak

 

For now, unless S&P Futures finish under 2900, there’s insufficient weakness trend-wise to think markets start to accelerate lower, though the concentrated weakness in Tech is a definite concern along with the inability of Financials to muster much rally.   

 

S&P 120 min chart-  Pullback thus far has held where it needs to, but under 2900 on an hourly close,  should lead to 2884 and then 2869-74 which is more important

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S&P- Daily -   Weakness has undercut Friday’s lows, but thus far not too much weakness,  but a break of recent lows would be far more negative so under 2900, the real area of concern is 2869-72

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TNX-  early day rally in yields above 3.01 has now backed off given the equity selling, but still an important move in yields if not erased

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NASDAQ-   100 Dec futures-  All eyes on the NASDAQ 100 given tech weakness and this can’t afford to get under 7400 without causing a much larger pullback

 





Both AAPL and AMZN which I discussed on CNBC last week are meaningfully lower, greater than 1.70%

My interviews found me negative on both of these stocks in the short run,  and my thought process is laid out here:

 

AAPL-   My CNBC interview on AAPL-  Bearish ahead of product launch

 

https://www.cnbc.com/2018/09/12/ahead-of-apples-product-launch-trader-is-playing-for-a-pullback.html

 

My CNBC interview on AMZN.  Calling for move to 1650 from its prior 2045 area about 2 weeks ago

https://www.cnbc.com/video/2018/08/29/trading-nation-amazon-1-trillion.html

Healthcare- Quick Technical Thoughts- CI, MTD, ZBH, ZTS, CVRS, THC, MNK, CLVS, NBIX

Here are some quick thoughts on some Healthcare names showing both bullish and bearish price action this past week

  

POSITIVE

Some bullish price action in CI, MTD, ZBH this week which looks to extend

ZTS getting close to bottoming and worth buying here technically,  CVRS also a huge week percentage wise and overall starting to show more evidence of bottoming out

 

NEGATIVE

While THC, MNK, CLVS still look to pullback further-  bearish charts

NBIX stretched here and some evidence of near-term peaking out after 2 straight weeks well off its highs

 

 

Good progress out of CI this week-  any pullbacks here should be bought.  

Good triangle breakout and should be able to extend

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ZTS looks to be close to trying to bottom after the last month of sideways consolidation.

I like buying

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 MTD should be bought as this starts to turn back higher, breaking minor downtrend

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ZBH-  Also good move here, but likely stalls near 133 at prior highs-  So next couple points would consider selling into this barring any fundamental catalysts

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SRPT-  Overweight-  Still a good stock to add to as recent gains and structural progress should help this reach 175, and early to sell into strength

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CVRS- weekly-  Some definite evidence of this trying to bottom out.  Big percentage move this week and volume has been heavy on these gains

CVRS broke the entire trend from 2017.. which is a good sign.. so would begin to weight heavier and buy all pullbacks

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NBIX would watch carefully as some evidence of topping behavior with 2 straight weeks of closing well off early week highs while extended.

UNDER 116.26 would suggest the start of a  pullback

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THC-  A bit more selling here is likely.. no real evidence of any bottom at hand and should at least get down under 27.98


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MNK-  weekly-   Pullback to near 26 possible  and early year breakout definitely showing evidence of rolling over this week, which is a negative for the next few weeks for MNK

S&P move above 2900 a minor positive, but Financials still not cooperating- MID_DAY TECHNICAL VIDEO, links to Technical webinar, and charts of interest

Thursday Technical Video- Mid-day

https://stme.in/PAKp654GUN

 

Link to today’s Technical Webinar-  20 min-  Best longs and shorts to consider-  SPX structure, and TNX, Dollar, Gold and Oil analysis

https://stme.in/wR2HSRdZBa


S&P picture after today’s open-  S&P had broken out above 2900 in Dec Futures.  This was equivalent to the 2895 level for Sept mentioned as being important

