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Transports and REITS weakening in otherwise lackluster session

June 25, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2941-2, 2926-8, 2905-7

Resistance: 2952-4, 2960-1, 2968-70, 2980



Monday Technical Video 6/24/19

https://stme.in/MnnQtq9RMG



Link to Last Thursday's Technical Webinar 6/20/19

https://stme.in/XCMYDCC7la



My CNBC interview (6/19/19) on Healthcare playing catchup

https://www.cnbc.com/video/2019/06/19/health-care-sector-set-to-bounce-after-weak-first-half-of-2019.html



My CNBC Fast Money interview (6/19/19) on Technology and Chip stocks

https://www.youtube.com/watch?v=QH5UnqRpnHY







SPX - (3-5 Days)- Bearish- It's thought that Monday's decline under last Friday lows could bring about 3-4 days of selling into the G-20 with support 2900- Over 2964 on a close lets the rally continue





EuroSTOXX 50- Bearish- Minor pullback here looks likely also over next few days, as this has stalled out just under prior peaks at 3511. Pullback to 3400-3415 would set up for a push back higher to test 3511 area.

HSCEI- Bullish- Rally up to 11085 looks likely over next 2-3 days with a max near 11273 before this stalls out as US Dollar stabilizes







Trading Longs: TMF, NOW, IPHI, IHI, IOVA, AKBA, MCD, SWAV, KHC, CSGP, FIS, TMO, DHR, AVLR



Trading Shorts: VNO, PLD, SPG, KIM, SLG, HST, SPB, PKG, GPS, UPS, FDX, JBHT, WBA, COTY, APA, SYMC, WDC, URBN



Some minor stalling out looks to be happening, not just with Equity indices, but many sectors as well, as SPX is back down under prior highs from April and many sectors like XLY for example have stalled out and rolled over to multi-day lows. As of yesterday's close, SPX had made its first decline under the prior trading days lows since this rally started back on June 3. Breadth came in about 3/2 negative and most of the strength happened in Materials, but no other major sector was up more than +0.30% in a very lackluster session. Conversely, Energy, Discretionary and Healthcare all declined -0.50% or more. Treasury yields seem to be turning back lower, for what appears to be a more serious area of support just under 2%, while the Dollar's pullback also continued. Gold raced further to the upside to near its first upside target at 1425, and Crude finished just below $58.



Overall, after a 200 point S&P rally in 14 days, some minor consolidation looked necessary coming into this week, and there's no signs that this can't extend a few more days. If Monday's session provided any tell-tale signs about the few days ahead of this week's G-20, it's that it very well could prove to be a very slow non eventful week until markets can get a bit more clarity.



Two items of concern technically: Transports look to be weakening more and more, with the DJ Transportation Avg declining to new multi-day lows. Stocks like FDX, UPS as well as JBHT, looked particularly weak. Additionally, the REIT sector looks to be peaking out near-term, and ETFs like VNQ rolled over to multi-day lows, breaking its uptrend, and suggesting further weakness here might be likely. So these look like two sectors to avoid this week, while Financials also could prove weak given the downward bias in yields







ACTION PLAN- 



Long XBI with targets back to 94



Long IHI, with targets at 240, stops under 221



Long SMH, looking to buy weakness, with targets at 112



Short VNQ with targets initially near 87



Long TLT with targets at 134, expecting yields to drop this week





Additional charts and thoughts below.

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SPX could weaken near-term, but likely to prove minor and buyable into G-20. Movement over 2964 would postpone any decline. Looking back at yesterday, SPX managed to pullback under the prior days lows which represented the first time this has happened on a closing basis since early June. While not a "hard and fast" sell rule per se, many other indices are starting to show some evidence of stalling out and rolling over to multi-day lows, the Transports and REITS being two. Other sectors like XLY failed at former highs and are weakening. Bottom line, some minor weakness could happen in the days ahead, but likely does not get down under 2900 and should be used as a buying opportunity for further strength into July.




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REITS starting to rollover. Charts of the VNQ, the Vanguard Real Estate ETF, show this sector starting to weaken in recent days. Prices have pulled back under last Friday's lows after having violated the one-month uptrend. REITS like VNO, PLD, SPG, KIM, SLG, HST all look to weaken in the days ahead. Thus, despite rates being low, there are some signs of this sector starting to weaken, which coincides with thoughts of a low in Yields being very near and could happen as early as this week on further yield weakness.





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Transports seem to be weakening steadily after the DJ Transportation Avg. failed to get up over the 50% retracement area of the prior decline and now have violated minor trendline support and fell to multi-day lows. This area should be avoided near-term, and stocks like FDX, UPS and JBHT look like better technical shorts this week on a 3-5 day basis than longs.





SPX hits new all-time highs, while Dollar collapses & EM bounces

June 21, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2917-8, 2905-7, 2892, 2884-5

Resistance: 2953-5, 2968-70



Technical Analysis Video Webinar,





My CNBC interview (6/19/19) on Healthcare playing catchup after recent underperformance

https://www.cnbc.com/video/2019/06/19/health-care-sector-set-to-bounce-after-weak-first-half-of-2019.html



My CNBC Fast Money interview (6/19/19) on Technology and Chip stocks

https://www.youtube.com/watch?v=QH5UnqRpnHY





SPX - (3-5 Days)- Expect near-term stallout Friday-Monday before gains can continue. Look to buy weakness next week



EuroSTOXX 50- Bullish- Rally is just below targets, but likely has a bit more Friday before prices stall out

HSCEI- Bullish- Expecting this bounce continues to 11071 before stalling and offering a pullback as a chance to buy dips



Trading Longs: NOW, IPHI, TNET, IHI, XBI, MRTX, IOVA, AKBA, EXEL, MCD, PLAN, ROKU, TNDM, TNET, SWAV, NVTA, TPB, KHC, CSGP, FIS, TMO, DHR, AVLR



Trading Shorts: SPB, AWI, CROX, SIG, SYMC, WDC, STX, URBN, FOSL

Equities finally pressed up to make the long awaited move back to new high territory yesterday. SPX led this surge to new highs, while both DJIA and NASDAQ failed in this regard. Breadth was strong for the second straight day, with ample participation out of Technology, which is thought to be key. It's interesting though not surprising (from a sentiment perspective) that some of this year's biggest gains have occurred while markets have been largely preoccupied with slowing economic growth or the prospects of the Trade war being prolonged. (This has resulted in many institutional investors sticking to the sidelines who have missed out on this move) From a non-technical perspective, this next week will be hugely important, as POTUS has seemed eager to strike a deal with the Chinese, as a way of jumpstarting his reelection campaign. Just the brief mention of this caused Technology to jump and should continue to be important this coming week. Overall, trends are bullish, but intra-day momentum has gotten quite stretched and one can make the argument of a 3-5 day stallout/reversal before pushing back to new high territory.



Outside of equities, we saw the Dollar and Treasury yields plunge, while Gold hit the highest levels on a close in over 5 years. The move in Yields, as discussed yesterday, should prove short-lived, allowing for an above-average snapback over the next 2-3 months. The Dollar, however, looks to be weakening more and more, Extreme weakness and//or Economic concerns that spur on FOMC turning more dovish wouldn't be thought as something ordinarily that would be extremely bullish. However, in this case, the market is in a sweetspot to rally, as FOMC has not done much to disappoint what has already been factored in. The real concern for the months ahead, remains the fact that intermediate-term momentum (monthly) is negative and diverging- (Higher prices not leading momentum higher) Meanwhile, Small and Mid-caps fell last month to the lowest relative levels in over 3 years. Thus, it very much seems like a Large-cap Growth rally. Yet, until signs of weakness appear, markets likely still carry higher (equities) in July, and likely just stall out near-term at April highs before pressing higher. The main timeframe for concern remains September-November of this year. Further rallies which accompany sentiment turning much more bullish as the SPX gets above 3035 would be something to drive concern.







ACTION PLAN- 



Long XBI -Long half unit, and using any pullback to 83-84.50 to add, expecting July rally back to 94



Long IHI, with targets at 240, stops under 221



Long SMH, looking to buy weakness, with targets at 112





Additional charts and thoughts below.

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SPX managed to move back to new all-time highs Thursday, and this index took the lead in outperforming both the NASDAQ and DJIA, both of which remain slightly shy of these levels. Overall, the area at 2965-70 is important in the short run. Breaking out above that would help S&P push higher to technical targets at 3040-75 into July/August. While seemingly far-fetched for this to happen right away, it's important to note that Sentiment remains largely subdued, and Technology has begun to reassert its strength, and now is back in the #1 position for the year. Bottom line, the next 3-5 days could present a challenge into end of quarter given the degree of near-term overbought conditions on hourly charts . Yet, the broader daily and weekly momentum are now positive and this remains quite resilient, trading up to and above former highs. Thus, there exist few reasons to be too concerned about this move overall, and structurally additional gains are likely to follow any minor 2-3 day pullback, lifting SPX back up to this 3040-75 area.



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Crude oil has just made its largest move of the year, coinciding directly with reports of Iran having struck a US Drone. This news directly coincided with Crude having broken out above its near-term downtrend, arguing for near-term strength. In the next 3-5 days, a bit more upside is possible, with resistance coming in near 58.75-60. However, for signs that this decline has run its course, a move back up over 60 is needed. Until then, this remains a bounce within an ongoing downtrend, and is likely to encounter strong resistance just under 59.


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Bloomberg Dollar index has now made two consecutive days of lossesthat have taken prices down to new multi-month lows. This has helped spur on a sharp rally in Emerging markets, including China, along with most Commodities, though this move largely has been led by the Precious Metals and Energy. Key support for this decline lies near 1180 just at fractionally lower levels. This is extremely important for the intermediate-term trend, as this represents a multi-year area of trendline support. If broken, and prices move UNDER Jan/Feb lows of 2019, this would be quite bearish for the US Dollar, leading to much lower prices for the Dollar. At present, it's thought that the next 1-2 weeks could lower before support arrives along with a counter-trend bounce. This could allow recent surges in Gold and other commodities to pullback, allowing for better risk/reward opportunities to buy. For now, this weakness in USD along with Treasury yields has been important in providing the crucial long-term breakout in Gold to new 5-year highs. Over the next 3-5 days, it's right to consider selling into commodity and Emerging market gains while buying USD as a short-term trade next week. At present, this is premature.

Post FOMC, Gold breaks out to 5-year highs, as US 10year yields break 2%

June 20, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2917-8, 2905-7, 2892, 2884-5

Resistance: 2953-5, 2968-70



Technical Analysis Video Webinar, 15 mins. Today 1pm EST Dial-In Number (United States): (701) 801-1211, Access Code: 840-955-999

https://join.startmeeting.com/info69336



My CNBC interview (6/19/19) on Healthcare playing catchup after recent underperformance

https://www.cnbc.com/video/2019/06/19/health-care-sector-set-to-bounce-after-weak-first-half-of-2019.html



My CNBC Fast Money interview (6/19/19) on Technology and Chip stocks

https://www.youtube.com/watch?v=QH5UnqRpnHY





SPX - (3-5 Days)- Bullish to 2954- S&P and other US indices likely to test April highs before any slowdown- For S&P this lies at 2954, with 2905 being important as support



EuroSTOXX 50- Bullish- Tuesday's rally should lead to a test of April highs near 3511. One should use any minor weakness to buy dips down to 3363 and expect further strength into early next week



HSCEI- Bullish- Expecting this bounce continues to 11071 before stalling and offering a pullback as a chance to buy dips



Trading Longs: NOW, IPHI, TNET, IHI, XBI, MRTX, IOVA, AKBA, EXEL, MCD, PLAN, ROKU, TNDM, TNET, SWAV, NVTA, TPB, KHC, CSGP, FIS, TMO, DHR, AVLR



Trading Shorts: SPB, AWI, CROX, SIG, SYMC, WDC, STX, URBN, FOSL

Equities appear to be in a technical Sweetspot given Fed accommodation with yesterday's Fed decision representing no real surprise for stocks. The combined Inaction along with dovish tilt helped both Stocks and bonds rally in unison along with causing a selloff in the US Dollar. Overall, SPX and other US Indices are now within striking distance of April highs, while momentum is not yet overbought and trends remain bullish near-term. While breadth has arguably not been as strong as desired in recent weeks, we've seen some evidence of Technology stabilization in joining the strength in Industrials, Discretionary and Healthcare to buoy the markets during a real time of indecision.



Healthcare in particular has shown some real mean reversion in recent weeks, jumping from the worst performing sector YTD, to the best performing sector in the last month. Yesterday's 1% gains helped the group gain further ground on other sectors and XLV hit the highest levels of hte year. Overall, this group should be favored for further outperformance in the days/weeks ahead.



