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Uptrends still intact for indices and most sectors, Defensive sectors losing ground again

February 15, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2732-4, 2722-4, 2700-2, 2683-5, 2662-5

Resistance: 2759-60, 2773-5



My CNBC interview from Wednesday 2/13

https://www.cnbc.com/video/2019/02/13/top-technician-says-this-is-why-its-time-to-ditch-tech-and-buy-the-financials.html



REPLAY LINK: Thursday Feb 14 Technical Webinar

https://youtu.be/XVuwPxHAZs8




SPX - (3-5 Days)- Mildly Bullish- S&P has stalled a bit, but insufficient evidence of turning down and can't rule out a bit more rally. A close UNDER 2737 is necessary before thinking prices are turning down


EuroSTOXX 50- Possible Peak in place after yesterday's reversal- Could be range bound between 3124 and 3250. Will need a move UNDER 3124 for confidence in the bearish case.

HSCEI- Bullish- Prices have pushed higher and still looks early now for a peak- Move up to 11450 looks possible



Trading Longs: FICO, POST, SBUX, WATT, PGR, XRAY, HIIQ, MPWR, IYT, XLF, GLW


Trading Shorts: CTL, K, FRT, XLK, TLRY, EEM, DBC, HAE 


Indices appear to be tiring, yet no material price deterioration and the weakness is being seen in momentum only. Bottom line.. a break of the trendlines that have guided uptrends in SPX, DJIA, NDX and Technology, Financials will need to happen before thinking markets are pulling back. We now have counter-trend exhaustion signals in indices, and the trend in TNX has been decidedly still bearish. Yet we've seen minor breakouts in both Financials and in Transportation in the last couple days, while the Defensive sectors have been turning back lower relatively. These latter few developments aren't usually what happens during any kind of pullback. Until 2737 is breached, trends will remain positive and it will be difficult to see any kind of material weakness. Yet, the signs are slowly coming together, and it's still likely that any upside proves minimal and not a great risk/reward for longs between now and March.


Specifically for yesterday, the Transport breakout needs to be highlighted as a positive and something that still is more bullish than bearish. Yields pulling back sharply though are something which did adversely affect Financials yesterday, and is thought to be a warning sign for the longevity of this equity rally now that prices have gained over 17% in 33 trading days, or roughly 1/2% a day. The charts below will serve to shed some light as to a couple of the recent technical developments in the last 24 hours.


ACTION PLAN- 


Long XLF- Expect Financials start to outperform and we see another 2-3 days of absolute rally in the group

Short EEM- Expect pullback in Emerging markets


Short DBC- Expect pullback in Commodities in the weeks ahead


Short VNQ- for Short REIT exposure




Additional charts and thoughts below.

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Technology has trended higher on an absolute basis, but has recently begun to show evidence of Demark-related exhaustion. Until prices violate uptrends and confirm these signals however, with a daily close below the close of four days prior) the uptrend is intact and can't rule out a bit more strength over the next week. However, it's thought that based on charts of SOX nearing serious resistance at 1380-1400 and Equal-weight Technology right at prior peaks, than a stalling out and rotation OUT of this group should occur. For those that don't study those other relationships, the one thing to monitor is whether this uptrend remains intact.

intact.gif

The Dow Jones Transportation Average has just broken out above the entire trendline guiding this decline from last Fall. While not widely discussed yesterday, this does look to be a positive for this group and can drive outperformance in the days ahead. One should continue to overweight stocks like UNP, NSC and CSX, expecting further strength while the Airlines likely lag performance.

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Consumer Staples and other Defensives have turned back lower in the last two days, creating more of a bullish environment for stocks. (The chart above highlights the S&P 500 Consumer Staples vs SPX relative chart) As told previously, these groups had been strengthening. Yet this seems to have proven short-lived and yesterday's price action seems to suggest Staples in particular will test former lows relatively and should be underweighted into early next week. Some evidence of the Defensives showing relative strength is a must before expecting serious market turmoil, in my view.

Expect rotation out of Technology and into Financials

February 14, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2722-4, 2700-2, 2683-5, 2662-5

Resistance: 2759-60, 2773-5


Wednesday Mid-day Technical Video

https://stme.in/vpJJlP74fT



My CNBC interview from yesterday:

https://www.cnbc.com/video/2019/02/13/top-technician-says-this-is-why-its-time-to-ditch-tech-and-buy-the-financials.html



REPLAY LINK: Thursday Feb 7 Technical Webinar

https://youtu.be/yuWFNWZxiMI



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

Dial-In (US): (701) 801-1211, Access Code: 840-955-999



SPX - (3-5 Days)- Mildly Bullish- S&P stalled out right at 2760 and remains within a resistance zone now that likely causes a stallout.


EuroSTOXX 50- Mildly Bullish- Closing on target and should stall out by Thursday

HSCEI- Stallout likely after test of last Sept highs. Trend won't be bearish unless 10770 is undercut.


Trading Longs: PGR, XRAY, HIIQ, MPWR, IYT, XLF, GLW

Trading Shorts: XLK, TLRY, EEM, DBC, HAE 

Overall yet another positive day with Transportation on the verge of a larger breakout, while Financials show some decent follow-through after the recent move above the downtrend that's guided this group since last Fall. Still no meaningful evidence of stocks starting to turn down, yet Technology has now gotten to levels that are important and it's thought that this group stalls out and reverses course, with money flowing into Financials. As stated yesterday, four reasons stand out to bring a bit of near-term concern about the longevity of this rally.

1) Defensive bias over last 5 days, 2) slowing momentum, 3) Demark exhaustion and 4) TNX, USDJPY diverging from SPX. All of these have the potential to be negative and should be highlighted. The fact that SPX is now above its 200-day moving average is thought to be unimportant, as the last few times this was exceeded, back in November and also December, both times prove to be short-lived and prices fell right back down. Thus as stated earlier, the 200-day is not really that important of a trade indicator as it is a point of reference.

Overall, Technology, as shown below is now up to important levels, whether it be based on Equal-weighted Tech, the SOX, or XLK nearing its own 200-day while showing Demark "sells" . Meanwhile, Financials look to be just breaking out of intermediate-term downtrends from last Fall. While "Fin-Tech" continues to show good strength and the Exchange stocks, others like Berkshire and JP Morgan have begun to show meaningful evidence of strength lately. Thus, it's thought that there could be an upcoming rotation where Technology stalls, while Financials pick up strength. Charts should highlight some of this rotation below.


ACTION PLAN- 

Long XLF- Expect Financials start to outperform and we see another 2-3 days of absolute rally in the group

Short EEM- Expect pullback in Emerging markets

Short DBC- Expect pullback in Commodities in the weeks ahead

Short VNQ- for Short REIT exposure


Additional charts and thoughts below.

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Equal-weighted Technology got right up to prior highs and has since begun to stall out in recent days. This chart highlights the SPXEWIN , or Equal-weighted Technology index, vs the SPX. Relatively speaking, the breakout late last year was instrumental in helping this continue higher, but at current levels, it looks like a poor risk-reward near former highs, and likely slows. This could affect the SOX (which looks to have maximum upside to 1385-1400 ) and XLK which could stall out at current levels. Overall, while Tech had been bullish last year and fell out of favor, the recent rally has been impressive and we'll see the extent to which this Tech rally stalls out. The Semi names might face more downward pressure than FANG.