Going forward.   2900 will be the line to watch separating a bullish from bearish view.  Holding above this gives markets a chance to test highs.. and can’t afford to be broken without expecting weakness down to 2875, , and then 2865-7.  US Dollar pulling back to what needs to hold for the bullish view..  and Yields have pulled back a bit to erase early week gains.  Crude giving back some of the last couple days gains.. but overall this move should be used to buy, technically-  Gold meanwhile has attempted to bounce, but it looks like this will require more time and near-term its right to sell into 1220-30 Gold until this can show more proof

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SM-  SM ENERGY attractive given what WTI CRUDE has done this week-   Breakout likely can lead higher, and like owning technically within energy

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Callaway Golf- ELY- stands out as an attractive technical long and this flag pattern likely gives way to higher prices

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WYNN and the casinos have bounced a bit providing good technical shorting opptys.  This group remains quite weak and right to sell into gains, expecting another move back to new monthly lows

I like shorting WYNN and LVS

 

 

  

Today’s USDTRY-  TURKISH LIRA rallying   USDTRY falling after rates hiked.  This should drive a further near-term stabilization in Emerging markets  and TRY could rally to near 5.40-5.50

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AAPL Analysis, Crude up to highs- Mid-day Technical Video, Charts of Interest

Mid-Day Wed Technical Video

https://stme.in/7Q8bKBnhWM

 

 

My CNBC interview from yesterday-  Bearish on AAPL into Product launch given overbought conditions, targeting $205 for pullback as part of current intermed. Term uptrend.

https://www.cnbc.com/2018/09/12/ahead-of-apples-product-launch-trader-is-playing-for-a-pullback.html

 

My CNBC interview from yesterday..  choosing HD, LOW out of the Big Box retailers after their recent breakout above Jan highs

https://www.cnbc.com/video/2018/09/11/trading-nation-big-box-surges.html

 

 

Markets remain fractionally negative, though NASDAQ down nearly 0.50% as stocks have struggled to regain its early positive, despite evidence of possible negotiations with China

Both Technology and Financials negative.. so over 40% of the Market..  so while those sectors and Utilities are the only ones down..  3 of 11..  they have a big impact on averages.

Sectors like Consumer Staples, Telecom up more than 1% today.  And Industrials also positive to the tune of 0.65%, so some good rallies in many names.  Yet, Technology weakness looks to be taking a toll.

Crude’s rally above $70 serving to help energy to some extent, but many Energy ETFs remain in downtrends and difficult to expect much of a rally.  So gains have been tough to come by.

Dollar weakness starting to extend a bit more in the last couple hours.  While bond also rallying  and Yields down to 2.96% on 10yr.. a bit of a pullback on last couple days. 

 

 

S&P-  KEY RESISTANCE at 2895-  near-term pattern will remain challenging until S&P can get above earlier highs.

UNDER 2879, the lows from earlier.. would cause a pullback to 2865-7 which is arguably more important on the downside

 

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Crude-   very constructive gains back to the highs of this pattern which bodes well for Crude to break out in the days/week ahead

Energy has been a serious laggard as a sector and many of these stocks remain tough to buy

Technically.. I like SM, VNOM, HLX, UNT, DNR, MCF

 

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AAPL-   Near-term, I expect AAPL likely pulls back to 205 before gains can continue-   so about a 6-8% correction as part of its ongoing uptrend

 

The stock is attractive on an intermediate-term basis technically, but AAPL has gotten a bit overbought near-term given the rise in the last few months, and just in the last week has shown some evidence of rolling over to alleviate some of these overbought conditions, correcting about 3.5% in the last 5 trading days.  I believe this should continue in this seasonally weak month

 

From late April to late August,  AAPL rose about 26% in four months’ time, causing the stock to get very extended above its intermediate-term uptrend.. and weekly RSI to spike above 70  (Relative Strength index) and remains above 70 on monthly basis.. the most overbought since 2015.