Powell's comments however, did lead the Dollar to turn down sharply yesterday while Treasury yields fell back lower.. Both of these coincided with a sharp rally in precious metals and we saw Gold break out above 1365 after hours while Treasury yields slippped down under 2%. Near-term, the move in Treasuries should prove short-lived and should prove to be a selling opportunity for US Treasuries into next week for a more substantial low. With regards to Gold, prices are stretched near-term and despite a decent breakout back to new highs, this will need to be consolidated before expecting an immediate move above 1400.



ACTION PLAN- 



Long XBI -Long half unit, and using any pullback to 83-84.50 to add, expecting July rally back to 94



Long IHI, with targets at 240, stops under 221



Long SMH, looking to buy weakness, with targets at 112





Additional charts and thoughts below.

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SPX is now within striking distance of both April 2019 peaks as well as All-time highs, which look to provide only minor resistance before prices can break through to targets near 3040-75 into August. Near-term, prices might seem extended, but gauges like RSI are not yet overbought, while momentum is certainly positively sloped and trending higher. Overall, it should still pay to favor further gains.




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Healthcare is coming back with a vengeance, as this Sector ETF managed to move to the highest levels of the year on Wednesday, turning in performance that many will start to notice quickly. This worst performing sector of the year is now the best performing sector of the last month, and XLV looks to continue higher in the short-run. Medical Devices are leading in performance, while both the Biotech sector and Healthcare Services sector have engineered short-term breakouts that bode well for both of these groups to show further strength in the weeks ahead. Pharma stocks showed very good performance, but indices like DRG are rapidly approaching former highs that likely offer at least some minor resistance before this group continues. However the group as a whole remains within a very seasonally bullish time, so this recent relative strength looks likely to continue. Near-term resistance for XLV lies near 96.


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Gold has finally managed to push up to new four-year highs after-hours to levels near 1380 which breaks the resistance trend hit no more than two other ocassions since being formed in 2014. Overall, this does look important and positive on an intermediate-term basis. However, in the short run, prices are stretched and it will be better to look to buy dips vs chase prices above 1380. However, this is the move that many were waiting for and will be widely telegraphed in the days ahead, as something to follow. While in broad agreement on the positive intermediate-term implications of this move, in the near-term, it does seem right to hold off for pullbacks to buy dips for the majority of long positions for those not involved.

Semis lead as US Equities pull to within 1% of All-time Highs

June 19, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2917-8, 2905-7, 2892, 2884-5

Resistance: 2930-1, 2943-5, 2968-70



Tentatively scheduled for CNBC Trading Nation today at 2:20-5 and also CNBC Fast Money near 5:20-5



Link to 6/18 Technical Video, discussing SPX gains ahead of FOMC

https://stme.in/bUHbHOYP96



Link to 6/13 Technical Webinar, discussing SPX, TNX, Crude, Gold and more

https://stme.in/rz4cpQWMpz



Real Vision Interview, 6/3/19, discussing SPX, TNX stabilizing & moving higher

https://www.realvision.com/tv/shows/trade-ideas/videos/finding-a-bottom





SPX - (3-5 Days)- Bullish to 2930-45- Yesterday's rally above 2910 was worth following for a move which likely gets up a bit higher to test April highs before any real top. SPY volume doubled the prior day's totals and breadth came in at 3.5/1 positive, all Pluses.



EuroSTOXX 50- Bullish- While slightly overbought on an intra-day basis, Tuesday's move should lead to a test of April highs near 3511. One should use any minor weakness Wednesday to buy dips down to 3363 and expect further strength into early next week



HSCEI- Bearish- Expecting weakness down to 10067-10100. Gains over 10564 necessary before being too bullish.





Trading Longs: NOW, IPHI, TNET, XBI, MRTX, IOVA, AKBA, EXEL, MCD, PLAN, WEC, CMS, SO, PNW, ROKU, TNDM, TNET, SWAV, NVTA, TPB, KHC, CSGP, FIS, TMO, DHR, AVLR



Trading Shorts: SPB, AWI, CROX, SIG, SYMC, WDC, STX, URBN, FOSL


Tuesday's rip certainly cleared up the near-term indecision caused by six sideways days, and clearly puts the Bulls back in the "Driver's Seat" in the short run. While near-term overdone on an intraday basis, breadth took a much needed turn higher yesterday and by the close we saw nearly 3/1 positive breadth while volume flowed into Up vs Down stocks at a near 4/1 ratio or nearly 80%. Technology, Financials, Energy, Industrials all posted gains of greater than 1% in trading, while Staples, Utilities and REITS all lagged in trading and were down on the day. To have any conviction about the possibility of a reversal, stocks at this point would need to erase ALL of Tuesday's gains and close back down under Last Friday's lows at 2879.62.. a Tall order, to say the least. Momentum remains positively sloped and not overbought on daily charts, while sentiment remains clearly subdued with pressure being put on the FOMC to ease, while a Trade deal thus far, has not been achieved. POTUS comments on US Meeting with China at the upcoming G-20 directly coincided with yesterday's surge, but more will be needed to help sentiment get more bullish. From a non-technical perspective, It's thought that enough upside potential is in the cards with a completed Trade deal and a FOMC that does what the market is pricing in (no cut in June, but a July cut) that it's tough getting too negative without any deterioration in price action.



Technology in particular turned up sharply yesterday, leading all sectors, with the Semi group leading the charge. This is a positive development along with Industrials and Healthcare starting to act well, and is thought to be enough to carry the market a bit further in the short run. If Financials can stabilize here with the FOMC not spooking the market and yields start to turn higher, this would be a definite positive which would add to the degree of participation. For now, Financials have been strong since March but have lagged in recent weeks and this will need to change to have more confidence.




Outside of Stocks, The US Dollar firmed a bit, while Treasury yields fell precipitously, not just in US but around the globe. German Bund yields fell to -0.32 bps while French, Austrian and Swedish sovereign 10yr notes fell below 0 for the first time ever. As has been mentioned of late, TNX is now getting very close to important support which likely can hold in the next week and turn back higher. It's worth not getting too aggressive on long Treasury holdings here and using any further TLT strength to take profits and consider "going the other way" into July as yields are getting overdone and counter-trend exhaustion is present. This could take the form of considering long TBT as a long play for the next 6-8 weeks into August, and expecting that yields hold 1.95% and start to reverse.




ACTION PLAN- 



Long XBI -Long half unit, and using any pullback to 83-84.50 to add, expecting July rally back to 94


Long IHI, with targets at 240, stops under 221


Long SMH, looking to buy weakness, with targets at 112

Long XLU, targeting 61.25-61.50. Buy weakness at 58



Additional charts and thoughts below.

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NASDAQ Composite, along with SPX and DJIA all jumped to new June highs, within striking distance of peaks made in April. Volume and breadth expanded and was a step in the right direction for the Bulls, in the short run. The NASDAQ is shown here as it tends to be the one index to concentrate on, along with TRAN and SOX, for those looking for leading sectors and indices. NASDAQ peaked a full month ahead of the broader market last Fall, and currently shows no divergences. It's thought that a move into April highs should occur before any reversal and likely gets above this area into July/August. Thus, while maybe extended intra-day and could benefit from a minor pullback post Fed, this is thought to be a buying opportunity for a rally into 6/24-5. With all the indecision into FOMC, yesterday's price action gave us a far more complete picture and "tell" than Monday's trading, so it will pay to stick with that, until proven otherwise.




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Semiconductor stocks led performance in trading Tuesday, outperforming other areas in Technology and taking a much needed step higher after nearly two months of fairly dismal performance. SOX charts show this to be the start of a likely "3rd" wave or "C" wave higher in SOX which i expect to move higher into 1483-95 without much trouble. This would allow the two waves to be equal price-wise and equate to a Fibonacci 61.8% retracement of this past Spring's decline. Overall, it's hard to project a move back to highs, but at least some additional upside here looks probable for Semis, specifically as a result of Tuesday's strength.


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Beyond Meat (BYND) reversed course, but does that mean the top is in? Maybe, but maybe not. More evidence necessary- BYND, the much heralded IPO which has gained more than 260% in just a couple months time since its May IPO, showed its first evidence of weakening in trading on Tuesday, trading up over 200 before closing down at a mild loss. When stocks that make rapid gains like this start to reverse course dramatically, it's often worth paying attention, particulalrly when they have market capitalization in excess of 10 billion. In this case, for those making comparisons to TLRY_ Tilray, it's worth pointing out that uptrends have not been broken yet, and this is the first piece of evidence that's needed before weighing in bearish, regardless of the valuation. Second, yesterday's pullback failed to even take out the prior day's lows. Thus, a dramatic reversal, but more needs to be done to validate the bears arguments, Technically speaking. Movement under $150 is thought to be the first real technical evidence of a possible larger pullback, and would cause movement down to $115-120. Until then, this upward volatility could very well continue in the short run, whether warranted or not.

Biotech breakout ahead of FOMC

June 18, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2884-5, 2873-4, 2867, 2853-5

Resistance: 2897-9, 2911-2, 2930-1



Link to 6/17 Monday Technical Video discussing SPX and Biotech move

https://youtu.be/ZyS-yrXYmJg



Link to 6/13 Technical Webinar, discussing SPX, TNX, Crude, Gold and more

https://stme.in/rz4cpQWMpz



Real Vision Interview, 6/3/19, discussing SPX, TNX stabilizing & moving higher

https://www.realvision.com/tv/shows/trade-ideas/videos/finding-a-bottom





SPX - (3-5 Days)- Neutral- Use strength above 2910 as chance to be long for move to 2930-45, while under 2874 likely leads to 2840-5. Sideways range over last 6 days doesn't add any real conviction for Tuesday's trading



EuroSTOXX 50- Neutral- Similar to S&P, very little directional guidance and this needs to change before having any real conviction for this week. Resistance at 3411-3450, while support lies at 3341



HSCEI- Bearish- Expecting weakness down to 10067-10100. Gains over 10564 necessary before being too bullish.





Trading Longs: XBI, MRTX, IOVA, AKBA, EXEL, MCD, ETSY, SMAR, PLAN, WEC, CMS, SO, PNW, ROKU, TNDM, TNET, SWAV, NVTA, TPB, KHC, CSGP, FIS, TMO, DHR, AVLR



Trading Shorts: SPB, AWI, CROX, SIG, WLL, APA, XEC, HP, CXO, EEM, SYMC, WDC, STX, URBN, FOSL


Bottom line, very little conviction on direction heading into FOMC near-term, as prices remain largely range-bound for the last six trading days. Volume and breadth have dried up, with yesterday's SPY volume showing the lowest volume since last August 9, 2018. Breadth came in just fractionally bullish, but otherwise, no meaningful evidence of any real directional change for indices. To paraphrase from the message in this week's Weekly from yesterday morning, Above 2910 would be a bullish sign on a close, while under 2874 likely leads to 3-5 trading days of weakness. Until this happens, the path of least resistance remains the upside, though some troublesome sector rotation has begun again, which ill discuss below.



Transports, for one, have been quite weak lately, with IYT rolling over to multi-day lows after barely having recovered 50% of the drop from late April. Financials also were weaker than preferred yesterday, dropping nearly 1% as Yields fell and the Yield curve flattened.



However, a few bright spots also materialized as the Biotech sector looks to have jumpstarted its rally, thanks to the PFE acquisition yesterday. Quite a few names positioned in Gene therapy and oncology jumped in Monday's trading, and stocks like MRTX, DRNA, IOVA, AKBA, NTRA, EXEL, KURA and RARX all showed attractive near-term technical gains. The XBI itself, the SPDR Biotech ETF, jumped to the highest levels in over a month on heavy volume, which seems promising to this sector.





ACTION PLAN- 



Long XBI -Long half unit, and using any pullback to 83-84.50 to add, expecting July rally back to 94


Long IHI, with targets at 240, stops under 221

Long XLU, targeting 61.25-61.50. Buy weakness at 58

Short EEM with thoughts that prices pullback to 40.30


Preemptively closing out XLF and KRE



Additional charts and thoughts below.

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SPY volume hit the lowest levels yesterday since last August ahead of today's highly anticipated FOMC meeting. Breadth and volume have dried up after this 6% push off the lows. Near-term, it's tough having too much conviction, as one can make the case for followthrough to test highs, or for a mild pullback into 6/24-5 before equities bottom. However, the larger trend still argues for an eventual push back to new high territory. Therefore, any selloff in the next few days following FOMC would be something to buy into. For now, it makes little sense to try to guess direction given that breadth has slowed, and sectors like XLF and IYT have begun to weaken. One should look to follow breakouts in this recent consolidation, on the upside and downside, as this week likely will help to resolve some of this near-term indecision on price trends.