NYFANG.gif

NYFANG, the Bloomberg index for the so-called "FAANG" names within Technology, remains trending down since last June. Last week's peak in this group in the very short term was higher than the last couple days, showing the extent that FANG has not really participated in the rally of late (Facebook, Amazon, Apple, Netflix and Google (Alphabet ) While a breakout of this downtrend would certainly be bullish, the near-term is more choppy and neutral and has not allowed for any real strength.

strength.gif

Financials showed evidence of breaking out of this entire downtrend from last September yesterday. This looks to be an important and bullish development from this group which has lagged for months. The absolute charts have begun to look more bullish, while the relative charts have stabilized and made minor breakouts in recent days. One should overweight stocks like V, MA, along with JPM, BRK/B.

Financials starting to turn higher is a Bullish intermediate-term development; Near-term though, SPX near Short-term Target

February 13, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2683-5, 2662-5,

Resistance: 2744-7, 2752-5, 2759-60



Tuesday Mid-day Technical Video

https://stme.in/JTfDwNZlI9



REPLAY LINK: Thursday Feb 7 Technical Webinar

https://youtu.be/yuWFNWZxiMI




SPX - (3-5 Days)- Mildly Bullish- Another 1-2 days of gains look possible this week, but S&P is now at bottom part of resistance zone and should hold UNDER 2760- Use early strength to sell


EuroSTOXX 50- Mildly Bullish- Closing on target and should stall out by Thursday

HSCEI- no change- Stallout likely after test of last Sept highs. Trend won't be bearish unless 10770 is undercut.



Trading Longs: KRE, XLF, JPM, BAC, GLW, ADBE, WMGI, NSC, CRM, INSP, CSCO


Trading Shorts: XLK, TLRY, EEM, DBC, HAE, 


Overall, the market's 1.5% surge has helped prices reach the bottom of the upside resistance zone at 2745-60 that I feel will be important. We've seen roughly a 400 point S&P rally in about 32 trading days, or 17% from trough to peak. This is roughly 1/2 % a day and a pace that likely is NOT sustainable.

While seeing Financials start to bottom out and turn higher is a very good development for the market on an intermediate-term basis, along with seeing Technology and Industrials continue to show good strength, it's importnat to separate out the near-term, from the intermediate-term as a few factors bear discussing.

Specifically, the following 4 factors I view as important and negative from a technical perspective that likely limit this rally from continuing higher throughout the balance of February.


1) The market has shown a more defensive bias recently. While yesterday was bullish in most "risk-on" sectors, we've seen Utilities and Staples lead the market over the past 5 trading days.



2) Momentum has begun to slowly wane as a result of last week's 2-day decline. While yesterday's breadth was impressive and positive +3/1.. it is highly likely that we see some type of stalling out in both breadth and momentum throughout the balance of this week, not continued surges like yesterday



3) Demark exhaustion is now present in some indices and will be complete I others over the next few trading days. These are the first instances of these appearing since late December, and often are important from a counter-trend perspective in suggesting a stalling-out



4) TNX and USDJPY have largely not joined the rally in equities to the same extent and stocks and bonds have largely moved in unison of late. This often needs to be heeded as bond yields have had an uncanny track record in recent months of having pointed out the right direction and stocks have followed.



For now, these four reasons are important enough, now that equities have rallied 17% in about 32 trading days, to suggest an upcoming Pause can happen, not dissimilar to last week's pullback, but larger in scope. However, given the extent of the negativity still present and huge inflows into Cash, as per the recent BaML polls, it looks right to think dips should prove short-lived and are buying opportunities.



ACTION PLAN- 



Long XLF- Expect Financials start to outperform and we see another 2-3 days of absolute rally in the group


Short EEM- Expect pullback in Emerging markets


Short DBC- Expect pullback in Commodities in the weeks ahead


Short VNQ- for Short REIT exposure


Closing out Long QQQ and also long XLK at the open Wednesday



Additional charts and thoughts below.

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A bullish move in S&P back to new highs for the year. Yet, note that momentum did not follow suit on the price gains yesterday. Demark counter-trend exhaustion should be complete this week. Overall, it looks right to sell into this recent push higher, with 2760 being the likely peak ceiling to this resistance band.

band.gif

DJIA not showing nearly the same effectiveness with prices finding any sort of resistance at the 200-day. With countless media mentioning 200-day moving averages as being important, its worthwhile to point out that these are simply points of reference only and shouldn't be thought of as true resistance. The DJIA for example has had a very spotty record when approaching its 200-day as shown. So most will simply ignore the DJIA 200-day as it has not worked and prefer to discuss selling the SPX heading into its own 200-day. Unfortunately one should either make use of it, or not, and cannot simply ignore for convenience purposes. DJIA does look close to near-term targets and is unlikely to move above early December highs.

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Financials are showing the first real signs of turning the corner, which is an important development and constructive for US markets this year. While this is just the start of this stabilization, seeing XLF breakout vs SPX on relative charts is a very good sign and should be respected. Thus, with Tech nearing targets, it's easy to recommend this sector as something to overweight vs Tech, exiting XLK to put money into XLF and/or KRE (the latter which looks to be turning up vs KBE and BETTER than most banks)

Transports can lead higher near-term; Upside S&P target 2745-60

February 12, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2683-5, 2662-5,

Resistance: 2744-7, 2752-5, 2759-60



Monday Mid-day Technical Video

https://stme.in/LwTyjczc1x



REPLAY LINK: Thursday Feb 7 Technical Webinar

https://youtu.be/yuWFNWZxiMI





SPX - (3-5 Days)- Bullish- Likely that S&P bounces after last week's minor Wed-Thursday drawdown. Resistance lies from 2745-60 to sell into



EuroSTOXX 50- Mildly Bullish- Likely bounces to complete Demark counts before this sells off



HSCEI- Stallout likely after test of last Sept highs. Trend won't be bearish unless 10770 is undercut.





Trading Longs: WMGI, NSC, CRM, INSP, CSCO



Trading Shorts: TLRY, EEM, MEOH, FLR, CVS

Overall, the lightest trading day of 2019 resulted in indices largely closing unchanged on the day, pulling back roughly 15 handles from earlier highs yet not doing hardly any real damage by yesterday's close. Near-term it still looks likely that prices can push higher to 2745-60, as last week's minor pullback on Wed-Thurs failed to make much headway lower. Momentum has slowed a bit, yet insufficient weakness has been seen to think prices need to go immediately lower. Demark counts still require about 3 days before forming counter-trend sells that might indicate a larger decline can happen.



In the short run, Transports, Technology both look to have another few days of upside, and until/unless 2680 is breached, it's still likely that additional upside can happen. The biggest development from yesterday centered not on Equities, but on currency movement as the US Dollar's gains pushed higher in a way that suggest additional Emerging market and commodity weakness.





ACTION PLAN- 



Short EEM- Expect pullback in Emerging markets



Short DBC- Expect pullback in Commodities in the weeks ahead



Long QQQ -Targets 175 but would look for evidence of near-term overbought conditions once 173 is hit. Stops under 167.3-



Long XLK with target 69, stops under 64.25 -Never quite got to target and now lower



Looking to short VNQ at 85





Additional charts and thoughts below.

