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Trading

Fractional Gains to start the new week- Natural Gas in focus

As the first new week of the new month gets underway, most US index futures are showing mild gains, while Europe is higher by a full 1%.  Treasuries are higher by a small amount, while WTI Crude and Gold are largely unchanged.  For now, the trends remain bullish, overbought, but still resilient, with no pullback lasting more than 3-4 days or causing meaningful damage before moving right back to the highs-  For S&P, prices lie up near the highs of this resistance channel that has guided prices since mid-March (on a flatter plane than the original rally from mid-February )  Resistance lies near 2070-2 while support of this channel is near 2040-2, 2035-7.    While some might consider this an area to sell, additional gains look likely up to last November/December highs before any meaningful pullback gets underway. Hourly chart below:

Excerpts from this morning's Weekly Technical Perspective-  where 10 TOP Technical Breakout stocks are listed which have just gotten above former highs and/or look attractive from a risk/reward perspective

"The ability to reclaim new highs for the year has stopped out shorts and looks to press even higher as indices enter the seasonally bullish month of April.  If history repeats itself, US equities typically average about 2% in the month of April, the month which directly proceeds the "Sell in May and Go Away" period.  Markets are higher typically 66% of the time, and even a greater percentage of the time 71%, when the prior month is higher by 5%, such as March according to Bespoke.( DJIA up by 7.08%) While April typically is the best month for Equities when considering the DJIA, 3rd/4th best for S&P, NASDAQ respectively, it lands a mere 3rd during Election years, averaging just under 1%.  However, it's important to remember that the the 2nd quarter of Election years typically has one of the worst returns of any within the Election year cycle, (Averaging -1.2% since 1900) and we see that three out of the last four times this occurred since 2000 were negative (2000, 2004, 2008, and 2012)  (Stock Traders Almanac)  Yet this time around, the selling very well might prove muted until indices reach former November/December 2015 highs, given that little resistance lies between prices and these levels at present, and they're only 1% higher ) "

Natural gas continuing its ascent, with May NG back up above $2.00 MBtu, and still looks attractive to make additional gains in the days ahead.

Stocks, bonds both trending higher as US Dollar implodes

Heading into the last day of the month and quarter, Equity indices remain resilient, showing no signs of the flight to safety that we've seen into both Treasuries and the Yen in recent days.   Prices have pushed back through to new highs for the year within 1% of last November's peaks, shaking off any signs of weakness, while Bond yields have gone exactly the opposite direction, trending exactly the opposite of how they've moved with stocks in the last 12 months.   Momentum began to wane in stocks about a week ago, when prices broke one month uptrends, which also coincided with a dropoff in momentum and breadth.  (Which also happened in WTI Crude)   While prices managed to recover recent trend breaks and push to new highs, we haven't seen momentum follow suit to the same degree which should signal that the rally since February 11 is losing steam, and could be vulnerable to stalling out.

For now, 2 areas are key to watch on the downside to think that any sort of weakness is unfolding:  2047 and then 2020-  Until we see at least some degree of pullback that can hold, the trend remains positive for S&P

5 min S&P charts still constructive for a probable push higher up to 2064-5-  Under 2052 would be the first warning that this shouldn't happen, along with 2047 as mentioned above

 

Bond yields have gone exactly in the opposite direction of stocks over the last couple days,, which will need to be watched carefully given this sudden divergence-  1.85% important for 10yr TY yields.. and unless this is recouped right away, the trend remains DOWN for Yields

 

US Dollar weakness has accelerated in recent days and this morning, we see the DXY breaking down under mid-March lows, which opens up the door to a probable test of last Fall's lows near 93 down to 92.50.  this should cause a bounce in EM, along with Materials and commodities outperformance