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Crude oil looks similar to Treasury yields at present. Both remain in downtrends and look likely to test lows between FOMC and the OPEC meeting on 6/24-5. Thus, it's early to expect prices to turn back higher and it's right to be defensive on Energy between now and end of month. While many of these names and Crude itself have gotten washed out, momentum is not sufficiently oversold and no real counter-trend exhaustion signals are in place to suggest buying dips. I'm expecting a quick move to 48.50-49.50 that turns out to be buyable with many Energy stocks likely stabilizing.


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Biotech finally has begun to show some signs of life, and it's thought that yesterday's PFE acquisition news helped to jumpstart many within this sector. XBI jumped to the highest levels in nearly 2 months time and volume also hit multi-month highs on yesterday's gains. One should favor Biotech and use any minor weakness to buy, expecting pullbacks could provide buying opportunities just as Healthcare enters its seasonally bullish time in July. Upside targets for XBI lie near 94.50

Treasuries and Equities rally together, but for how long?reasuries and Equities rally together, but for how long?

June 14, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2884-5, 2873-4, 2867, 2853-5

Resistance: 2897-9, 2911-2, 2930-1



Link to Yesterday's Technical Webinar, discussing SPX, TNX, Crude, Gold and more

https://stme.in/rz4cpQWMpz



Real Vision Interview, 6/3/19, discussing SPX, TNX stabilizing & moving higher

https://www.realvision.com/tv/shows/trade-ideas/videos/finding-a-bottom





My CNBC interview from Thursday 5/29 on SPX, and 3 stocks to favor

https://www.cnbc.com/video/2019/05/29/technician-says-these-are-the-three-stocks-to-buy-amid-sell-off.html





SPX - (3-5 Days)- Bullish- Thursday's gains should lead to a move back to new weekly highs into FOMC before markets reverse. For now, bullish with stops on daily close under 2874 and upside target between 2930-45.


EuroSTOXX 50- Bullish- Europe rally should continue between now and early next week to 3411-3450 before stalling out. Support lies at 3341


HSCEI- Bearish- Rollover in Emerging markets is affecting China and HSCEI and pullbacks to minor new lows are anticipated over next 1-2 weeks before this bottoms. Under 10288 should lead to pullback to 10067, an area to cover shorts and buy.





Trading Longs: MCD, ETSY, SMAR, PLAN, WEC, CMS, SO, PNW, ROKU, TNDM, TNET, SWAV, NVTA, TPB, KHC, CSGP, FIS, TMO, DHR, AVLR,



Trading Shorts: SIG, WLL, APA, XEC, HP, CXO, EEM, SYMC, WDC, STX, CHRW, ANF, URBN, XLC, FOSL, BBBY, GES, EMR


US and European markets continued higher Thursday, extending gains and making further strength Friday into next Monday likely before a stallout. ETF's listed below like XLY, XLK, XLF, and XLI all have targets directly above, and show similar signs of pending exhaustion that will be in place on minor new highs, which could come about as early as Friday. It's thought that the FOMC decision next week could be a turning point for indices, as these meetings often can be pivotal for markets. In this case, breadth has been rising, though not as sharply as during previous rallies, and it's thought that this week's sideways activity Monday-Wednesday has caused an ever so slight dip in momentum, which should make any move back up above 2915 likely prove short-lived into FOMC before a pullback into the OPEC meeting 6/25. For Friday, further gains still look likely, and it's right to be bullish.

One item of concern is the degree to which stocks and bonds are now rallying in tandem. This has occurred at various times throughout history, and largely was the case back in March of this year. Yet, given that yields and stocks have trended together more recently in the month of May, this recent divergence likely could mean that one of these moves is wrong. Technically speaking, Treasuries still look to continue higher near-term with yield targets at 2.06 down to 2.00% into next week's FOMC. For Equities, a bit higher prices also looks right, with 2930-45 a definite potential once SPX gets back over 2915. Technically one can make a good case for selling into the stock and bond rally on a bit more strength over the next week. For Treasuries, a few methods point to possible intermediate-term lows in yield being made in mid-June. For stocks, a short-term correction is possible into 6/24-5, but likely would be buyable. Stay tuned.



Max Targets for Sector ETF's before these stall out and turn lower

XLY-- Target 120.50

XLK-- Target $79.70

XLF- Target 27.90

XLI- Target $78.40




ACTION PLAN- 



Long IHI, with targets at 240, stops under 221



Long XLF with initial targets at 28, with stops under 25.92



Long KRE with targets at 57 and stops under 51.41



Long XLU, targeting 61.25-61.50. Buy weakness at 58





Additional charts and thoughts below.

below.gif

S&P Trend still short-term bullish and move back above 2915 likely into FOMC- Looking at this week, the SPX sideways motion has now begun to turn back higher, based on Thursday's gains, and still looks early to turn bearish. While this week's sideways range has taken a toll on short-term momentum, prices failed to turn down sufficiently to think the market had begun to rollover. Movement up to 2915 likely and over to 2930-45 which would be an area to sell into if reached Friday into next Tuesday. At present, bullish stance is preferred.




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US 10-Year Treasury yields look to be rolling over yet again and a TNX pullback to 2.00-2.06% is likely into the FOMC meeting next week before Treasury yields attempt a more serious intermediate-term low. Over the next 3-5 days, long positions in Treasuries are preferred, along with TLT, but movement back to new lows in yield would warrant taking profits and reversing this, for a potential two-month bounce into the fall. This would call for TBT longs, selling TLT and being short Treasury futures for a possible move to 2.25-2.35. At present, a move back to test lows in yields looks likely.




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Transports have made some decent progress of late, and Thursday's rally was sufficient to break out of the entire downtrend from early May. This is encouraging as this had not yet been accomplished by this leading sector, but merely by the broader US indices. Near-term, prices should encounter resistance at either 10341 or slightly above at 10500 before giving some of this rally back into late June. However, the amount of strength that Transports have shown lately is encouraging in recent days, and should mean that further rallies can happen into Fall once this consolidates gains. For Friday/Monday, additional gains look likely.

Equities showing more signs of Fatigue

June 12, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2892, 2880-2, 2873-4

Resistance: 2911-2, 2930-1, 2945-7



Tuesday Technical Video, discussing SPX and TNX

https://stme.in/BtG63ImMO7



Link to 6/6/19 Technical Webinar: 20 min, covering SPX, DXY, Crude, Gold

https://stme.in/vFCE3ACzfT



Real Vision Interview, 6/3/19, discussing SPX, TNX stabilizing & moving higher

https://www.realvision.com/tv/shows/trade-ideas/videos/finding-a-bottom





My CNBC interview from Thursday 5/29 on SPX, and 3 stocks to favor

https://www.cnbc.com/video/2019/05/29/technician-says-these-are-the-three-stocks-to-buy-amid-sell-off.html





SPX - (3-5 Days)- Bullish- Two straight days of stalling out, though this still isn't sufficient to call a Top, and Demark exhaustion is premature by 2-3 days. Stay long while using tight stops at 2880 for longs on a close while resistance likely comes in near 2930



EuroSTOXX 50- Bullish- Europe was more bullish than US yesterday and should continue between now and Thursday/Friday to 3411-3450 before stalling out. Support lies at 3341



HSCEI- Bullish- HSCEI likely to show 1-2 more days of gains, but a bottoming US Dollar could put pressure on this and gains to 10821 should be used to take profits. Under 10304 would drive decline.





Trading Longs: TNET, SWAV, NVTA, TPB, KHC, CSGP, FIS, TMO, DHR, AVLR, MNST



Trading Shorts: EEM, SYMC, WDC, STX, CHRW, SIG, ANF, URBN, XLC, FOSL, BBBY, GES, EMR

Markets definitely have begun to tire, in the short run, and we've now seen two straight days of pulling back materially from early highs. While there hasn't been sufficient weakness to think a top is in, breadth has been subpar and could remain that way the rest of the week before a larger stallout. Overall, Upside looks limited this week, and targets lie between 2930-45 to take profits and expect at least a 1-2 week pullback, which very well could get jumpstarted following the FOMC meeting.



Emerging markets have shown better than average strength in recent days, with bounces in EEM, ILF, EWW, EWZ and others. In the short run, the declining DOllar has largely been responsible for the bounce in EM, but this looks to be nearing completion in the short run after its recent big selloff. US Dollar likely should bottom out in the next 1-2 days, and I expect China and Emerging markets to selloff and underperform.



Max Targets for Sector ETF's before these stall out and turn lower

XLY-- Target 120

XLK-- Target $79.70

XLF- Target 27.90

XLI- Target $78.40





ACTION PLAN- 



Long IHI, with targets at 240, stops under 221



Long XLF with initial targets at 28, with stops under 25.92



Long KRE with targets at 57 and stops under 51.41



Long XLU, targeting 61.25-61.50. Buy weakness at 58



Short XLC- expecting pullback to 44.50 and then a max near 43.70- stops at 47.05





Additional charts and thoughts below.

S&P has now pulled back for two straight days from intra-day highs, yet has barely made any real headway to the downside. Similar to yesterday's message, after 6% gains in 6 trading days, prices are getting stretched, but we'll need to see more to have any real conviction of prices turning down. Under 2880 would allow for minor weakness, but only a move under 2837 should result in a larger decline. Meanwhile, upside targets lie near 2830 up to 2845 and should be more likely than not, given the incomplete Demark signals coupled with ongoing uncertainty amidst a positive momentum trend. Yet, breadth has been very mild of late on this rally, and nearly flat for the last few days. This should be watched carefully in the days ahead for evidence of any negative breadth on gains, or other signs of Tech or Financials stalling after this bounce. For now, it's right to stay bullish, but yet proper to keep a close eye on the exits which i think could be prudent by end of week from a trading perspective.




perspective.gif

EEM- Emerging Markets ETF- At resistance- Look to take profits- In the last week, we've seen signs of the Emerging market space outperforming as the Dollar has pulled back. This looks to be near completion, and US Dollar likely should bottom out technically in the next 1-2 days, with downside exhaustion very similar to the upside exhaustion now being seen in EEM. One should consider taking profits on EEM longs right as price is nearing the 50% retracement, and upside here should prove limited from 42-43 while on the downside, prices could very easily pullback to test recent lows in the high $30's. For now this looks like an appealing risk/reward trade to avoid/short for aggressive traders, but likely depends on the Dollar starting to bounce.




bounce.gif

Crude oil starting to show evidence of stalling out, and pullbacks back down to recent lows look increasingly likely. Similar to Equities, the last 2-3 days in Crude have gone sideways, as part of this existing downtrend. Movement back up over 55 would be necessary to help this breakout, which for now, looks premature. Sector ETFs like XLE look similar and might weaken into next week on a pullback in Crude. For now, this recent outperformance in Energy looks like something to sell into and is not a bullish development.

Minor Stalling out, but More needed to call an Equity top

June 11, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2892, 2880-2, 2873-4

Resistance: 2904-5, 2911-2, 2930-1



Monday Technical Video, discussing SPX and TNX

https://stme.in/AIR3duZcHZ



Link to 6/6/19 Technical Webinar: 20 min, covering SPX, DXY, Crude, Gold

https://stme.in/vFCE3ACzfT



Real Vision Interview, 6/3/19, discussing SPX, TNX stabilizing & moving higher

https://www.realvision.com/tv/shows/trade-ideas/videos/finding-a-bottom





My CNBC interview from Thursday 5/29 on SPX, and 3 stocks to favor

https://www.cnbc.com/video/2019/05/29/technician-says-these-are-the-three-stocks-to-buy-amid-sell-off.html





SPX - (3-5 Days)- Bullish- Rally has reached initial targets, and while some minor pullback from highs occurred yesterday, this wasn't sufficient yet to suggest a top in place. Use tight stops at 2880 for longs on a close while resistance likely comes in near 2930



EuroSTOXX 50- Bullish- A bit more rally likely with targets at 3411 between today and Thursday. Support lies at 3341



HSCEI- Bullish- Yesterday's close over 10500 could drive a short-term bounce. Yet, most of Asia remains much weaker at present than SPX, or Europe. Under 10304 would drive decline.





Trading Longs: SWAV, NVTA, TPB, KHC,SPXC, CSGP, FIS, TMO, DHR, AVLR, MNST, QURE



Trading Shorts: SIG, ANF, URBN, XLC, FOSL, BBBY, GES, MO, PM, EMR

Upside looks limited this week, but heading into Tuesday, insufficient weakness has been seen to turn bearish for most investors. Aggressive traders can use Monday's 2904 high as a stop for shorts, but over this should lead to 2930 this week, potentially into Wednesday or Thursday before any temporary high is in place. When scanning most US indices and sectors, we find that nearly all of these show a Demark "5 count" after having made five consecutive daily closes above the close from four trading days ago. In plain English, markets typically stall out and/or peak on an 8 or 9. Thus, we can allow for another couple days, using this system alone, when expecting a possible peak.