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S&P looks to be trying to stabilize after just a couple minor down days last week. Rallies to challenge last week's highs looks likely given this minor stabilization, and something that could briefly get above, near 2745-2760 into late this week. Over the next couple days, gains look more likely than losses.

losses.gif

IYT, the Transportation ETF, made a very decisive breakout type move yesterday that carried up over the highs of the last week to the highest levels since late last year. While the larger downtrend has not yet been surpassed, yesterday's move should allow for further near-term strength in Transports. Stocks like NSC, UNP and CSX look to all be able to make additional gains, and IYT also looks like a technical long.

long.gif

BBDXY, the Bloomberg Dollar index has now made one of the largest gains in the last 6 trading days than has occurred in the last couple years. Near-term trends remain bullish as part of what's thought to be a larger intermediate-term Topping pattern for the Dollar. Between now and end of February it looks like additional gains can happen in the US Dollar. Breakdowns in EURUSD below support happened yesterday while GBPUSD also extended recent losses. USDJPY rallied above recent highs despite Japan being closed on holiday. Thus, US Dollar still looks to extent gains vs the Majors and this move likely allows for EEM weakness along with commodity weakness (DBC)

Emerging mkts & commodities break down, w/ US Equities showing first signs of weakness

February 8, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2683-5, 2662-5,

Resistance: 2744-7, 2752-5



REPLAY LINK: Thursday Feb 7 Technical Video

https://youtu.be/yuWFNWZxiMI





SPX - (3-5 Days)- Bearish -Looks like at least a minor pullback has gotten underway a few days early. While a few warnings signs were in place it was necessary to wait for the price break, which we got, and held by end of day. Two areas are important. Thursday's lows- 2685 and under this sends prices down to 2662-5. On upside, regaining 2705 would be constructive for a move to 2727



EuroSTOXX 50- Mildly bearish- This decline will take time and initially, 3096 should hold and produce a bounce which should be sold. Demark counts are not complete



HSCEI- Stallout likely after test of last Sept highs. Trend won't be bearish unless 10770 is undercut.





Trading Longs: PAYC, DE, CMI, FL, SNN, MSFT, PLNT



Trading Shorts: EEM, MATX, MEOH, FLR, MAC, CVS, K, MHK, HRB, GPS, ILMN, CBOE, CI, MKC, VOD, AMGN, CE, SWK

Well, all the pieces were in place to suggest an upcoming reversal, except for the price action itself. We seem to have gotten that yesterday with the pullback down to multi-day lows. Breadth, which had been flat for the last few days, expanded to 3/1 negative on the decline, and at one point there were 8 sectors out of 11 down on the day.



The reasons cited mentioned cycles based on 90 day and 360 days, along with breadth deterioration in the near-term. Additionally, Demark exhaustion was close to being completed while Financials had not been working well as Treasury yields have been trending lower with both stocks and bonds rallying in unison. All these are far more importnat technically than the oft-cited reasons about China trade, which has been an ongoing concern and just now being discussed as a reason for "why" equities pulled back.



Key developments for Thursday centered on Emerging markets and Commodities both breaking down in the short run, with both EEM and CCI index violating key support and declining on US Dollar strength. (Precious metals however were more stable given that yields have been pulling back.)



Overall, I think yesterday's decline does pave the way for additional selling on a 2-3 day basis. However, it's tough making the call for a pullback down to prior lows in any sort of retest, as stocks have been up nearly 15% in 5 weeks and will need far more than 1 day of selling to argue that the trend is vulnerable to a retest. For now, a pullback to 2662-5 is possible and violating yesterday's lows is the first step to this, (2685) so this area is key.



ACTION PLAN- 

Short EEM- Expect pullback in Emerging markets

Short DBC- Expect pullback in Commodities in the weeks ahead

Long QQQ -Targets 175 but would look for evidence of near-term overbought conditions once 173 is hit. Stops under 167.3-


Long XLK with target 69, stops under 64.25 -Never quite got to target and now lower


Long Crude oil with movement up to $55-56 likely

Looking to short VNQ at 85 as its doubtful this is breaking out




Additional charts and thoughts below.

belowç.gif

S&P broke its own uptrend from late December yesterday, coinciding with Counter-trend indicators like TD Combo confirming (13) Countdown sells. While Sequential is premature by a few days, this breakdown looks to lead to a bit more weakness in the short run and then might revisit highs. Overall, a larger breakdown to this uptrend looks to have started with Thursday's decline. While this might take some time, and still difficult to say this leads to a larger setback, it is a negative compared to how S&P has traded in recent weeks and has to be respected. Pullbacks to 2662-5 looks possible and this should be the first area to consider buying. Only on a break under 2622 would the larger trend start to give way to more meaningful weakness. For now this is very much premature.


premature.gif

EEM, the Ishares MSCI Emerging mkt ETF, violated its one-month uptrend from early January yesterday, something which likely puts EM under pressure for the month of February. While this might not prove to be a straight line lower, this breakdown and weakness has to be recognized and is a definite negative


negative.gif

Commodities moving lower. While 2019 looks to be the year that this area starts to make some headway, February doesn't look to be the month which this gets underway. Yesterday's break was certainly much more bearish than bullish, and finishing at multi-day lows as the US Dollar has climbed for six straight days looks to lead commodities lower in the days ahead. Overall, one could consider DBC as an ETF to short to take advantage of near-term weakness in this group and with USD still technically trending higher in the short run, commodities likely underperform.

Expect that breadth deterioration could lead to stalling out in next 3-4 days

February 7, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2728-9, 2717, 2707-8, 2700-2, 2689-91

Resistance: 2744-7, 2752-5



REPLAY LINK: Thursday Jan 31-Technical Webinar- 15 min

https://youtu.be/GaetauQeqKY



TODAYS WEBINAR DIAL-IN INFO

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

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




SPX - (3-5 Days)- Mildly Bullish- Expect that fractional upside still likely in the short run, with targets up at 2745-60 before a stalling out next week



EuroSTOXX 50- Mildly Bullish- Rallies up to 3250 look possible before this stalls. Under 3094 necessary to change this trend.



HSCEI- Stallout likely after test of last Sept highs. Trend won't be bearish unless 10770 is undercut.




Trading Longs: PAYC GLW, DIS, PLNT, TWTR, BIIB, WYNN, MGM, LVS, ITB, FAST, ZS, IGV, MEDP, TEAM, SBUX, CRM, PG, HCA, EVBG, CCI, VTR, WELL, TECK, ARNA, MRK, LLY, REGN


Trading Shorts: MHK, HRB, GPS, ILMN, CBOE, CI, MKC, VOD, AMGN, CE, SWK


Yesterday was the first real evidence of at least a minor stalling out in the market. We saw a small downdraft which was nearly completely recovered, yet breadth still showed more declining than advancing issues to the tune of 3/2 negative. Admittedly, little to no damage was done by the close of trading and Wednesday finished with a very narrow range overall. In the short run, the following seem to be important factors which would suggest this rally is coming to an end:


1) Cyclical importance of reaching last years major lows made on Feb 8/9 and now we're approaching a significant one-year anniversary along with a 90 day interval from our early November 2018 highs. This can have importance in causing a turn

2) Breadth stalling out- We've seen a very good move in the last 5 weeks, but prices are getting up near important resistance from a price perspective and now time is coming together as well just as we've begun to see more Declining than Advancing issues. While uptrends are intact, seeing 2-3 days of negative breadth would constitute a definite warning on this rally stalling out


3) Demark exhaustion should be in place by Friday 2/8 into early next week 2/11-2/12. These indicators have been powerful in recent past in signaling the start of at least a minor slowdown in stocks

4) Financials not acting well- This group turned down last week and has not followed Technology's lead. 10-Year Treasury yields are also turning lower.


