February 7, 2019
Mark Newton CMT, Newton Advisors, LLC
Thursday 2/7 Technical Webinar Link- 20 min long, discussing SPX, TNX, EEM, Commodities
Newton Advisors CNBC Appearance- Friday 12/28/18
Short idea: EEM, DBC- Emerging markets showing evidence of trend breaks (More on this in the Daily tomorrow am)
First real evidence of any selling which many people expected might be overdue given China trade disputes or global growth concerns, yet technically there was very little evidence to back this up until today's pullback to multi-day lows. Much will depend on whether prices rebound into the close as to whether this selloff immediately extends, and any ability to rally back over 2717 likely postpones the decline. However, momentum and breadth are starting to grow more negative, so even on rallies at this point, I expect these should prove short-lived and some kind of pullback CAN happen. However, S&P could get down to 2650 without doing much damage and requires a decline under 2722-4 (Futures and Cash) to expect a larger setback. At present, this appears like nothing more than a minor pullback after the big run-up we've had.
More importantly perhaps concerns the movement in Emerging markets and commodities which have taken a noticeable leg lower given the US Dollar's 6th straight day of gains. These groups along with China should be avoided technically in the short run over the next 1-2 weeks, and it's thought that EM likely underperforms.
This daily chart of SPX doesn't show much concern technically on today's move, but a close near the bottom quartile of today's range likely would allow for another 2-3 days of weakness. Important for the bulls that markets rally up well off their lows into today's close. The lack thereof likely brings about some selling into early next week.