ETF's like the following likely should have max upside at the following levels this week: First price is closing price for Monday; The second price is the maximum upside target: SPX for example is at 2886.73, and has a max target at 2945 on this bounce



XLY-$116- Target 120

XLK- $77- Target $79.70

XLF- $21.35- Target 27.90

XLI- $75.82- Target $78.40



Overall, yesterday's rise , yet again, showed signs of lackluster breadth, with just a 3/2 positive margin. Technology however, showed sharp gains, thanks to Semiconductor names, as the SOXs 2.54% gains helped to lead performance yesterday. (SOX in this case at 1413.89, is on a "6 count" and 2-3 days away from a possible peak, and likely has max upside near its 50% retracement, which is found at 1445.78. Bottom line, given that so many various indices and sectors are showing this same count, on a 5, or 6, leads me to think that another few days are possible in this bounce.



Outside of Domestic markets, there was a healthy move in China's FXI along with Emerging markets in general. This area is thought to be weak, technically; However, we're definitely seeing some ability to play catchup, which i feel should prove short-lived.



Finally, Treasury yields managed to show a decent bounce Monday, closing above the highs of the past few days. Given that Demark patterns here never signaled any kind of meaningful low, and momentum remains quite strong to the downside, for now, it's right to suspect this might be a "wave 4" type Elliott bounce and a final pullback to 2.06% or slightly under can happen into the FOMC meeting before any low in yields.



Risk assets overall are still favored here, though it's wise to be much more selective this week, and i expect upside to prove relatively limited with some evidence of a minor peak in Stocks seen this week, along with Yields stalling and turning back down to new lows.







ACTION PLAN- 



Long IHI, with targets at 240, stops under 221



Long XLF with initial targets at 28, with stops under 25.92



Long KRE with targets at 57 and stops under 51.41



Long XLU, targeting 61.25-61.50. Buy weakness at 58



Short XLC- expecting pullback to 44.50 and then a max near 43.70- stops at 47.05



Covering short EEM, and taking profits in long Copper- COPX, HG_F



Additional charts and thoughts below.

below.gif

S&P getting stretched, but yet yesterday's pullback was insufficient to thinking top in place just yet. This past weekend's Weekly Technical perspective discussed some of the reasons for concern heading into this week after a swift, sharp gain for SPX, while weekly and monthly momentum have been negatively sloped. This creates a difficult environment for being long with any real confidence, particularly when trends turned down so sharply in May. For now, the decline off yesterday's intra-day highs was somewhat important in thinking exhaustion is near, yet in these cases its often important to see a move down under the prior day's lows towards driving a decline. Therefore, we'll use 2880 in this case as a stop for longs on a close, while expecting that any move over 2904 should allow for a move to 2930, but that the area between 2930 and 2945 should be very strong resistance for the month of June. Pullbacks could happen in the back half of June, but should create buying opportunities for the month of July.




july.gif

XLK (Big-Cap Technology) looks to be nearing resistance- XLK, as the current SPDR ETF for Technology, shows a similar rebound as was seen in our Equal-weighted Technology chart shown in Monday morning's weekly. However, the importance in this chart is seen in the "5 COUNT" shown in green, as "9 counts" (Demark based exhaustion based on TD Sequential and TD Combo indicator) should be complete within 3 days time. Thus, upside here looks limited for Technology and while the near-term trend is bullish, one should be looking to pare down longs as the week progresses, with former highs near 79.70, less than $3 higher, likely serving as good resistance to gains.


gains.gif

Brokers getting stretched relative to Financial space. Favor the Banks-IAI, or the Ishares Broker Dealer & Security Exchanges ETF, when compared to the broader XLF, shows pretty substantial outperformance over the Financials, and in this case, most of the Banks in recent months. This looks to be nearing conclusion, as we're seeing ratios arrive at price and time areas where this could stall out. One should look to consider taking profits in Brokers and the Exchange stocks, while favoring the Banks among Financials. While a larger bullish trade in the Financials depends on yields likely turning up more aggressively in the US 10-Year yield, my thinking is this should be in place after the Fed meeting, and right to buy dips in the Financial space, if given the chance over the next week





Rally closing in on targets; Healthcare starting to outperform

June 7, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2825-7, 2800-2, 2790-1, 2728-30

Resistance: 2856, 2860-3, 2869-71, 2876-8



Link to 6/6/19 Technical Webinar: 20 min, covering SPX, TNX, DXY, Crude, Gold

https://stme.in/vFCE3ACzfT



Real Vision Interview, 6/3/19, discussing SPX, TNX stabilizing & moving higher

https://www.realvision.com/tv/shows/trade-ideas/videos/finding-a-bottom





My CNBC interview from Thursday 5/29 on SPX, and 3 stocks to favor

https://www.cnbc.com/video/2019/05/29/technician-says-these-are-the-three-stocks-to-buy-amid-sell-off.html





SPX - (3-5 Days)- Bullish- Rally should get to 2860-3, or 2871-8 before stalling out, potentially as early as Monday, or Tuesday of next week. While the short-term trend is bullish, we're likely to stall out into early next week.



EuroSTOXX 50- Bullish- A bit more rally likely into early next week, but similar to SPX, likely could stall into mid-month and backtrack. For Friday into Monday, still early. Targets at 3411



HSCEI- Bearish- Still early to buy. Thursday's weakness seems to suggest pullbacks to 10100 can happen. We've seen nearly 2 weeks of very narrow range-bound consolidation. Over 10500 needed for rally, while under 10304 would drive decline.





Trading Longs: MET, FIS, PODD, TMO, DHR, AVLR, CDNA, MOH, MNST, NDAQ, ICE, REXR, DRE, CSGP, FSV, MOMO, KIE, XLF, KRE, TNDM, COPX, QURE, AON, MMC, KHC, SPXC, AVB, EIX, AEP, ED, WEC



Trading Shorts: XLC, FOSL, BBBY, GME, URBN, GES, ANF, FXI, EEM, SIG, MO, PM, WYNN, LVS, EMR

Further gains look likely on Friday into early next week before any temporary peak is at hand. While intra-day momentum is nearing overbought levels, there remains a lack of counter-trend exhaustion that would argue for any kind of peak. While momentum and breadth have been sub-par on this week's bounce, there's been some constructive developments with regards to short-term structure that have argued for a rally. Sectors like Healthcare Industrials and Financials have shown signs of participating this week, and while it's been still quite Defensive in nature, it remains early to sell heading into Friday.



Outside of lackluster breadth and momentum, another concern is the lack of a sharp rally in both Treasury yields and Crude oil, which both have correlated quite positively with Equities. Yields still look weak, despite a few days of stabilization, and Crude oil also has failed to follow suit to the Equity rally. This coupled with the fact that Small and Mid-cap sectors are hitting new monthly lows vs the broader market is a concern heading into mid-June. While a lack of a trade agreement might be thought to be bearish to some, it's really the non-participation in Small and mid-caps and breakdown in breadth that should be a warning heading into next week. We'll discuss this in greater detail in the Weekly piece. At present, I expect Friday to be bullish into next Monday, and would look to sell gains above 2860 in SPX.







ACTION PLAN- 



Long IHI, with targets at 240, stops under 221



Long XLF with initial targets at 28, with stops under 25.92



Long KRE with targets at 57 and stops under 51.41



Long XLU, targeting 61.25-61.50. Buy weakness at 58



Long Copper- HG_F- Expecting an upcoming trendline breakout at 270 that carries prices up to 285-290. COPX might be considered for non-commodity traders at 18.71



Short XLC- expecting pullback to 44.50 and then a max near 43.70- stops at 47.05



Short EEM with targets at 39, then 38.04 maximum





Additional charts and thoughts below.

below.gif

S&P Bullish for a bit more gains into next week- As of yesterday's close, S&P got right near initial targets, yet most time counts suggest it's still early for a top. Thus, a long stance is still right into next week, looking to buy any weakness given the chance early Friday. Upside targets could come about near 2860-2, or above near 2871-8. It's thought that 6/10-12 could usher in a temporary peak, but that any weakness should be buyable. Trends have improved near-term, yet breadth and volume have been sub-par


sub-war.gif

BULLISH on Medical Devices and Healthcare overall for the next 4-6 weeks, maybe longer. US Medical Devices ETF, ( IHI ), managed to exceed the downtrend of the last few months, as XLV also engineered a breakout of its own yesterday. This should help Healthcare to begin outperforming at a time when the group is heading into a very bullish seasonal time, which tends to show very good relative strength for Healthcare. Specifically, the Medical Devices stocks have taken the lead in this regard, and stocks like BSX, DHR, MDT and others have shown very good technical strength that likely helps these stocks continue.


continue.gif

Small caps have gone exactly opposite the direction of broader Equity indices in the last week, with RTY to SPX in ratio form breaking down to the lowest levels in years. This is not constructive to intermediate-term breadth, and it's thought that on a further rally into the Fall, both Small-caps and Mid-caps likely would underperform. For now, Large-Cap Growth remains the place to be, and Russell 2000 looks like a laggard and has trended lower relatively since late last year. Thus, while the near-term trend is bullish for Equities and intermediate-term also likely stays bullish for a few more months, this deterioration is something to keep a close eye on in the weeks and months ahead.

Financials should lead this Equity bounce- Relative breakout worth following

June 5, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2790-1, 2775, 2762-3, 2743-5

Resistance: 2817, 2831-3, 2840-2, 2864-8



Tuesday Technical Video 6/4/19

https://stme.in/3h4JbLN2Sc



Thursday Technical Webinar 5/30/19- SPX, TNX, Crude, Dollar

https://youtu.be/4otZSGdynIw

My CNBC interview from Thursday 5/29 on SPX, and 3 stocks to favor

https://www.cnbc.com/video/2019/05/29/technician-says-these-are-the-three-stocks-to-buy-amid-sell-off.html





SPX - (3-5 Days)- Bullish- Rally underway, & exceeding 2801 on a close likely to lift Stocks further into 6/10 before mid-month swoon. Targets are near 2841-50



EuroSTOXX 50- Bullish- Similar to SPX, SX5E has exceeded former lows and right back up to important make-or-break near downtrend at 3350. However, getting over this should allow for a decent rally in the next week before stalling and likely in July. For now 3350 is the main hurdle.



HSCEI- Bearish- Still not enough proof that China is ready to join S&P and SX5E higher and we've seen nearly 2 weeks of very narrow range-bound consolidation. Over 10500 needed for rally, while under 10304 would drive decline.





Trading Longs: XLF, KRE, NDAQ, ICE, TNDM, COPX, QURE, AON, MMC, KHC, SPXC, MNST, ICE, AVB, AEP, ED, WEC



Trading Shorts: SIG, WYNN, LVS, URBN, HTZ, BBBY, KSS, EMR


Rally looks to be underway, with upside targets near 2841-50 for SPX, which if reached on or near 5/10-11, should be used to take profits for trading purposes. Yesterday's lift might have seemed like a surprise to some, but internal breadth had given plenty of advance notice that stocks were holding up quite well despite the breakdown in Technology in Monday's trading, which was discussed. (Looking back, most of that final day washout in Tech turned out to be largely "FANG" and Large-cap Tech, while the broader sector actually had fared reasonably well last week, showing performance that beat out 8 other of the 11 major S&P sectors)



The combination of near-term oversold conditions (but not drastically oversold, like the Media would have us believe) coupled with a return of pessimism, VIX backwardation, and the start of Tech outperformance were all factors that suggested a counter-trend rally could be near. Yesterday's breadth figures came in just shy of a 90% UP day, and advance/Decline was 4/1 bullish while volume was nearly 8/1 into Up vs Down stocks. Five sectors finished up over 2% on the day, and having both Technology and Financials participate and outperform was a big plus. Specifically and more will be detailed in charts below, XLF v SPX has broken out of the entire downtrend since last year. This is a big plus for the Financials group, & I expect continued relative strength in the days, weeks and months ahead.



Yields and Crude oil also managed to lift and these are all part of the same trade, in my view, which bodes well for a rally in Risk assets into mid-month before a pullback. Overall, one should favor being long, looking to buy dips on any chance Wednesday/Thursday for a push higher into next week.