Overall, Wednesday's price action is not sufficient to sell into this move as little to no weakness occurred. However, movement up to 2745-60 in the next 3 days would be an interesting area to consider buying implied volatility.



ACTION PLAN- 



Long QQQ -Targets 175 but would look for evidence of near-term overbought conditions once 173 is hit. Stops under 167.3


Long XLK with target 69, stops under 64.25

Long XLI with target 74.25, stops under 69.68


Long Crude oil with movement up to $55-56 likely

Looking to short Gold at 1330-40 in next 2-3 days of rally


Exiting VNQ for REITS.. thinking REITS are close to peaking out



Additional charts and thoughts below.

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S&P still showing little signs of any real damage, and yesterday's range was one of the smallest seen in recent weeks. A final push higher into Friday/next Monday looks likely before any downturn, but upon reaching 2745-60, there will be evidence of counter-trend exhaustion just as SPX reaches its one-year anniversary of last year's first major low on February 8/9. This area could have importance, as it also lines up with a key 90 degree cycle from early November peaks as well. Bottom line, further signs of breadth deterioration should be important in starting to suggest that upside is limited, and rallies in indices while more stocks are "down" than "up". For now, there still hasn't been evidence of any pullback to multi-day lows, and the trend remains near-term bullish, though with thoughts that upside is limited. Under 2717 would be the first signal that a pullback is underway.

underway.gif

SOX, the Philadelphia Stock Exchange Semiconductor Index, made a very sharp advance yesterday, helping to keep Technology positive and pushing higher. The SOX looks to be nearing its first real area of importance, and this lies up near 1375-80. It's thought that rallies here would constitute good opportunities for profit-taking technically as this intersects the larger trend from last year as resistance.

resistance.gif

VXXB, the VXX replacement or Ipath S&P 50 Short-term Futures ETF which tracks implied volatility, looks to be getting close to area that should allow for a bottoming out and reversal in VOL heading into next week. The area at $32-$33 would line up in the next 3-4 days with the exact same (but opposite) counter-trend signals as the indices are close to forming. Thus, while the intermediate-term trend for Implied volatility has gotten worse, the near-term should be near a level where reversals of trend should occur between 2/8-2/19, with a preference for 2/8,2/11 or 2/18-20. We'll monitor this trend as it's thought that a rally throughout the month of February in US indices is highly unlikely, and could allow for at least a minor pullback in stocks and rally in Implied Vol.

Discretionary, Technology still look to extend; No proof of any weakness just yet

February 6, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2728-9, 2707-8, 2700-2, 2689-91

Resistance: 2742-4, 2748-50



Wednesday Jan 30- 1 hour special 2019 Technical Outlook Webinar -presented to CMT Association

https://cmtassociation.org/video/2019-technical-outlook/




REPLAY LINK: Thursday Jan 31-Technical Webinar- 15 min

https://youtu.be/GaetauQeqKY




SPX - (3-5 Days)- Bullish- Tuesday's early pullback proved short-lived, and still no compelling evidence that indices are peaking, and Demark indicators will take another 3-4 days to complete. Overall, it's right to stay long until some evidence of reversal arises, which could be later this week.



EuroSTOXX 50- Bullish- Rallies up to 3250 look possible before this stalls. Under 3094 necessary to change this trend.



HSCEI- Stallout likely after test of last Sept highs. Trend won't be bearish unless 10770 is undercut.




Trading Longs: PLNT, TWTR, BIIB, WYNN, MGM, LVS, ITB, FAST, ZS, IGV, MEDP, TEAM, SBUX, CRM, PG, HCA, EVBG, CCI, VTR, WELL, TECK, ARNA, MRK, LLY, REGN



Trading Shorts: MHK, HRB, GPS, ILMN, CBOE, CI, MKC, VOD, AMGN, CE, SWK


Simply put, we've seen five straight days now with higher highs, higher lows and higher closes. Trends are bullish near-term, and likely to trend still a bit higher into Friday/Monday before stalling out. In order to have any sort of bearish inkling, we'll need to see prices close down under the prior days lows at a minimum, and preferably into early next week, which would have more importance cyclically. At present, Demark exhaustion is not complete and Technology , Discretionary and Industrials are all making very sharp moves higher. Specifically given the rally back OVER 2630 and then back OVER 2715, with a lack of exhaustion, price wobble and/or break of the uptrend from Dec. 24th, it's simply tough to be bearish just yet.



Furthermore, reports of Treasury Secretary Mnuchin and Lighthizer heading to Beijing next week to continue trade talk negotiations might serve as something that holds markets higher. Regardless if this proves to be successful, breadth and price action have failed to turn down yet to confirm any pullback, and Technology's charts still look to have upside this week, and the NASDAQ specifically looks to outperform SPY





ACTION PLAN- 



Long QQQ as opposed to SPY, as this looks stronger near-term- Targets 175 but would look for evidence of near-term overbought conditions once 173 is hit. Stops under 167.3


Long XLK with target 69, stops under 64.25


Long XLI with target 74.25, stops under 69.68


Long Crude oil with movement up to $55-56 likely


Long VNQ for REIT exposure- near-term target $83.50, but over should drive to 90


Looking to short Gold at 1330-40 in next 2-3 days of rally




Additional charts and thoughts below.

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Technology still bullish near-term and while getting stretched, still little reason to fade ahead of the weekend without any proof of reversal. Overall, Tech remains the key sector to focus in on for those who are trying to figure out SPX direction. This sector remains a healthy 20% of SPX and yesterday's close pushed up above the highs of its daily 2% Bollinger Band. The S&P 500 Information Technology index looks to push up just above 1210 before any resistance, and Demark signals are 2-3 days away from any confluence that would lead one to sell into this move. Bottom line, without any reversal, it's right to stay the course for now.

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INASDAQ has pushed up vs SPX in the last couple days, breaking out to new multi-week highs in relative terms and NASDAQ should continue to outperform SPX into end of week. For those seeking reversals, it's usually important to see the NASDAQ stall out and turn lower. For now this is clearly premature and still looks bullish.

bullish.gif

Equal-weighted Consumer Discretionary vs Equal-weighted Consumer Staples remains trending higher and yesterday's outperformance in Discretionary looks to be turning this ratio higher at a time when this was at a key crossroads. Daily charts show the breakout of Discretionary to Staples and this should make one favor Discretionary for now. Until this uptrend is broken, XLY and/or RCD which is shown here, are longs vs shorting XLP and/or RHS, the Equal-weighted version.

Technology leads all groups; No tangible sign yet of any reversal

February 5, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2707-8, 2689-91, 2670-2, 2656-8

Resistance: 2733-5, 2742-4



Wednesday 1 hour special 2019 Technical Outlook Webinar -presented to CMT Association

https://cmtassociation.org/video/2019-technical-outlook/





REPLAY LINK: ThursdayTechnical Webinar- 15 min

https://youtu.be/GaetauQeqKY





SPX - (3-5 Days)- Bullish- Despite being stretched, still no compelling evidence that indices are peaking, and Demark indicators will take another 3-4 days at a minimum to complete. Overall, it's right to stay long until some evidence of reversal arises, which could be later this week.



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls. Under 3094 necessary to change this trend.



HSCEI- Stallout looks to be happening after test of last Sept highs. Trend won't be bearish unless 10550 is undercut. One should consider a move back over 11165 to prove short-lived.