This recent start of weakness in the last week does not look complete.   So similar to 2012,  2015..  the stock looks likely to pullback in the short run.. and its runup from late April should be consolidated into late September before gains can continue

 

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AAPL-  Weekly-  $205 would be a 50% correction to the rise from late June and is considered the first real target of importance on the downside

 

 

 

 

AAPL- MONTHLY-  See how stretched prices have gotten as of this past month-   Weakness down to 205 is a minimum expectation but would provide a much better buying opportunity as part of this uptrend

 

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HD remains quite attractive and any pullback back to its base should be used to buy, arguing for further outperformance

Great technical structure in this compared to stocks like TGT, and a better near-term risk/reward

Would choose HD also over LOW as HD has consistently outperformed in recent years but has underperformed in last couple months, making for a better risk/reward in my view

 

 

 

 

 

 

 

 

 

 

 

Transports pushing to new highs a positive force given the withering in Technology

September 11, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

S&P 500 ETF Trust SPDR (SPY)-  
286.5, 283, 281    Support
290.45, 291.16-19         Resistance


LINK TO TECHNICAL WEBINAR from Wednesday, 9/5:  https://www.youtube.com/watch?v=WwyKpRK1hR4&feature=youtu.be

 

SPX - (3-5 Days)- Mildly bullish with stops and turning short again under 2865--It's thought that Tech stabilizing along with Industrials and Transports extending gains are minor bullish factors for the next couple days.  Any reversal and pullback underFriday/Monday lows puts the bearish case back on the front burner for immediate pullback to 2800-7, but its thought that selling proves mild for now.  

SX5E- EuroSTOXX 50- Minor bounce possible but should NOT get above 3350, so 40 points maximum before this turns down again.   Wave structure should result in additional weakness to take out lows in SX5E.  Underperformance still likely.

HSCEI- Mildly Bearish-  Pullback looks to have another 1-2 days before finding support near-term, with max weakness likely taking this to 10200 before rebounding.  Look to cover shorts under 10250 on weakness into Tuesday/Wednesday


Trading Longs: CCE, KSU, CSX, URI, LB, TOWR, SQ, SAIL, PS, D, NEP, EXC, NRG, ES, ETR

Trading Shorts:  VMC, TWTR, AMZN, MLM, NTES, BF/B, JD, ANTM, AMBA


TECHNICAL THOUGHTS

US Equities selling has been largely unconvincing lately, and despite some rotation out of Technology, we're still not seeing weakness in Industrials, nor in Financials, with Transports having extended after breaking back out to new high territory.  While this splintered market might show a few days of rally attempts, largely driven by the Rails, it's unlikely that Tech can muster much strength, and this latter group remains one to avoid, outside of a few selective names within Enterprise Software.   

Technically one can make the case that Transports continue higher in the next few days given the recent breakout, and the pattern in XLI also looks more bullish than bearish near-term.  While Demark weekly sells are now present on XLI, the larger pattern still merits sticking with it, from the long side, until more evidence of weakness appears.   The Dollar along with Treasury yields and commodities have not shown much evidence of volatlity in the last 24-48 hours, so it's right to stick with what's working for the next couple days, that being Industrials and Transports, and stocks like KSU, CSX, URI, TXT, LII, ENS, AMR, ROP and EMR. 

ACTION PLAN-  

Short XLK at 75.75, with targets near 72.50- Take profits on daily close above 74.67
Long IYT- with targets at 212
Long XRT with target at 54
Long XLU with targets at 55
Long XLP with targets 55, Stop at 53.98

 

Additional charts and thoughts below.

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XLI still looks to push higher in the days ahead after yesterday's outperformance.  240 minute charts showing four-hour bar charts for XLI look to extend to targets over 79 before any real exhaustion, which still looks premature on intra-day charts.  Any test of highs from late January/early February would be an area to take profits, but might be difficult in September given the degree that momentum has turned down in other sectors.  

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Transports look to be one of the stronger areas in the market in the short run, given rallies in the Rails and The DJ Transportation Avg has managed to extend its recent breakout to new highs and should be favored for further near-term outperformance in the days ahead.  Overall, a move to 11700 looks likely before any real stalling out, and IYT could be bought technically for further gains near-term.  