ACTION PLAN- 



Long XLF with initial targets at 28, with stops under 25.92



Long KRE with targets at 57 and stops under 51.41



Long Copper- HG_F- Expecting an upcoming trendline breakout at 270 that carries prices up to 285-290. COPX might be considered for non-commodity traders at 18.71



Short XLC- expecting pullback to 44.50 and then a max near 43.70- stops at 47.05



Short EEM with targets at 39, then 38.04 maximum



Long XLU targeting 59.85-60 - Buy Weakness at 58





Additional charts and thoughts below.

below.gif

S&P- Bullish for further gains and push to 2850 possible. Rally managed to exceed prior lows at 2801 from mid-May, and did so on very good breadth of over 4/1 positive. While volume was light, we did see very good participation out of Tech and Financials which is a bullish sign. Getting over 2823 would argue for continued strength to 2841-50 which I believe is possible into 6/10-12 before a stalling out and minor reversal. For now, it's right to stick with a long bias, looking to buy any dips if given the chance Wednesday.




wednesday.gif

Technology has stabilized far better than what most have given it credit for in the last week. While the FANG names and most of large Cap Tech experienced severe damage on Monday before rising back sharply yesterday, charts show Tech to definitely have stabilized in the last week after the decline from May took most of this group down sharply. This ratio chart of the Equal-weighted Technology index vs SPX shows a mild breakout of this downtrend followed by a pullback Monday and then Tuesday's about face to turn back higher. Overall, this is a bullish development, and should lead Tech to stage a larger rally in the weeks ahead. Given that Tech is 20% of the SPX, this is definitely a positive development after this recent downtrend.





downtrend.gif

Financials as a group have just exceeded a long-term downtrend from last February's peak that should help to jumpstart this group, just at a time when Yields look to be trying to bottom out after testing the key 2.06% support. This does look to be a technical breakout. and the ability of XLF to SPX to have exceeded prior monthly highs in relative terms should help the group start to show far better relative strength than has been seen in recent months. While a weekly close will mean more than just one day, this is certainly a bullish development which could help to fuel this rally in the weeks and months ahead through the Summer, given that Financials represents 12% of the SPX as the 3rd largest group. This group should be overweighted as a result of the movement in the last two trading days.









Market rally near but stabilization in Tech will be Key

June 4, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2762-3, 2743-5, 2732-4

Resistance: 2800-1, 2840-2, 2864-8



Thursday Technical Webinar 5/30/19- SPX, TNX, Crude, Dollar

https://youtu.be/4otZSGdynIw

My CNBC interview from Thursday 5/29 on SPX, and 3 stocks to favor

https://www.cnbc.com/video/2019/05/29/technician-says-these-are-the-three-stocks-to-buy-amid-sell-off.html





SPX - (3-5 Days)- Bullish- S&P down to levels where shorts can be covered and longs can initiated between SPX 2744 down to 2722, expecting a rebound in stocks back up to 2800



EuroSTOXX 50- Bullish- Monday's Bullish reversal after having hit new lows to recoup nearly all of last Friday's losses is thought to be a positive. Movement up to 3360 likely and over should drive a larger rally back to 3450 and then 3514



HSCEI- Bearish- Dollar pullback should be near support and a rally in USD likely coincides with HSCEI breaking support for a final pullback down to 10067- Still looks early for a rally though this would change over 10600.





Trading Longs: COPX, QURE, AON, MMC, KHC, SPXC, MNST, ICE, AVB, AEP, ED, WEC



Trading Shorts: SIG, WYNN, LVS, URBN, HTZ, BBBY, KSS, EMR

Yesterday's weakness in Technology put a damper on SPX recovery efforts, though breadth finished positive despite the mild drawdown and SPX prices look to be in a zone now both from a price and time perspective where a bounce can happen. The combination of excessively bearish sentiment coupled with near-term oversold conditions is important, and should create a decent risk/reward perspective with SPX at current levels and maximum drawdown from here holding prices above 2722.



Most of yesterday's gains came from the Materials sector on the falling Dollar, which has little overall impact on SPX given its weighting. However, other sectors like Energy, Utilities, Staples all rallied over 1%, while both Industrials and Financials also managed to churn out gains of nearly +0.70%. So not as bad of a move sector-wise as might have been thought given a mildly down market. Interestingly enough, breadth was positive despite a 2% down day in the NASDAQ 100 index, and the broader market was able to absorb Tech's decline and hold up in fairly resilient fashion. While Tech woes might continue a bit longer this week, other sectors should come in to help buoy SPX, and provide an oversold bounce.



The one broader concern, however, is the degree to which the 2year yield continues to plummet as Rate cut Bets continue to pile up. The ongoing trade war uncertainty and evidence of some deteriorating economic conditions have led to expectations of more than 50 bps of cuts in 2019, a dramatic about-face from earlier this year. Near-term,, this has caused the Yield curve to steepen dramatically, though 2year yields look to be near support and are unlikely to get down under 1.70% in the short run.







ACTION PLAN- 



Long Copper- HG_F- Expecting an upcoming trendline breakout at 270 that carries prices up to 285-290. COPX might be considered for non-commodity traders at 18.71



Short XLC- expecting pullback to 44.50 and then a max near 43.70- stops at 47.05



Short EEM with targets at 39, then 38.04 maximum



Short XOP with expectations of a move to 25.50 and then 23.89 to challenge Dec 18 lows



Long XLU targeting 59.85-60 - Buy Weakness at 58





Additional charts and thoughts below.

below.gif

S&P- Yesterday's mild decline failed to do much damage, but took SPX momentum further into near-term oversold territory right near lows made in March of this year. Counter-trend exhaustion could be in place by Tuesday's close, and SPX is now into a zone of support where pullbacks likely start to reverse back higher. While Technology remains a weak link, other sectors seem to be helping in a way that's keeping markets afloat, even with a 2% decline in NDX. One should consider covering shorts and assuming longs, with the thought of pressing bets over 2800.

2800.gif

"FANG" stocks weakened substantially in Monday's trading, with FB, GOOGL and TWTR all falling more than 5% in trading. This group is facing ongoing Antitrust concerns, and as the daily charts show, the recent decline has proven relentless since peaking in late April, erasing nearly 70% of the prior rally. Near-term, no real support exists until under 2200, and the NY FANG index (10 members- BABA, AAPL, NVDA, NFLX, BIDU, TSLA, AMZN, TWTR, GOOGL and FB) looks to weaken more over the next 2-3 days before stabilizing and turning back higher. In the short run, this might prohibit SPX from making much headway higher, but is thought to be a temporary headwind only at this time. One should hold off on buying dips in these stocks technically until Thursday/Friday of this week.

week.gif

Copper looks to be on the verge of attempting a counter-trend rally after its recent pullback to test former lows from this past January. The metal has done a complete "Round-Trip" after moving up to test 300 and now having erased much of this move in less than two-months time. Counter-trend exhaustion, however, is now present in Copper in the July contract, and movement over 270 would be quite bullish, supporting movement up to 285-290 initially. Interestingly enough, this move comes on the heels of increasingly more bearish economic data and Trade war uncertainty that's fueling rate cut bets. Technically, a move over 270 would be quite encouraging in suggesting further rallies.





Further overnight selling could lead S&P into 2722-35 into early next week

May 31, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2762-3, 2743-5, 2732-4

Resistance: 2800-1, 2840-2, 2864-8



Thursday Technical Webinar 5/30/19- SPX, TNX, Crude, Dollar

https://youtu.be/4otZSGdynIw

My CNBC interview from Thursday 5/29 on SPX, and 3 stocks to favor

https://www.cnbc.com/video/2019/05/29/technician-says-these-are-the-three-stocks-to-buy-amid-sell-off.html



My Bloomberg Interview on Rising US Dollar and Detrimental effects to Emerging Mkts- 5/22/19

https://binged.it/2QeoW6L





SPX - (3-5 Days)- Bearish- Insufficient signs of bottoming- Yesterday's bounce attempt failed to get over 2800 and then fell to unchanged. The Subsequent volatility in the after-market on Trump tariff talks has resulted in further deterioration heading into the final day of May. Bottom line, it still looks like weakness is possible down to 2722-36 area before lows are in.



EuroSTOXX 50- Bearish- Minor rebound attempt failed to get back over the area of the breakdown- 3323, and should move lower to 3283, or a max of 3212 before finding support.



HSCEI- Bearish- Six days of unchanged prices doesn't argue for any sort of rallyand momentum remains quite negative. Expect further weakness to 10067-10100 initially with possibility of 9761.





Trading Longs: VXX, ACC, AVB, QURE, AEP, ED, WEC



Trading Shorts: WTI, COP, IMO, APA, DVN, NOV, CHRW, SIG, TPR, KHC, MO, PM, URBN, HTZ, EEM, FXI, ALB, COPX, BBBY, DDD, UNG, KSS, LVS, EMR, AOS

Yesterday's rally attempt in many indices..both US and abroad, failed to get back up over the area of the breakdown and looked like nothing more than a reflex rally after this week's violation of support. Breadth was flat for today, and more volume flowed into DOWN stocks than UP. By the end of day, prices had moved back down to unchanged on the session. After the market close, futures have turned back lower sharply and at the time of writing are lower by -0.70% in both S&P and NASDAQ Futures.



Treasury yields turned back lower on Thursday, as did Crude oil, two areas which had tried to make a minor rebound into the close on Wednesday. Yet, Yields finished back lower and are now back near 2.21%. Crude oil meanwhile was hit hard to the tune of 4% in trading on Thursday, and there is little to no real support for WTI until prices get to near $55-$55.35, or near the 50% retracement of the entire move up off the December lows.


BOTTOM LINE: Insufficient recovery, and the downtrend remains in place. Poor recovery effort with lackluster breadth and volume and structurally most indices still look to require another move lower before putting in any sort of bottom.



ACTION PLAN- 



Short EEM with targets at 39, then 38.04 maximum



Short XOP with expectations of a move to 25.50 and then 23.89 to challenge



Long XLU targeting 59.85-60 - Buy Weakness at 58





Additional charts and thoughts below.

S&P- Overnight tariff threats to Mexico has resulted in S&P gapping down under 2770 heading into Friday, the final trading day of the month. No real support exists until near 2722-35, and it remains premature to try to buy dips given the ongoing poor structure and momentum. Thursday's trading provided a good "tell" in that rallies failed 1 tick under the key 2800 level before pulling back to unchanged. Now post market close on Thursday, S&P Futures have sold off under prior days lows with little to no real counter-trend exhaustion. One should hold off on getting too aggressive in trying to buy dips and additional downside still looks lately.

Crude oil's nearly 4% Drop Thursday keeps this trend bearish and prices in many Energy stocks could follow headed into the final day of the week an into early next. Targets lie near $55-$55.30 initially which represents both a 50% retracement as well as coinciding with Demark based exhaustion. Overall, Energy has quickly slipped back to being the worst performing sector over the last 1, 3 and 6 month periods, and while many stocks are getting quite oversold, it still looks early to buy into this pullback.

pullback.gif

Put/Call ratio on Equities has become more subdued after spiking up near .80 last month. This was an interesting development to suggest additional selling might still be likely. Given the VIX breakout and Crude decline, it's likely that this can start to move a bit more higher in implieds but should be watched carefully.

These 4 key factors should determine when Equity lows are here

May 30, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2762-3, 2748, 2732-4

Resistance: 2850-2, 2864-8, 2892-3



Technical Analysis Video Webinar, 15 mins. Today 1pm EST-https://join.startmeeting.com/info69336

Dial-In Number (United States): (701) 801-1211, Access Code: 840-955-999





My CNBC interview from Thursday 5/29 on SPX, and 3 stocks to favor

https://www.msn.com/en-us/news/watch/technician-says-these-are-the-three-stocks-to-buy-amid-sell-off/vp-AAC6mjl



Thursday Technical Webinar 5/23/19- SPX, TNX, Crude, Dollar

https://youtu.be/K3H-HZCCcMA

My Bloomberg Interview on Rising US Dollar and Detrimental effects to Emerging Mkts- 5/22/19

https://binged.it/2QeoW6L



SPX - (3-5 Days)- Bearish- Insufficient signs of bottoming and yesterday's break of 2800 likely should move to 2734-6 or a max near 2722-5 before lows are in. Strong resistance at 2800, and above warns that lows could be in place



EuroSTOXX 50- Bearish- Retest of 3311 looks imminent, but a break takes prices to 3283, or 3212 before finding support. It remains premature to buy dips



HSCEI- Bearish- Expect further weakness to 10067-10100 initially with possibility of 9761.





Trading Longs: VXX, ACC, AVB, QURE, AEP, ED, WEC, PAGS, COUP



Trading Shorts: CHRW, SIG, TPR, KHC, MO, PM, URBN, HTZ, EEM, FXI, ALB, COPX, BBBY, DDD, UNG, KSS, LVS, EMR, DVN, NOV, AOS

Yesterday was important and negative in having violated the prior mid-May lows in SPX along with DJIA, NASDAQ along with European benchmark indices like SX5E the STOXX 50. While a late day bounce occurred, it failed to regain the area of the breakdown. Thus, trends remain negative near-term and a bit further weakness looks likely before lows are in place.