Trading Longs: IGV, MEDP, TEAM, SBUX, CRM, PG, HCA, EVBG, CCI, VTR, WELL, TECK, ARNA, MRK, LLY, REGN



Trading Shorts: ILMN, CBOE, CI, MKC, VOD, AMGN, CE, SWK

Equities managed to turn back higher yesterday, after nearly 48 hours of sideways prices. While many are looking for excuses to sell into this move, there still hasn't been sufficient weakness to think a peak is imminent just yet. It's important that at least some evidence of trend reversal occurs (pulling back to the days lows after an early gain, or reversing to close at multiple days lows ) Breadth came in around a 2/1 positive yesterday, and momentum still has not reached overbought levels. Treasury yields managed to rise 3bps yesterday also, so this needs to be watched closely as well because yiedls had not been following stocks of late.



Technology managed to roar back to life yesterday, being led again by the Enterprise software space. This group along with Financials continue to be the top areas to watch for evidence of stocks stalling which for now is premature. Heading into Tuesday, a move down under 2696 would fit the bill, and particularly if prices get below 2672.







ACTION PLAN- 



Long SPY with stops 259.96, looking to sell into 270.50-271 into next week

Long XLK with target 69, stops under 64.25


Long XLI with target 74.25, stops under 69.68


Long Crude oil with movement up to $55-56 likely


Long VNQ for REIT exposure- near-term target $83.50, but over should drive to 90


Looking to short Gold at 1330-40 in next 2-3 days of rally




Additional charts and thoughts below.

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SPX has now exceeded 2715, an area that was thought to have importance in recent days, and has officially gotten back above its 61.8% Fibonacci retracement area. Given that no counter-trend exhaustion is present, and no evidence of any trend reversal has occurred in recent trading days, additional gains still look possible over the next few days of this week. Momentum has not gotten overbought yet on daily charts on this rally, so until there is some evidence of pulling back and reversing course, one would still stay long, while looking to pare down on this rally once Demark's TD Sequential and TD Combo complete (which might take another 3-5 trading days)

days.gif

IGV, the Ishares Software ETF. has begun to show greater signs of recent upside acceleration and further gains look likely to test last year's highs before any trend reversal occurs. This group has been one of the hotter areas in the market in recent days, and little immediate resistance looks to stop this trend given a lack of counter-trend exhaustion as IGV managed to move back above an 80% retracement of last year's decline. Overall, one should own Software, looking to buy dips on any pullback in the days to come with targets at former peaks.

peaks.gif

Homebuilders look attractive at current levels and recent strength should continue in the weeks ahead as part of this current mean reversion. This group was one of last year's real laggards, peaking out in May and declining nearly the entire year before bottoming when broader indices did in late December. Its rally has been impressive, breaking out above the entire downtrend which guided this lower last year, and the move above $36 is thought to be constructive technically speaking. Initial targets lie near $38.50 and moving above that would allow for a greater push higher to the low to mid $40's.

Rally getting extended near-term, likely stalls out early next week

February 1, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2670-2, 2656-8, 2622-3

Resistance: 2715-7, 2723-5



Wednesday 1 hour special 2019 Technical Outlook Webinar -presented to CMT Association

https://cmtassociation.org/video/2019-technical-outlook/




REPLAY LINK: ThursdayTechnical Webinar- 15 min

https://youtu.be/GaetauQeqKY





SPX - (3-5 Days)- Mildly Bullish, but Upside likely limited into Next week- S&P, DJIA, NDX and others have neared targets in both price and time, and it looks likely that some type of stallout happens next week. For Friday, this still looks early and the trend remains bullish, so it's right to stay long, until some evidence of trend reversal.



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls. Under 3094 necessary to change this trend.



HSCEI- Stallout looks likely up at 11000-11100 in next 3-5 days. Prices have moved a long way very quickly since early Jan, but this area has had significance since last July and has to be respected. For now, Trend won't be bearish unless 10550 is undercut but one should sell into 11100





Trading Longs: TTD, TEAM, SBUX, CRM, PG, HCA, ROKU, DATA, EVBG, CCI, VTR, WELL, TECK, ARNA, MRK, LLY, REGN



Trading Shorts: ILMN, VOD, AMGN, CE, RO SWK, AAL

Equities managed to follow-through nicely again for the Bulls yesterday and breadth was still about 3/1 positive, so not a lot of concern regarding either breadth being negative on this push just yet, nor evidence of upside exhaustion. Prices managed to close near highs of the session and Demark indicators will start to show up in the next 2-3 days on this rally. (TD Combo could be triggered as early as Friday, though not confirmed, though the Setup count will take an additional few days into next week)



Importantly, SPX, DJIA, NDX, IWM, CCMP all have now broken out of the downtrend which was holding prices since last Fall's highs. This is thought to be a bullish development. Industrials have now also broken out near-term to join recent strength seen in Technology and Discretionary, but yesterday did bring about some above-average strength in the Defensive sectors, as Staples, Utilities and Telecom all rallied more than 1.5%, more than any other. Meanwhile, Financials and Tech both finished fractionally negative. Our thoughts on Financials starting to underperform was very much in effect on Thursday, and this looks to continue near-term.



The key concerns at this stage have more to do with traditionally highly positive correlating things like USDJPY and TNX both turning down sharply in recent days, and this does give worry that one of these moves between TNX and SPX is wrong. (Historically, TNX has won this battle)

For now, Equity Put/call is starting to dip down to low levels (just above .50), but the VIX breakdown makes it look like another 3 days of weakness should happen (not dissimilar from SPX (given Demark counts). Thus while a trend reversal should be near, as always, without proper evidence of any turn, or counter-trend sell, or negative breadth, it doesn't make sense just to sell because prices have rallied. We'll require some hard and fast technical proof now that downtrend lines have been exceeded across the board on many US equity indices.




ACTION PLAN- 


Long SPY with stops 259.96, looking to sell into 270.50-271 into next week


Long XLK with target 69, stops under 64.25


Long XLI with target 74.25, stops under 69.68


Long Crude oil with movement up to $55-56 likely


Long VNQ for REIT exposure- near-term target $83.50, but over should drive to 90


Looking to short Gold at 1330-40 in next 2-3 days of rally





Additional charts and thoughts below.

below.gif

SPX has now joined the NASDAQ in exceeding the key trendline that most believed would serve as resistance for this rally and this now makes two different areas that have failed to hold on gains in recent weeks (the first being 2630 near former November lows) This looks to help prices extend a bit more near-term. While targets are just fractionally above at 2715-7 for SPX cash, we're seeing Demark exhaustion being close to complete along with SPX testing its 61.8% Fib retracement of the entire decline from September. Some key cycles hit next week also which might result in a stalling out and trend reversal. For now, the trend remains bullish, but we'll be on alert for evidence of any stalling out reversal of trend or low /negative breadth that might warn of a pullback ahead.


Industrials have now risen back up above key trendline resistance along with the entire trendline resistance area stretching back since 2017. This is near-term constructive for this group (Note GE moving above $10 yesterday, up more than 10% on the day) While the relative picture for Industrials has been mixed of late, the near-term technical situation merits owning XLI for a bit more strength.


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Gold is nearing its first real area of importance, and longs might be wise to consider taking profits from a trading perspective into next week. The area from 1330-40 should have importance in causing at least a temporary top, and weakness in gold in early February. Reasons for skepticism in this trend have to do with counter-trend sells which have just appeared, coinciding with near-term overbought conditions while the Dollar looks to be right at good initial support. While an eventual breakdown in the Dollar would be good for Gold, for now this is premature and this trend is getting stretched near-term. My technical call is to take profits and await pullbacks to buy.

