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Rally term rally continues & a bit more strength likely into Wed-Friday

January 7, 2018

Mark Newton CMT, Newton Advisors, LLC



Monday Technical Video- 5 min discussion of SPX structure, TNX, Crude

Thursday Weekly Technical Webinar-12/27/18- SPX, TNX, DXY

Newton Advisors CNBC Appearance- Friday 12/28/18


Ongoing ability for S&P and US indices to extend gains, and still looks early to sell on most timeframes. S&P likely will get up to 2575-2590 before stalling out, and it's still right to look at this rally as counter-trend in nature of the pullback that started in September and December. Getting above 2630 is necessary before thinking prices can truly extend.

Breadth is quite positive today at 4.5/1 bullish, and Energy and Discretionary are leading the charge, while Financials and Tech are lagging as of now. Overall, this appears like a counter-trend ABC type bounce and likely should be complete by end of week. For now, its right to favor continued gains in Energy which should lead, and use further gains this week to consider buying implied volatility


S&P has moved to the 50% area of the December drawdown, yet still little signs of any real exhaustion just yet, and will require likely another 2-3 days of gains. Note, this is still considered a counter-trend rally and unlikely to get up above 2630. Targets for S&P lie from 2565-2590 and should be good to buy implied volatility and/or sell that which is overbought that has moved quickly in the last two weeks.


The declining Dollar looks to be nearing support into mid-week, so I expect the next 1-2 days should represent a good chance to sell EURUSD, and/or GBPUSD and expect the Dollar to reverse back higher.