Specifically, these four things are important to achieve before thinking lows are near:



1) Oversold conditions- Markets are not all that oversold on daily, weekly nor monthly basis. Hourly intra-day charts only. Therefore more needs to be done



2) Capitulatory volume into Declining vs Advancing issues. Markets need to show a high TRIN (Arms index) reading before lows are in, not dissimilar from what was seen back on May 13



3) Counter-trend exhaustion per Demark indicators- At prior highs and lows, we've seen evidence of exhaustion at both highs and lows. For now, there's insufficient signs of any of these signals appearing, not just in US stocks but also in Crude oil and TNX. Given that all of these started to accelerate lower near the same time, it should pay to watch all.



4) Signs of sector stabilization. Given that Technology largely led markets lower from late April, this sector should be the key one to pay attention to when this starts to stabilize.



For now, the only real evidence we've seen is some minor signs of technology stabilization. Yet this will all take time. Until then, downside targets should take another 3-5 trading days with 2722-35 having significance for S&P. Closes back up above 2800, however, would be something to watch carefully.





ACTION PLAN- 



Short EEM with targets at 39, then 38.04 maximum



Short XOP with expectations of a move to 25.50 and then 23.89 to challenge



Long XLV with movement up to 90.60 likely and over would drive up to 96- Under 87.75 is stop for longs on a close



Long XLU targeting 59.85-60 - Buy Weakness from yesterday at 58.25-58.50



Stopped out of XHS long, give the close under 63.40 Tuesday





Additional charts and thoughts below.

below.gif

S&P- Pullback under 2800 jumpstarted what should be another round of selling into early June before this pullback is complete. S&P along with NASDAQ, DJIA and also SX5E all violated key support and trends remain bearish and momentum and breadth have followed suit of late. Near-term targets lie near 2735-7 with breaks leading to 2722, but it's thought that this pullback should prove short-term in nature and be complete by mid-June at the latest. For now, only a move back up over 2800 would cancel the bearishness of yesterday's breakdown. Overall, additional weakness likely.


Technology has started to show some definite signs of stabilization,when viewed in Equal-weighted terms. While the peakout in late April was well documented, now we're seeing this group start to turn back higher. This is an important step in Technology starting to bottom out and should be watched carefully in the days ahead. Therefore, while stock trends remain bearish, Tech itself is starting to hold support and show slow but sure signs of relative strength in the last couple days.

days.jpg

Sentiment has not really turned that bearish on this drawdown just yet to argue for any meaningful turn and Investors Intelligence heading into the first few days of this week still showed a healthy level of bulls vs bears which goes against the bearish readings seen in AAII. If Thursday's readings show more bears than bulls and start to invert, than this would be the first step in the right direction towards thinking a rally is imminent. For now, it looks early as sentiment gauges are not aligned in unison in showing bearish readings.

TNX turns down sharply while Credit spreads start to widen

May 29, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2800-2, 2762-3, 2748, 2732-4

Resistance: 2850-2, 2864-8, 2892-3, 2894-6



My CNBC interview Thursday 5/23 on S&P and key levels to watch

https://pub-origin.cnbc.com/video/2019/05/23/these-are-key-levels-to-watch-on-the-sp-500.html



Thursday Technical Webinar 5/23/19- SPX, TNX, Crude, Dollar

https://youtu.be/K3H-HZCCcMA

My Bloomberg Interview on Rising US Dollar and Detrimental effects to Emerging Mkts- 5/22/19

https://binged.it/2QeoW6L





My CNBC interview 5/8/19 discussing Technology

https://pub-origin.cnbc.com/video/2019/05/08/tech-sector-may-be-hitting-a-peak-technician-says.html





SPX - (3-5 Days)- Bearish- S&P has pulled back to near critical make-or-break support, but it's thought that 2800 should give way for a move down to 2762 initially and then 2732-4 being very important for support. Regaining 2869 important to negate this damaging break - Overnight strength should be sold at 2831-3



EuroSTOXX 50- Bearish- Retest of 3311 looks imminent, but a break takes prices to 3283, or 3212 before finding support. It remains premature to buy dips



HSCEI- Bearish- Expect further weakness to 10067-10100 initially with possibility of 9761.





Trading Longs: VXX, ACC, AVB, QURE, AEP, ED, WEC, PAGS, COUP



Trading Shorts: CHRW, SIG, TPR, KHC, MO, PM, URBN, HTZ, EEM, FXI, ALB, COPX, BBBY, DDD, UNG, KSS, LVS, EMR, DVN, NOV, AOS

Trends remain negative in the short run, and while S&P is nearing key make-or-break levels at 2800-2, the action in XLK, XLF and most importantly, US 10-Year yields have not signaled any kind of real stabilization that merits buying this dip in Equities. It's important to keep in mind that the breakdown late last week was a key TELL for Markets, as it represented not only trend damage in Equities, but also Technology, Financials and also Crude and TY Yields. Momentum is not oversold on daily charts, but has rolled over to negative on a weekly basis (MACD has crossed the Signal line from above) So this is a concern given that both weekly and monthly momentum are now negatively sloped. However, for now, there remains insufficient price weakness and in structure to turn bearish on anything besides just a short-term basis, where we'll stay negative. It's thought that 2800 is broken into end of month but that price weakness should prove short-lived and turn out to be a buying opportunity at levels just above the 38.2% Fibonacci retracement of the rally from December into April, right above early March lows- 2734-6



An additional negative to watch closely is the ratio between High Yield "Junk" ETF's vs Investment Grade ETF's like LQD. This has moved up just above levels seen back in December which is a troublesome sign technically. While credit was "hanging in there" quite well through most of May, we've definitely begun to see some widening out, which often times can lead stocks lower.



While defensive issues acted poorly on Tuesday, which was interesting given the extent that stocks sold off along with the Treasury rally, lower rates and a stock market selloff should drive flows into Defensive issues and this should be an area to buy dips. (AT least with regards to Utilities and REITS) Some of the Consumer Staples stocks like MO, PM, KHC remain strongly negative, making selectivity key for the Staples sector. Charts below will try to make sense of some of this volatility.





ACTION PLAN- 



Short EEM with targets at 39, then 38.04 maximum



Short XOP with expectations of a move to 25.50 and then 23.89 to challenge



Long XLV with movement up to 90.60 likely and over would drive up to 96- Under 87.75 is stop for longs on a close



Long XLU targeting 59.85-60 - Buy Weakness from yesterday at 58.25-58.50



Stopped out of XHS long, give the close under 63.40 Tuesday





Additional charts and thoughts below.

below.gif

S&P- Near-term trends remain negative for SPX and other US Benchmark indices, particularly given the widespread support violation in multiple asset classes which happened last week. Prices are now right at former lows from mid-May, yet not much exists as to why one would buy into this pullback structurally when given the ongoing Treasury rally and signs of deterioration in Technology and Financials. Violations of 2800 should bring about a quick move to 2762 and then 2748 with 2732-4 being an attractive area to cover shorts and get long. (These targets are all based on SPX cash index)

index.gif

Treasury yields have cracked former lows which suggests additional Downside in the days and weeks to come. This could be detrimental for the Yield curve and in turn for Financials. This looks to show no downside exhaustion for at least another week, and potentially as many as three weeks. Thus, additional downside pressure looks likely for Yields and targets are found near 2.06% which represents a 61.8% Fibonacci retracement of the entire Yield rally from 2016 along with 2017 lows. This should be an importnat area to sell Treasuries on yield weakening which gives back another 20-30 bps


20-30.gif

Credit spreads look to be widening again and this ratio of LQD to HYG, or the Ishares IBoxx Investment Grade Corporate bond ETF, vs the Ishares iBoxx High Yield Corporate bond ETF has broken out and climbed to the highest levels since last December, at the peak of the 2018 selloff. This ratio looks to be a better gauge of how to view credit deterioration vs looking at HYG on its own, and while just a crude gauge for Credit, has given quite a few meaningful warnings in the past. Thus, when this starts to rise, it indicates Credit spreads widening, and could be problematic unless resolved quickly. Weekly charts will likely show a close above last December highs on any further market deterioration.

Healthcare should be overweighted; EM still an underweight

May 23, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2829-31, 2819-20, 2800-2

Resistance: 2864, 2892-3, 2894-6





Technical Analysis Video Webinar, 15 mins. Today 1pm EST-https://join.startmeeting.com/info69336

Dial-In Number (United States): (701) 801-1211, Access Code: 840-955-999

My Bloomberg Interview on Rising US Dollar and Detrimental effects to Emerging Mkts- 5/22/19

https://binged.it/2QeoW6L





Thursday's Technical Analysis Video Webinar-5/16/19-20 min

https://youtu.be/RTMG17HRncc



My CNBC interview 5/8/19 discussing Technology

https://pub-origin.cnbc.com/video/2019/05/08/tech-sector-may-be-hitting-a-peak-technician-says.html





SPX - (3-5 Days)- Neutral- No change in price for the last 5 days We'll need to see movement back over 2885 on upside, or under 2831 below to suggest price is starting to trend. Pullbacks likely would prove short-lived, but if this latter case happens, would take prices down to 2775-85 into 5/31 before bouncing.



EuroSTOXX 50- Mildly bearish for a retest of 3311. Trendstill not that negative, but the stalling out and minor pullback still hasn't shown much strength, and the bias for now is to the downside in the near-term. Above 3425 would be positive.



HSCEI- Bearish- Move down to test 10067 and then 9761 possible. Still tough to trust rallies given the degree of sharp downside momentum while US Dollar index hitting highest level in over 15 years on a trade weighted basis.





Trading Longs: OTEX, QURE, ANTM, HUM, MCK, AEP, ED, WEC, FRO, PAGS, MHK, FLS, CMG, GE, COST, TNDM, COUP



Trading Shorts: EEM, FXI, ALB, COPX, BBBY, DDD, UNG, KSS, M, SIG, LVS, EMR, DVN, NOV, AOS

Still tough to put much faith in either rallies, nor declines at this point. US Market indices have been sideways for the last 5 days. Emerging markets, specifically China, remain quite weak, while Developed markets are in much better shape. Breadth seems to have been better on "UP" days, than "DOWN" yet, we'll need to see some follow-through to pay attention. At this point, that requires a move down under 2831 for S&P, or above 2885. Looking back, Energy, Industrials, Technology and Materials all closed up more than 1% on the day and Semis in particular, managed to halt recent declines and turn higher to the tune of 2%. This was seen as constructive at a time when many are expecting the Trade war uncertainty should certainly cause market declines. For now, Equities have held where they needed to and turned up sharply yesterday yet, we''ll need to see some evidence of prices getting above key levels. For now, the bounce has stalled out, yet has not yet turned lower.



Key developments for yesterday centered on the US Dollar index when viewed in Trade weighted terms, moving back to the highest level in more than 15 years. Treasury yields also made a sharp move higher, in Europe and US, while the Yield curve flattened out. This is seen as bearish for commodities and for Emerging markets and China. While weve seen a minor bounce in these in the last 24 hours, it's unlikely to persist with Dollar strength (more on this below)





ACTION PLAN- 



Long TBT with targets initially at 33.40 and breakout above leads to 34.47, and then 36



Short EEM with targets at 39, then 38.04 maximum



Long XLV with movement up to 90.60 likely and over would drive up to 96



Long XHS, targeting 72 then 77. Stops at 63.40



Long XLU ,targeting 59.85-60 into end of week before a stalling out





Additional charts and thoughts below.

below.gif

S&P- Neutral churning still not too bearish. Overall, given the amount of negative news, one would suspect S&P could have easily dropped another 3-5 % in the last week. Technically, domestic indices have successfully held up much better than expected, and as the hourly chart shows, part of this is due to groups like Healthcare coming to the rescue as Technology falters. At present, S&P has managed to close up just 2 points above levels it closed at five trading days ago. So despite all the negative news and ongoing indecision regarding the Trade war, this really has had "Zero effect" with regards to the broader market, which has largely not been affected. Overall, its right to stick with a bullish view given a relative lack of deterioration. Under 2833 would be negative for a pullback to 2800 or slightly below. Meanwhile, over 2855 should be successful in driving prices higher back to challenge last weeks highs and over.

over.gif

Healthcare looks to be breaking out of the entire downtrend in relative terms vs SPX that has been ongoing for all of 2019. This group went from best to worst very quickly this year, in an extreme case of mean reversion. Now we're seeing evidence of the entire downtrend in Healthcare vs SPX being broken, as of yesterday, something which bodes well for a period of outperformance in this group, just as seasonality starts to kick in positive for the months of June and July. This began a few weeks ago with Healthcare Services (which was featured in the daily note yesterday, but now we're seeing evidence of additional parts of healthcare starting to participate. Overall, a breakout above an intermediate-term downtrend is something that normally happens first on a relative basis before spreading to absolute charts. in this case, XLV has not yet broken out, nor has DRG index or XBI - Biotech. But I expect all of these should take place in the near future and its right to position long ahead of this event.

event.gif

Insurance looks like the strongest part of the Financials group presently, and daily charts of KIE have carved out an attractive Cup and Handle pattern that should bode well for future strength. Daily charts show the pattern which looks very similar to a Reverse Head and Shoulders pattern above. The breakout consolidated over the last few weeks and now turning back higher again. Overall, quite a few stocks within this group have been pushing up to new 52-week highs, and it pays to favor Insurance and overweight.