Post FOMC surge kicks off a likely push to S&P 2715

January 31, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2670-2, 2656-8, 2622-3, 2612-3, 2606

Resistance: 2698-2700, 2710-5

No Video or afternoon report yesterday, as I did a 1 hour Technical Webinar for the CMT association, which should provide me a link to share.

There will be a Technical Webinar TODAY for clients at 1pm EST. Details below



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

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



Tuesday Technical Video- SPX, TNX and Gold

https://stme.in/rBEeWSFRfn





REPLAY LINK: Last ThursdayTechnical Webinar- 15 min

https://youtu.be/RIHXNWdJgDw





SPX - (3-5 Days)- Bullish- Expecting this is the likely final rally of this move off Dec 24 lows, but should move a bit higher into 2710-5 before stalling and reversing course. Still long here, buying dips as targets have not been met



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls. Under 3094 necessary to change this trend.



HSCEI- Stallout looks likely up at 11000-11100 in next 3-5 days. Prices have moved a long way very quickly since early Jan, but this area has had significance since last July and has to be respected. For now, Trend won't be bearish unless 10550 is undercut but one should sell into 11100





Trading Longs: CRM, PG, HCA, ROKU, DATA, EVBG, CCI, VTR, WELL, PLD, FOX, NOW, TECK, ARNA, MRK, LLY, REGN, RH, TWTR



Trading Shorts: ILMN, VOD, AMGN, OLED, CE, ROP, GWW, SWK, AAL

Equities extended gains post FOMC, and the move above 2672 coinciding with Powell comments helped Equities accelerate on above-average breadth. Bonds rallied as well (more on this later) while we saw decent stabilization in both Crude and Gold as the Dollar fell sharply down to support. Technology and Consumer Discretionary both led the rally while Financials lagged performance.



Overall, yesterday's move likely kicks off a "final" push up to near 2710-5 that lines up with many technical and price/time targets for SPX off the December 24, 2018 lows. While the move on above-average breadth is certainly a good sign technically (with NASDAQ and IWM having broken out above downtrends from Fall 2018 peaks), prices are growing stretched, and are unlikely to move much further without the need to consolidate gains. Sentiment should start to turn more positive in short order now, given that Powell has all but turned "dovish" in his comments (whether this is true or not is a different story, but he seems to be realizing that accommodating the market is a positive, which in turn helps deflect the heat off him, as well as providing some cushion for the economy)



The one technical concern is that breadth did manage to flatten out over the last couple weeks on this US Equities "triangle" (likely 4th wave Elliott) from Jan 18. Thus a push higher now will likely result in negative momentum divergence, along with representing structurally the final move up in a 5-wave advance off late December lows. Additionally, bond yields have turned South sharply in recent days. Often it pays to watch when bond yields diverge from equities (as was the case in late November) and equities end up eventually following bond yields. (More recently the correlation has been quite positive and strong for yields and equities since October) This looks to particularly affect Financials in the short run (See chart below) and this group should lag. However very good price action out of Industrials, Discretionary and Tech.



In the days ahead, I am specifically looking for evidence of breadth turning less robust, signs of counter-trend indicators (Demark) lining up (will take 3-4 days) and/or any evidence of S&P reaching 2715 and reversing sharply. For now, most of this seems still a bit premature. Thus it should pay to stay the course, use dips to buy and look to sell over 2710 into early February.





ACTION PLAN- 



Long SPY with stops 259.96, expecting possible rallies back to 268.50-270



Long Crude oil with movement up to $55-56 likely



Long VNQ for REIT exposure- near-term target $83.50, but over should drive to 90





Additional charts and thoughts below.

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BULLISH BREAKOUT near-term in S&P!! S&P Triangle was broken yesterday into and after the FOMC meeting, coinciding with Powell's dovish shift which seems to have had a very bullish effect on equities, regardless if this in fact plays out. Near-term, it's likely that this move does allow for more strength up to S&P 2710-5, but should be used to pare down risk into next week. Near-term momentum should begin to wane in the days ahead and one should look for evidence of breadth stalling out.




out.gif

Financials have begun to show some evidence of stalling out in recent days, with XLF up against solid resistance and relative charts of XLF/SPX hitting trendline resistance and starting to rollover. Demark sells are now present and have been confirmed for XLF/SPX, indicating that avoiding and/or underweighting Financials might make sense. Near-term, this pullback in yields should be watched carefully for its effect in eventually dragging down US indices. For now, after a strong January, I expect Financials to take a breather.





This move in the US Dollar is quite negative in recent days, and plays into my thinking about a larger decline getting underway in short order. Near-term, this area does have some significance as support as this was hit a few other times. However, with January coming to a close and prices at new three-month lows and on the verge of a larger breakdown, one should look at Emerging markets, Commodities, and/or for FX traders, owning EURUSD, and/or GBPUSD. Shorting UUP and EUO also might make sense for those who are seeking currency ETF ideas. I will continue to highlight this as this move begins to play out, but this is one of this year's key themes, that the Dollar begins a larger pullback and should materialize in a way that benefits commodities and commodity related stocks.

AAPL post Earnings 6% jump could help Technology, & market into early Feb

January 30, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2622-3, 2612-3, 2606

Resistance: 2672-5, 2685-7, 2700



Tuesday Technical Video- SPX, TNX and Gold

https://stme.in/rBEeWSFRfn





REPLAY LINK: Last ThursdayTechnical Webinar- 15 min

https://youtu.be/RIHXNWdJgDw





SPX - (3-5 Days)- Bullish- Still willing to bet higher for markets given Triangle pattern in S&P and AAPL post earnings 6% jump, which likely helps Technology on Wednesday into FOMC.



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls. Under 3094 necessary to change this trend.



HSCEI- Stallout looks likely up at 11000-11100 in next 3-5 days. Prices have moved a long way very quickly since early Jan, but this area has had significance since last July and has to be respected. For now, Trend won't be bearish unless 10550 is undercut but one should sell into 11100





Trading Longs: HCA, ROKU, DATA, EVBG, CCI, VTR, WELL, PLD, FOX, NOW, TECK, ARNA, MRK, LLY, REGN, RH, TWTR



Trading Shorts: ILMN, VOD, AMGN, PCAR, OLED, IWM, CE, ROP, GWW, SWK, AAL

Equities managed to largely shrug off early losses yesterday, still finishing within their Triangle patterns, and despite weakness in Technology, this very well could be recouped by bullish AAPL and AMD movement into today's trading. Near-term, it still looks right to bet on a bit higher prices. While breadth and momentum have stalled noticeably,, there still hasn't been any meaningful decline to jumpstart any real selloff in equities.



It's worthwhile to note that NONE of the bearish news events, be it a Govt Shutdown, China, nor the FOMC, have served to derail this recent bounce. Even bearish earnings news out of NVDA and CAT couldn't take down Stocks. Meanwhile good news last night out of AAPL and AMD looks to be helping these stocks and very well could help to lead Tech higher. Thus, it always pays to note when bad news doesn't work, while Good news does.