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AAPL looks to be finally showing some evidence of backing off, at exactly the same time we're seeing selling in other former leaders like FB, NFLX, AMZN and others.   Many didn't expect that Equities would be able to hold up given a decline in many of the stocks that had carried this rally most of the way this year.   For now, the rotation into Industrials and Financials looks important and has been able to hold indices up despite the decline in Technology.  Near-term, this is a positive, but on any evidence of these other groups giving way, one would expect signs of markets showing further weakness in this seasonally tough month.  AAPL looks to pullback to 205-210 into end of September, so any near-term rally likely will not mark any meaningful low near-term for AAPL, which pulled back to multi-day lows yesterday and shows little evidence of any exhaustion after its recent move. 

Markets struggling to rally- SPX requires move over 2895 at a minimum for progress-

Monday mid-day Technical Video

https://stme.in/tumRGMGQiT

 

 

New Technical Long ideas  PS, AKAM, LB, PVH, SAIL, HEAR

New Technical Short ideas:   TWTR, MLM, ,NTES, VMC, AAPL, AMZN, BF/B, JD

 

 

Markets have attempted to bounce today but largely are failing to make much ground-   Most of Europe closed higher by 0.50% but should be something to sell into

Not much volatlity today out of WTI Crude, Gold, TNX, or DXY..  but Dollar has backed off a bit

Healthcare is the only “down” sector today.. but gains have proven very minimal in other sectors. With only Industrials showing gains above 0.50%

 

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S&P-  See that bounces failed to get back up above 2895 which was broken last week.

While today’s move was a minor positive in having broken out above the “WHITE” downtrend, structurally trends are still bearish and momentum is negative.

So it should be expected that rallies fail and lead lower, if not today, then over next couple days.

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AAPL-  Weekly chart in AAPL shows completion of upside exhaustion for the first time since mid-last year with a completed weekly 9-13-9 and now turning lower

This could allow for a move down to 205-210.    So near-term its right to expect weakness out of AAPL.. but don’t expect any longer-term trend breaks

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VMC-  VULCAN also violating quite a few past lows.. so for those looking for short ideas.  This likely causes weakness in VMC in the days and weeks ahead.

No evidence of any exhaustion on the selling, so expect this will continue

 

SAIL-  A bullish play – Application Software which is moving back to new highs and still healthy technically

Quite a few App software stocks showing good strength and one of the few areas of Technology that can still be favored near-term

Expect move up to 34-35, but would utilize tight stops on longs

 

US Markets still not matching the selling intensity of Europe, Asia, but Technology weakness still important

Thursday Technical Video-   5 min-  there will not be mid-day videos over the next 2 trading days, as I’ll be conducting a private 2-day Client Teach in, in NYC but will resume on Monday

The daily reports will continue Thursday and Friday-  Thanks for your understanding

https://stme.in/f0DEZE6M6m

Thursday Technical Webinar link-  20 min overview of Global asset markets, technically-  and Charts of 5 top longs and shorts

https://stme.in/NEOsL45We3

US indices remain weak, but have not really shown any real acceleration which has  begun to happen in the rest of the world.

Both Europe and Asia have shown more meaningful weakness, and in particular..  Europe’s SX5e and DAX have broken down out of near-term support ranges

Market performance today is largely flat outside of what’s happening in Technology which with a -1.5% decline, is causing most of the breaks in the US indices

In turn.  Money has flowed into the defensive sectors and both Utilities and Staples are rallying sharply

Both S&P and NASDAQ have gotten under early areas of support.  2885 for S&P.. but yet, sectors like Financials and Industrials are positive today and 7 sectors out of 11 are positive with breadth just 3/2 negative

 

Signs of Yields turning lower would give more confidence of Financials starting to weaken, which in turn would allow for the US decline to become more broad-based

For now, these are the charts which seem important for today

 

S&P broke 2891 and also 2885, but regained in a pattern that’s become familiar over the last week

Movement back to the lows and closing UNDER 2885 into the bell would be more negative heading into end of week

Until then.. its better to stick with Europe and Asia shorts

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DAX-  Break of this diamond formation is a negative for German DAX

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Tuesday mid-day Technical Video- S&P, NASDAQ break initial support- Prices holding just under for now.

Tuesday mid-day Technical Video

https://stme.in/KAjlTbeLHg

 

 

Break of support..  but holding just under, for now.