Trade weighted Dollar breakout could spell additional trouble for EM, commodities

May 22, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2829-31, 2819-20, 2800-2

Resistance: 2864, , 2892-3, 2894-6



Will be on Bloomberg TV today 4:40 PM, live at Bloomberg Headquarters, NYC



Thursday's Technical Analysis Video Webinar-5/16/19-20 min

https://youtu.be/RTMG17HRncc



My CNBC interview 5/8/19 discussing Technology

https://pub-origin.cnbc.com/video/2019/05/08/tech-sector-may-be-hitting-a-peak-technician-says.html





SPX - (3-5 Days)- Bullish- Yesterday's breakout of 2858 keeps trend bullish and should lead to further gains to test recent highs near 2894. Under 2840 on an hourly close would change to bearish for a test of 2800.



EuroSTOXX 50- Bullish - No Change- Pullback here also failed to undercut former highs from Tuesday, at 3367 and can support a bounce.. Over 3402 should point back higher to 3438 retest and then 3458, 3514.



HSCEI- Bearish- Still tough to trust rallies given the degree of sharp downside momentum while US Dollar index hitting highest level in over 15 years on a trade weighted basis. Bounces should prove sellable into end of week. Increasingly it looks possible that a 100% retracement and retest of January lows takes place





Trading Longs: OTEX, QURE, ANTM, HUM, MCK, AEP, ED, WEC, FRO, PAGS, MHK, FLS, CMG, GE, COST, TNDM, COUP



Trading Shorts: ALB, COPX, BBBY, DDD, UNG, KSS, EEM, M, SIG, LVS, EMR, DVN, NOV, AOS

Yesterday's gains got off to an early start, rising up above key resistance, and never looking back. By day's end, markets had closed up near highs of the session, on much better breadth on an UP day, than the prior negative breadth had been on a DOWN session. Energy, Industrials, Technology and Materials all closed up more than 1% on the day and Semis in particular, managed to halt recent declines and turn higher to the tune of 2%. This was seen as constructive at a time when many are expecting the Trade war uncertainty should certainly cause market declines. For now, Equities have held where they needed to and turned up sharply yesterday, adding some confidence to the idea that this recent decline had likely run its course.



Key developments for yesterday centered on the US Dollar index when viewed in Trade weighted terms, moving back to the highest level in more than 15 years. Treasury yields also made a sharp move higher, in Europe and US, while the Yield curve flattened out. This is seen as bearish for commodities and for Emerging markets and China. While weve seen a minor bounce in these in the last 24 hours, it's unlikely to persist with Dollar strength (more on this below)





ACTION PLAN- 



Long TBT with targets initially at 33.40 and breakout above leads to 34.47, and then 36



Long XHS, targeting 72 then 77. Stops at 63.40



Long XLU ,targeting 59.85-60 into end of week before a stalling out



Taking profits in XLP longs as additional churning is happening near highs and near-term underperformance has begun. Under 56 would be problematic for XLP longs





Additional charts and thoughts below.

below.gif

S&P- Move over 2858 was seen as a positive Tuesday, and should drive prices back to test and exceed last week's highs. Looking back, S&P managed to bottom right where it needed to, just as Equity Put/call was spiking and higher volume into Down vs UP stocks occurred. S&P held 2840 which was thought to be important before turning up and making some structural progress yesterday. Breadth came in at nearly 4/1 positive and turned out to be a much more positive broad-based rally than Monday's decline was negative. Thus, it's right to use 2833 as support, and simply say its better to be long OVER 2833, while under 2833 would postpone the advance, and lead to a deeper retest of lows.

lows.gif

The US Dollar's recent strength looks to continue near-term, as the Trade-weighted Dollar managed to exceed highs of the last few years, putting this at the highest levels since 2002. This is a much more bullish chart of the Dollar than when looking at DXY, the commonly viewed Benchmark for the US Dollar. This latter index has over 60% vs the Euro which can often give a biased view of where the Dollar is headed, simply based on Euro strength or weakness. In the short run, further strength looks likely and should likely put further pressure on Emerging Markets and commodities into late May/early June before a bottom. One should consider betting against Pound Sterling along with many of the Emerging and LatAm currencies which have been showing increasing amounts of weakness.


Healthcare Services looks likely to show further near-term outperformance as Healthcare slowly improves. Stocks within the Managed care group showed very good performance yesterday, with stocsk like ANTM, HUM, UNH, ABC, HCA all turning in the top performance within the group over the last five trading days, showing nearly 5% or better performance each. This minor breakout of the recent consolidation for XHS, the Healthcare Services ETF, should allow for gains up to $68-69 in this sub-sector. Furthermore, healthcare is entering a very bullish time of the year seasonally and looks likely to show further relative strength.





Semiconductor decline should be nearly complete; Utilities a safe bet for this week

May 21, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2829-31, 2819-20, 2800-2, 2785-7

Resistance: 2852-5, 2864, 2894-6



Monday Technical Video 5/20/19

https://youtu.be/vuupEH5e9Ys



Thursday's Technical Analysis Video Webinar-5/16/19-20 min

https://youtu.be/RTMG17HRncc



My CNBC interview 5/8/19 discussing Technology

https://pub-origin.cnbc.com/video/2019/05/08/tech-sector-may-be-hitting-a-peak-technician-says.html





SPX - (3-5 Days)- Bullish- Leaning long after pullback failed to undercut key 2840 area discussed in Monday's weekly. Under 2840 on an hourly close would change to bearish for a test of 2800, while OVER 2858 can allow for a move higher to test and likely exceed 2894.



EuroSTOXX 50- Bullish - Pullback here also failed to undercut former highs from Tuesday, at 3367 and can support a bounce Tuesday. Over 3402 should point back higher to 3438 retest and then 3458, 3514.



HSCEI- Bearish- Monday's decline took out prior lows of the past week, finishing at the lowest levels since January. While momentum getting oversold and Demark signals present on 180, 240 min charts, nothing yet on Daily. Bounces are possible from 10500-70, but should prove sellable. Increasingly it looks possible that a 100% retracement and retest of January lows takes place





Trading Longs: AEP, ED, WEC, FRO, PAGS, QURE, OTEX, MHK, FLS, CMG, GE, COST, TNDM, COUP



Trading Shorts: ALB, COPX, BBBY, DDD, UNG, KSS, EEM, M, SIG, LVS, EMR, DVN, NOV, AOS, OSTK


Yesterday's break of Friday's lows was a negative, allowing for a test of the key 2840 which looks to have held for now. One can attempt to play a Turnaround Tuesday bounce, but any move back under 2840 on an hourly close and under Monday's lows 2833, would turn trends bearish near-term for a pullback to test 2800-2.



Overall, breadth finished only around 2/1 negative, not as bad on the downside, as last Thursday's gains were good for the upside. Volume was also about 2/1 negative, but it remains a concern that less than 50% of issues are above their 50 and 200 day moving averages with indices only ~3% off all-time highs. Most of Asia and Emerging markets remain under severe pressure, and various signs of leadership changes and sector rotation are running rampant at a time of peak uncertainy regarding a trade deal.



Technology is the key culprit here which continues to weaken, with Semiconductor weakness from Spillover on Huawei Supplier disruptions causing a further turn lower in this sector which only experienced about 2 days of bounce before turning back lower.



However, despite some of the breadth and momentum concern from early May, the positives here to lean on involved the rising levels of bearish sentiment, along with the fact that sectors like Healthcare and Financials have managed to hold up better than expected in the last week (Equal-weighted Financials, not XLF) While weve seen Tech turn down yet again, and this does remain a concern at 20% of SPX, the extent of the negativity seems a bit strong given a relative lack of real decline in the broader averages and lack of structural damage in many of the other sectors. Overall, it looks right to be more optimistic on domestic indices than Emerging at present, and for S&P, the ability to hold up above 2840 is seen as a positive.





ACTION PLAN- 



Long TBT with targets initially at 33.40 and breakout above leads to 34.47, and then 36



Long XLU ,targeting 59.85-60 into end of week before a stalling out



Long XLP with target at 58.90 and stops at 56.19





Additional charts and thoughts below.

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S&P- It looks right to maintain long positions here given that insufficient damage was done Monday. Gains have now been partially given back, though breadth and volume on this pullback has been less robust than we've seen during last week's minor trend breakout. This should signify that this minor consolidation is something to buy into. If 2836 is violated, for SPX cash, that would postpone any rally, and allow for a test of 2800 and potentially a slight undercut. However, getting back above 2854-SPX Cash (2858 S&P FUTURES) would suggest this pullback has run its course and a move above last week's highs is in order. For now, this looks like the right way to position, but will depend on markets turning higher Tuesday or Wednesday. Stay tuned.

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Semiconductors have extended weakness, and have given up nearly 50% of the four month rally in a mere 18 trading days' time. This looks damaging for this group on an intermediate-term basis, though looks to be nearing support which could help SOX stabilize at just fractionally lower levels. Of particular interest is the 5-wave Elliott-wave pattern in the SOX which looks to be nearing completion. This should mean that the decline is nearly done on the downside, with 1325-55 being important and under near 1250-75. However, given that this is the first real five-wave move lower in this sector, gains into the late Summer/early Fall would be something to sell into, expecting that SOX could have very well made its peak for the year this past month. For now, shorting into this group looks like a poor risk/reward, though buying into it also looks to be a few days premature, but should happen by end of month.

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Utilities look like a good safety net for this week as XLU prices have broken back out to March highs. This is temporarily bullish as the defensive trade is still very much ongoing with deterioration in groups like Technology. XLU looks like a technical long for short-term only, but could get to 59.85-60 before peaking, and quite a few Utes hit the new 52-week high list today, like WEC, ED, AEP, NEE, PEG, XEL and could help this sector remain afloat a bit longer. Key risk to this trade concerns Treasury yields starting to bottom out, and a lift back over 2.50 should prove to be the death knell for the Utes, not dissimilar from what's happening in the REIT sector right now. At present, with ongoing volatility, this looks attractive for short-term traders focusing on good sectors for near-term outperformance.

Technology bounce underway, & Over 2862 is bullish for S&P

May 17, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2857-7, 2752-3, 2838-39, 2785-7

Resistance: 2891-3, 2898-2900, 2918



Thursday's Technical Analysis Video Webinar-5/16/19

https://youtu.be/RTMG17HRncc



My CNBC interview on GE General Electric Technicals- 5/8/19

https://www.cnbc.com/video/2019/05/08/ge-has-shown-momentum-but-may-have-rough-road-ahead-pro.html



My CNBC interview 5/8/19 discussing Technology

https://pub-origin.cnbc.com/video/2019/05/08/tech-sector-may-be-hitting-a-peak-technician-says.html





SPX - (3-5 Days)- Bullish- Buy early weakness- Prices exceeded 2862 in a broad-based rally yesterday on higher volume, breaking the downtrend and arguing for a bit more rally to close the week. Downside support of 2852 should now hold on pullback attempts. Targets should be 2918, then 2954



EuroSTOXX 50- Bullish - Above-avg gains have recouped over 60% of prior decline. Targets 3458, then 3514. Under 3311 is bearish.



HSCEI- Bearish-Minor bounce but has failed to make much progress, and Rising US Dollar could result in underperformance. Trend unlikely to exceed 11151 before turning down for a final pullack to this decline which could hit 10526 as maximum support before stabilizing and showing a stronger rally





Trading Longs: MNST, MHK, FLS, CMG, F, GM, GE, COST, TMUS, TNDM, COUP, LIQT, GRVY



Trading Shorts: EEM, M, SIG, LVS, EMR, DVN, NOV, AOS, OSTK

Prices managed to push above May's downtrend line resistance, in SPX, DJIA and NASDAQ Composite which was seen as a real positive on a day which finally managed to show some broad-based participation with 3 sectors up more than 1% on the day: Financials, Materials and Discretionary, while Industrials, Technology, Telecom and Staples all came very close. Breadth finished at a bit more than 2/1 positive, and while prices slipped a bit into the close, the net effect was still viewed as positive after indices looked to be near important levels. Unfortunately the news is not all bullish, as daily momentum remains negatively sloped and SPX still showed less than 50% of all stocks above their 50 and 200-day moving averages. Followthrough in the days ahead wiill be crucial to the success of a push to new highs with downside being limted to support near 2852. As stated above, under this would warn of a deeper retracement and possible test of lows.