While the area at 2670-2715 overall is quite important for SPX, there hasn't been any real bearish reversals yet to suggest it's right to be short. Thus, bearish opinions might be served better by owning implied volatlity into the month of February. For sectors to favor, one can turn to the REITS, and to Gold stocks (though extended now, and better to wait for pullbacks (See below))







ACTION PLAN- 


Long SPY with stops 259.96, expecting possible rallies back to 268.50-270


Long Crude oil with movement up to $55-56 likely


Long VNQ for REIT exposure- near-term target $83.50, but over should drive to 90



Additional charts and thoughts below.

below.gif

S&P Triangle very much still intact and yesterday's early weakness held where it should have before attempting to push back higher. Near-term, we'll focus on 2671-2 as important on the upside (unchanged from yesterday) while support near 2622 is key and then 2612. It's thought that bullish earnings from both AAPL and AMD very well might help the ailing Tech sector at a time when this is sorely needed after recent Semiconductor weakness. Overall, patterns of these sorts (HOURLY CHART) typically do get resolved by a push higher and it's worthwhile not turning too bearish too quickly on the idea of stocks stalling out (even though momentum has definitely stalled) until prices confirm some type of reversal and turn back lower under 2612 at a minimum. Until then, it might pay to bet on a last ditch push up into 2710-5 before a more meaningful stallout occurs.


Gold stocks have proven to be one of the strongest groups in rallying off the lows from last September, just at a time that the broader equity market was peaking out. Rallies this week in the GDX, the VanEck Vectors Gold Miners ETF shows prices getting over prior lows from the last two years, which is a very encouraging development for the Mining stocks. Near-term, there doesn't look to be a lot of upside however, as prices are now well above the upper Bollinger and will register counter-trend Sells within the next 2-3 days potentially. However, dips should be used to buy, as structurally the miners have improved in recent weeks, and given the negative correlation with stocks from October to January, might be an area to consider for those wishing to diversify away from groups like Technology this year.


year.JPG

AAPL was higher by 6% in the after market following earnings and forecast suggesting some much needed stabilization after the company's stock lost about 1/3 of its market value since October. The decline from October occurred at nearly an exact 1x1 Price/time aspect, falling 90 points in 90 days time to hit 142. While arithmetic charts showed this level not to be all that meaningful outside of a 61.8% Fibonacci level from 2016 (and meaningful trendline down near 120) the logarithmic charts on a monthly basis showed this to be quite important. Often viewing monthly charts on a log basis gives some much needed insight. In this case, the stock had fallen to exactly a key level intersected by the rising trendline from 2016. Now post close, AAPL has bounced to over 163 (if these gains hold ) Heading into the days and weeks ahead, it looks unlikely that the stock will get immediately up over 170, so this bounce might prove to be an initial level to sell for traders, with technical targets found above its 50-day moving average but just under 170 on this first rebound. Longer-term, momentum will need to stabilize a bit to suggest anything more than just a short-term bounce. However, providing this holds this trendline, a more meaningful rally could take place between now and September of this year before peaking.

Triangle, or Start of Breakdown? Next 2-3 days very important

January 29, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2622-3, 2612-3, 2606, 2590-2, 2574-5

Resistance: 2653-5, 2672-5, 2685-7, 2700



Monday Technical Video

https://stme.in/iyp7YQ6AIX



REPLAY LINK: Last ThursdayTechnical Webinar- 15 min

https://youtu.be/RIHXNWdJgDw





SPX - (3-5 Days)- Mildly Bullish- Despite Monday's weakness, prices rallied into the close, and even on post close declines, have not yet broken areas to turn bearish. Hourly charts still resemble a triangle pattern and we'll need to see movement under 2622 to have bearish leanings and then under 2612 would be more definitive.



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls. Under 3094 necessary to change this trend.



HSCEI- Stallout looks likely up at 11000-11100 in next 3-5 days. Prices have moved a long way very quickly since early Jan, but this area has had significance since last July and has to be respected. For now, Trend won't be bearish unless 10550 is undercut but one should sell into 11100





Trading Longs: DATA, EVBG, CCI, VTR, WELL, PLD, FOX, NOW, TECK, ARNA, MRK, LLY, REGN, RH, TWTR



Trading Shorts: ILMN, VOD, AMGN, PCAR, OLED, IWM, CE, ROP, GWW, SWK, AAL

Equities pulled back sharply Monday on earnings and guidance concerns of some very important companies like Caterpillar, and NVIDIA, with Semiconductors experiencing a vicious about-face from their recent strength last week. Overall, Technology sold off the most of any of the major 11 sectors, yet breadth remained somewhat tepid, and failed to register any type of levels of concern. Prices managed to hold last Friday's lows, failing to breakdown sufficiently to think a pullback is upon us. However, this triangle pattern has very well defined levels of risk, so any violation of 2612 would put a selloff back on the front burner and particularly under 2596 would be a negative.



Bottom line, more needs to be done to suggest a correction has arrived. While charts seem to paint a very poor risk/reward with prices up near critical resistance, and cycles suggesting the possibility of a decline into mid-February, structurally we haven't seen sufficient weakness. Financials have been acting very well lately and Technology as well, despite yesterday's pullback. Most of Europe and Asia remain in near-term uptrends, so more will need to happen to expect stocks are turning down. This week should help solve this dilemma.







ACTION PLAN- 



Long SPY with stops 259.96, expecting possible rallies back to 268.50-270



Long Crude oil with movement up to $55-56 likely



Treasury Shorts closed out Thursday on strength and yield decline





Additional charts and thoughts below.

below.gif

S&P looks to have formed a triangle pattern, which bodes well for buying into dips on Monday's close, with a very well defined area of risk at 2622 and under at 2612. Gains back above 2671 argue for a push up to the more important 2700-2715 area before stocks stall. For now, it's difficult to be all that bearish on trend, despite the many reasons for concern and ongoing uncertainty. Minor pullbacks have held where they need to thus far. While prices did in fact look to peak out near important one-year anniversaries, we'll need to see more weakness to argue for a larger pullback. The next 2-3 days should decide the course of action here. Stay tuned.




tuned.gif

2019 has started off showing some classic mean reversion, as the worst performing sectors for last year are currently leading the pack. This 12-month performance table shows Energy and Financials right at the bottom, both losing over 14% in the past 12 months. Since that time, however, we've seen both groups turn higher and lead performance this year, which is traditionally something to expect from lagging sectors heading into a new year. Financials now leads all sectors with three more days in the month of January and relatively speaking has broken out vs the SPX relatively. This should mean on pullbacks that this sector is one to consider buying for outperformance in the weeks ahead.


ahead.gif

XLI has rallied to very important resistance near-term, not unlike the same area that S&P, DJIA and NASDAQ are dealing with. In the short -run, the odds are that Industrials fails at current levels given the presence of four-month trendline resistance coupled with resistance near former trading lows which have been important in XLI since late 2017. This area lies near 71-71.50, and until/unless exceeded, it's right to consider this to be strong overhead resistance to gains. The act of getting back above 71.50, however, while an alternate scenario, would drive this higher to the mid-70's.

Semi strength helps Technology strengthen more, while Financials on verge of intermediate-term Breakout

January 25, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2612-3, 2606, 2590-2, 2574-5

Resistance: 2653-5, 2675, 2685-7, 2700



REPLAY LINK: Yesterday's Technical Webinar- 15 min

https://stme.in/5zNviOEfU4





SPX - (3-5 Days)- Bullish- Still no evidence of any real downturn at work, as multiple selloff attempts failed over last few days, and prices still within striking distance of pushing up to new weekly highs. Best risk/reward is to sell rallies at 2685-2700 into 1/26-8



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls



HSCEI- Mildly bullish- Rally to 10900 now possible. Stallout did not result in any meaningful weakness and could still push higher.