 

US Equities have struggled  to regain losses after the first bounce off the lows looks to be turning back lower post Europe’s close

The area at 2891.75 at Friday’s intra-day lows is important on a closing basis.. as is remaining below 7621 in NASDAQ 100 futures

Breadth seems to be turning down pretty sharply today, at 3/1+ negative and we’ve seen most of Europe close down over 1%-  DAX, CAC and SX5E, while SXXP finished lower by 0.70%

Bond yields and the US Dollar are higher, though yields have slipped from earlier highs.  Healthcare, Materials, Telecom and REITS are all down more than 1%, and Tech is lower by 0.75% with only Utilities positive on the session.

 

Overall, its thought that holding losses down under 2891 by the close would start the September pullback, but it’s a necessity to have the NASDAQ leading lower in my view. And this is happening today, with NASDAQ lower by nearly 0.90% and EEM also down more than 2%.  

Key developments for today. Thus far. Are the Equity breakdown under last week’s lows for S&P, NASDAQ, while the US Dollar rise continues. And Emerging markets suffering as a result. Both equities and currencies.  Meanwhile Crude oil’s early breakout thus far has NOT been able to hold.. and we’re seeing this being given back with 2 hours to go until close

A defensive stance makes sense under 2891, and its right to own/buy implied volatility.

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S&P gradually rolling over.  Thus far, Bounce attempts back over 2891 look to have failed, and with 3 hours left. Further weakness could face support near 2883, then 2861

 

 

 

 

NASDAQ also under last week’s lows near 7620 that were thought to be important for today-  Failure to regain this causes a move to 7567 briefly but then a larger test of 7400

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Crude oil’s early breakout attempt failed and now important to watch if this were to weaken in the days ahead after trapping longs over 71

Movement to new multi-day low closes would be a negative for Crude-  Energy never really participated all that dramatically on the upside  but down 0.35% with the drop in WTI

 

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S&P undercutting 2894 is negative- Move to either 2883, or 2861 possible

Friday mid-day Technical Video-  Analyzing S&P structure

https://stme.in/jNQZlWbOjO

 

 

 

Thursday Weekly Technical Webinar-  LINK BELOW

https://www.youtube.com/watch?v=KTA02Ng_gRo&feature=youtu.be

 

 

S&P -  Watch if S&P spends any length of time under 2894..  an HOURLY close could be sufficient and would likely begin the decline to 2883, 2861 and 2800-7

This is the real battleground for today. An important spot-  so next 30-60 min  will show whether this can hold or not.

 

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S&P-   Daily closes day UNDER 2898. Would confirm Demark sells.. and as said above

Under 2894 on an hourly close today … means this happens this afternoon most likely and turns down

For now.. has held

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AAPL stabilizing vs AMZN-   For those who care on this.  One should favor AAPL vs AMZN in the weeks/months ahead

This is starting to stabilize and showing some evidence of bottoming.

The trend in this has been negative since 2015.. but now some initial evidence that AAPL might begin to show better relative performance

image003.gif

 

 

USDCAD-  Canadian dollar weakening today.. with thoughts that a deal might NOT happen

OVER 1.32 TECHNICALLY would suggest that is correct.  As this would cause meaningful weakness in Canadian dollar

Or as seen below.  Strength in USD vs Canad Dollar

 

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My interviews from this past week and last

 

AMZN-    my CNBC interview from 8/30, arguing that 1650 should come before 2500, the new MS target

https://www.cnbc.com/video/2018/08/29/trading-nation-amazon-1-trillion.html

 

My CNBC interview talking markets as Equities close to finishing the best August in 4 years—What’s in store for Sept

https://www.cnbc.com/video/2018/08/29/sp-fantastic-august-can-the-run-continue.html

 

 

Chinese Tech stocks-  Time to buy?   BABA, BIDU, TCEHY

https://www.cnbc.com/video/2018/08/23/trading-nation-buy-chinese-tech-weakness.html

 

Retail stocks to favor-   LULU-    Last weeks interview where I picked LULU out of the handful of retail stocks to succeed.  Stock is up +15% today

https://www.cnbc.com/video/2018/08/23/two-surging-retail-stocks-could-fly-even-higher-on-earnings.html