Key developments for Thursday centered on the US Dollar pushing higher vs Yen and Pound Sterling while achieving a minor breakout vs the Euro. This looks to be important in causing underperformance in Emerging markets, specifically China, along with commodities in the days ahead. Meanwhile, Treasury yields look to have made an important "About-Face" the other day with yields on the 10yr getting down to near the key 2.33% before bouncing back above 2.39%. The net effect was a period of weakness for the Metals. While a move back above 2.50% would likely lead to further near-term pullbacks in Gold, for now Yields need to show much more technical improvement after being down the last 3 of four weeks.





ACTION PLAN- 



Long TBT with targets initially at 33.40 and breakout above leads to34.47, and then 36

Long GLD with target 125.90-Stop under 120.77


Long XLP with target at 58.90 and stops at 56.19




Additional charts and thoughts below.


S&P- Gains have broken 2862 which was seen as a positive in breaking the downtrend from early May. Breadth expanded on the move and volume picked up yesterday vs the prior session, both positives. At present, after 3 days of gains, S&P has managed to claw back over 50% of the decline thus far. Momentum hasn't turned up all that much thus far however, and remains negative based on popular gauges like MACD. Provided that S&P now stays over 2852, the swing high from earlier in the week, this trend will have a chance to follow-through. Seeing key groups like Financials and Healthcare participate in the days ahead would be a good sign.

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Semiconductors have been noticeably absent from the recent rally and have underperformed dramatically of late. After the steep selloff that broke uptrends from last December, we've seen just a fractional gain in the SOX. This is an important leading sector, and key part of Technology. Underperformance won't help to give much confidence in the Tech rally until SOX can regain the trendline that was broken. After hours earnings news saw NVDA gain nearly $10 from 160 to 170 in price before giving back all those gains during the conference call. Other stocks like AMAT were higher after hours, but it will be key to maintain these gains and try to jumpstart a rally in this sub-sector, which for now, remains a very big laggard.

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Emerging Markets likely face further selling pressure. As this daily chart of EEM shows, we've seen hardly any bounce in EEM after a 9.5% decline from early May. The lagging in performance was accentuated by Asian markets like China, Taiwan and Korea which have all plummeted lately, but others like Brazil have also broken down and shown real technical weakness. Overall, i expect EEM to pullback to test lows into next week and downward momentum could be strong enough to result in a retest of former lows.

Trend bearish but minor stabilization into close with hopes of Trade Deal

May 10, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2860-2, 2836-40, 2775-80

Resistance: 2898-2900, 2910-2, 2936, 2944-5



Link to Thursday 5/9 Technical Webinar-20 min overview on Selloff

https://youtu.be/rMoIsOVMKNI

My CNBC interview from yesterday, discussing Technology

https://pub-origin.cnbc.com/video/2019/05/08/tech-sector-may-be-hitting-a-peak-technician-says.html





SPX - (3-5 Days)- Bearish - Initial support at 2840 held yesterday within 2 ticks, and prices rallied nearly 25 handles into the close. Yet Downtrend is intact and momentum remains tilted lower. Failure to reach an agreement would send S&P down to 2775-95 in my view, and this is the key area to cover shorts. Above 2899 is bullish, and traders can use tight stops with 2880 as being a stop for shorts intra-day, and above 2899 on a close.



EuroSTOXX 50- Bearish - Acceleration has taken prices under the first Fibonacci and should hit 3283 within 4-6 trading days before a low of any magnitude. Overnight bounces on a US/China deal would need to clear 3425 to have likelihood of further gains



HSCEI- Mildly bearish-Trend has accelerated under support , but should stabilize at 50% retracement area. 10762 should provide a near-term floor and right to cover shorts here, thinking bounces would need to clear 11177 to have any real confidence.





Trading Longs: H, PRFT, ZS, TSCO, DISH, CME, FIS, CHD, SBAC, TMUS, SANM, MHK, BAC, C, V, IYT, KEX, ZTS, MYL, CAR, WIX, TSCO, MAS, TRP, FLT



Trading Shorts: BHGE, DVN, EOG, XEC, NOV, SLB, FOSL, WATT, AOS, MAT, SIG, CTXS, OSTK

BOTTOM LINE: The next 3-5 days is largely a coinflip, trends are bearish but are nearing areas where prices should bottom and begin to turn back up. Downside likely is limited to 2775 for S&P Futures while over 2899 jumpstarts the rally.



Overall, trends heading into next week largely will depend on the outcome of the US/China meeting and whether tariffs can be avoided. Given that this news did accompany many of the swings in recent days, taking a bet on the outcome would amount to largely a coin flip, though recent Trump dialogue and President Xi's letter seem to indicate the desire for a positive outcome. Note that breadth and momentum, along with Technology peaking out, however, along with Treasury yields, peaked out a full week ahead of much of the Trade tension drama. This truly set the stage, and the breakdown in Tech proved to be the catalyst.



Heading into end of week, technical trends from the 4/30 high remain bearish as of Thursday's close, though with an impressive rally to end the session which carried prices right up to important near-term resistance near the multi-day trendline. Key short-term resistance lies at 2880 while over 2899 on a close would be a signal to cover shorts and assume longs. The US has fared much better than the rest of the developed world as well as many Emerging markets which have been hit hard in recent weeks. EEM as a gauge for Emerging markets has dropped sharply, and while near-term oversold, remains difficult to bet on. Overall, for the bulls, it's a must to stabilize quickly with prices at multi-week lows and push back higher, as momentum has begun to drop off sharply. The next 24-48 hours should shed some light as to whether trends can snapback, or one final selloff is in order.



ACTION PLAN- 



Long XLP with target at 58.90 and stops at 56.50



Long XLF with targets at 28-28.50- Stops on daily closes under 26.90



Long IWM with targets at 162.50



XLU was stopped out and XLP and XLF are close. These will be kept on a tight leash, but thought to be good risk/rewards now for those not involved, with tight stops





Additional charts and thoughts below.

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S&P- Prices up near key downtrend, and a "MUST" to get over 2899 to have faith in this rally continuing. Early am lows occurred near 2838-40.This was thought to be a pivotal turning point for the day, and 2840 marked a key area of support that was based on both the 50% retracement from March-April rally as well as Gann 180 degree projections from the 4/30 high close of 2948.50.  While this held on Thursday, any failure in negotiations likely would take prices back down to recent lows, and the area of 5/15-7 stands out as being important for trend change, and on declines, should turn out to be a low. Overall, it's thought that this decline should be close to nearing a low, not something which could carry on through May. Yet, it's a must for Technology to stabilize quickly given its deterioration, something shown in charts below.

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S&P 500 Information Technology index- Bearish weekly drop to multi-week lows stands to confirm Demark sells barring a 1% rally Friday.

The drop to multi-week lows is a concern for Technology after the trend break for the group on daily charts, and this weekly chart also helps to put this deterioration into perspective. Prices rose right to prior highs and briefly above before reversing violently to new multi-week lows. Demark weekly TD Combo 13 sells could be confirmed on Friday's close, if Tech doesn't rally 1% higher in Friday's trading. This seems to be a bearish development, yet other sectors could come to Tech's rescue, as we've seen with Financials and Healthcare lately. For now, this past week looks to be a definite warning sign for Technology peaking, unless we can see an imminent rally back to highs.

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Equity put/call ratio spiked intra-day right near late morning lows to the highest levels seen since December. This was important late morning on Thursday, as it happened right when S&P had neared the critical 2840 low. This sudden uptick in fear waned a bit towards the close with a 0.70 reading, yet eyeing the intra-day put/call trading can often be important, coinciding with hourly Demark signals, but those wishing to catch trading lows intra-day. Bottom line, while trends are bearish, prices look to be near support from a price and time perspective within the next 4-6 trading days, so it's right to use further weakness to consider covering shorts, particularlly when Equity put/call data confirms further.

Insufficient recovery, and Semis still weak within Technology

May 9, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2860-2, 2836-40, 2775-80

Resistance: 2898-2900, 2910-2, 2936, 2944-5



Thurs Technical Webinar, TODAY 1pm EST- Dial in info and link below:

https://join.startmeeting.com/info69336

Dial-In Number (United States): (701) 801-1211, Access Code: 840-955-999

My CNBC interview from yesterday, discussing Technology

https://pub-origin.cnbc.com/video/2019/05/08/tech-sector-may-be-hitting-a-peak-technician-says.html



Wednesday Technical Video, 5/8/19, discussing Selloff yesterday

https://youtu.be/9yBPZqj2Dsk



Thursday Technical Webinar link- 20-min overview of risk assets

https://youtu.be/aMjQydjqblo





SPX - (3-5 Days)- Bearish on break of 2901 Insufficient progress yesterday, and prices will need to get back up above 2909 to argue for gains. First real support lies at 2840 and below near 2775-2800 which should prove to be a buying opportunity.



EuroSTOXX 50- Bearish - No change- prices are hugging the lower Bollinger on Daily charts, any bounce likely should not get over 3475 before turning down to challenge March lows near 3281-3 which also hits the 38.2% FIbonacci retracement.



HSCEI- Mildly Bullish- Recent selloff creates a good risk/reward to buy weakness ahead of US/China talks. Selloff has reached good support to put in a trading low within 2-3 days. HSCEI managed to hold March/April lows and its right to use recent weakness to consider covering shorts. >11429 creates a more bullish short-term view.





Trading Longs: H, DISH, CME, FIS, CHD, SBAC, TMUS, SANM, MHK, BAC, C, V, IYT, KEX, ZTS, MYL, CAR, WIX, TSCO, MAS, TRP, FLT



Trading Shorts: BHGE, DVN, EOG, XEC, NOV, SLB, FOSL, WATT, AOS, MAT, SIG, CTXS, OSTK



Equity markets traded in a much narrower range yesterday, but insufficient upward progress to argue for any sort of meaningful low at hand ahead of this week's China negotiations. Trends remain bearish since last week, and there continues to be an exodus out of Technology, with yesterday's Semiconductor weakness a prime example. Overall, no meaningful progress in Equities to argue for a difference of opinion. Trends will be negative for US Stocks, with stops on S&P shorts near 2909 and movement under 2880 leading down to 2840, and a maximum of 2775-2800 into next week.



Utilities sold off sharply yesterday, in a rare showing of exodus out of Defensive sectors even with huge indecision about the course of the China trade deal. Rates have remained low, and no real evidence of Treasury yields turning higher. Thus, this group (as discussed below) has pulled back to near make-or-break territory and will need to stabilize.





ACTION PLAN- 



Long XLU with target at 61.50 and stops at 57.50 on a close



Long XLP with target at 58.90 and stops at 56.50



Long XLF with targets at 28-28.50- Stops on daily closes under 26.90



Long IWM with targets at 162.50





Additional charts and thoughts below.

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S&P- Bearish- No real change based on yesterday's price action. Trends from the last couple months remain broken technically and not sufficiently oversold to argue for any sort of real low. Yet, as we've learned in this news sensitive tape, any hint of progress on a meaningful deal likely would bring about a decent rally, and thus one should be prepared with 2909 as an area for stops. Hourly charts above show the stair-stepping price action of this decline as its unfolded in recent days. While the structure looks choppy and overlapping , there hasn't been sufficient progress to argue for buying dips particularly given a lack of news on this Trade deal. On the downside, 2840 looks like the first meaningful area on this pullback. Below that would likely bring about a test of 2775-2800, an area that coincides with the 50% retracement of the move from mid-February.

february.gif

Semiconductors weakened further Wednesday, dropping under the key 113.50 area (SMH) and breaking uptrend line support which happened to the Technology group as a whole in recent days. This leading sector violating trendline support is seen as a negative technically, and demonstrates that this group could witness further outflows and lag after turning in superb performance over the first four months of the year. With Technology higher by nearly 24% on the year, the last two weeks have shown a notable exodus out of this group, with losses greater than 2%. Overall, it's necessary to see some evidence of stabilization before trusting this group to bounce, but for now, a break of a multi-month trend normally argues for additional weakness.

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Utilities weakened down to key make-or-break support in recent days, an area marked by a support trendline undercutting the last few weeks lows that also marked resistance for former highs. Weekly closes back under 57 in XLU would argue for more meaningful weakness out of this group at a time when rates are still dropping. This might be viewed somewhat positively from a risk-on type standpoint, and signs of deterioration would be something to keep an eye out for given the recent weakness.