Trading Longs: DATA, FOX, YUM, EXC, PNW, MRK, ABT, LLY, REGN, RH, EVBG, RMD, TNDM, TWTR



Trading Shorts: VOD, MAR, H, STX, OLED, IWM, XRT, CE, ROP, GWW, SWK, AAL

Equities have stalled, but yet no real trend reversal and despite the Doubts of a Chinese deal which seem to be coinciding with constant reversals in stocks, only to see these reverse higher by days' end, the trend remains bullish near-term and an increasing likelihood of a final push into 2700 which would signify a better risk/reward to sell into.



Overall, two things give confidence near-term. Technology strength has improved measurably, as seen by the Equal-weight Technology index v SPX which has broken out above the trendline since last June. Yesterday's' SOX outperformance also helped this sector begin to trend higher and turn up vs the group (which was profiled yesterday as being at a key make-or-break. Second, Financials have rallied up to make-or-break levels given Financials strength, and relatively speaking, this group is challenging a longer-term area of serious resistance created last year when Financials peaked relatively. So both Tech and Financials have broken out and/or are on the verge.



A couple things give caution, however. Price structure remains weak and SPX has now rallied 12% into a serious area of resistance. Additionally, prices along with breadth and momentum have stalled out of late. Overall, until 2710 is exceeded in SPX, this remains a counter-trend rally and should be used to sell on any move into 2685-2710. However, in the short run, selling here still looks a bit premature given SPX price action alone. However, Treasury yields very well might have started the new trend on yesterday's breakdown, and this very well might have an effect on the Financials space as it deals with its own possible breakout. The next few days will be key in this regard. Stay tuned.





ACTION PLAN- 



Long SPY with stops 259.96, expecting possible rallies back to 268.50-270


Long Crude oil with movement up to $55-56 likely

Treasury Shorts closed out Thursday on strength and yield decline


Additional charts and thoughts below.

below.gif

NASDAQ will have to be watched carefully here as this did manage to exceed the downtrend from October, similar to NDX, CCMP and IWM. Given that technical patterns have improved, it's right to give this the benefit of the doubt until we see evidence of this failing.

failing.gif

Technology has begun to turn sharply higher in recent days, as yesterday's Semiconductor strength helped this group makes some meaningful outperformance. The Equal-weighted Tech index vs SPX shows this recent surge, and should be respected as being important to the overall market given Tech's 20% representation in the SPX. Overall, it's tough turning bearish when Tech is surging higher and this will need to slow down to give any stalling out any real credibility.

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CCI index could be on the verge of trying to attempt its own breakout as the US Dollar rally looks to be nearing at least a temporary peak. Pound Sterling has been rallying sharply of late on signs BREXIT might have a second lifeline, while EURUSD looks to be near key support after dismal European data and Draghi warnings on growth had very little downward effect on the Euro. Overall, any signs of meaningful dollar downturn should cause CCI to breakout, giving investors their first buy signal for Commodities of the year. For now this is still premature, but the pieces are in place for a potential turn, so it makes sense to pay close attention.

Second straight day of selloff being recouped- Short-term Bullish trend intact

January 24, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2612-3, 2606, 2590-2, 2574-5

Resistance: 2653-5, 2675, 2685-7, 2700



SPX - (3-5 Days)- Bullish- Thought that it's right to buy into yesterday's weakness, as there wasn't sufficient weakness to expect immediate downside and better to sell rallies at 2685-2700 into 1/26-8



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls



HSCEI- Mildly bullish- Rally to 10900 now possible. Stallout did not result in any meaningful weakness and could still push higher.



Trading Longs: EXC, PNW, MRK, ABT, LLY, REGN, RH, DATA, EVBG, RMD, TNDM, TWTR



Trading Shorts: MAR, H, STX, OSTK, IWM, XRT, CE, ROP, VOD, LVS, GWW, SWK, AAL

No real change in thinking give the second straight day of closing well up off early lows. S&P's 3-4 About-faces in the last 24 hours gives some concern to many who wish to see this volatility die down, and it continues to be an environment where short-term news is certainly coinciding with many reversals, regardless if it turns out to be true or not.



Yesterday's ability to hold early losses and grind higher, yet again, for the second day in a row does give some optimism that this trend is still very much intact in the near-term. Gains look more likely than losses into end of week and early next week before resistance sets in. Semiconductor earnings post close seem to have helped prices extend in stocks like TXN, LRCX and XLNX, and while this sectors underperformed in Wednesday's trading and looks to be up near key resistance, Technology overall has been acting much better, and potentially today's trading could help provide the necessary strength that this sector needs.



One thing is for certain however: Small-caps have been turning down pretty rapidly in the last two weeks and yesterday, yet again, saw IWM down, while SML lower to the tune of 1.6%. Note that Small caps peaked out last June when Technology did and it was the late August peakout in NASDAQ composite that coincided with nearly a full month of negative breadth before the broader market peaked. This will be something to watch carefully in the days/weeks ahead. However, this negative has to be weighed vs a Financials and a Technology sector that both are acting better than would be expected in a volatile "down" tape like we've experienced.







ACTION PLAN- 



Short US 10Year Treasuries, expecting yields rally up to 2.81-3% for 10-Year Treasuries



Long SPY with stops 259.96, expecting possible rallies back to 268.50-270



Long Crude oil on Tuesday's weakness, with movement up to $55-56 likely in the week ahead





Additional charts and thoughts below.

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S&P severed several uptrends and downtrends before settling in at levels above yesterday's close by nearly 8 ticks and rose post close on good earnings by several Semi names. Gains look likely in the days ahead, barring a close under 2612, and the ability to clear 2653.75 would be an area to consider buying for gains up to at least 2685-6. For today, there is a bit more confidence given two straight days of reversals off early lows, and it looks right to expect a bit more strength into 1/28 before indices stall out.

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Semiconductor stocks appear to be at a critical crossroads vs Technology as a whole, and after the two month rally, this group stalled out over the last few days, and particularly has done so vs Hardware. However, post close earnings yesterday from TNX, XLNX, LRCX were good enough to lift futures post close, and as can be seen above, Semis look to be at resistance now of the entire downtrend from last Fall. Any ability of this to be broken would be a vote of confidence that could help this rally extend a bit more into end of week and into early next, helping the SPX achieve its target of 2700.

Don't look now, but Financials appear to be on the verge of a larger sector breakout relatively speaking. This group has taken the lead in recent weeks to now lead all other 10 sectors in performance for 2019. The ability to break out of the entire relative trend for XLF to SPX going back since early last year would be a good vote of technical confidence that this group might finally begin to start strengthening in a manner that would help the broader stock market, regardless of the poor technical structure, and is something to be watched carefully in the weeks ahead.

Pullback fails to violate uptrend, & S&P, TNX both remain near-term bullish with tight stops

January 23, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2606, 2590-2, 2574-5

Resistance: 2630-9, 2675, 2685-7, 2700



SPX - (3-5 Days)- Bullish- Thought that it's right to buy into yesterday's weakness, as there wasn't sufficient weakness to expect immediate downside and better to sell rallies at 2685-2700 into 1/26-8



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls



HSCEI- Mildly bullish- Rally to 10900 now possible. Stallout did not result in any meaningful weakness and could still push higher.



Trading Longs: MRK, ABT, LLY, REGN, RH, DATA, EVBG, RMD, TNDM, TWTR



Trading Shorts: MAR, H, STX, OSTK, IWM, XRT, CE, ROP, VOD, LVS, GWW, SWK, AAL

S&P's attempted pullback failed to break down under key support which needed to be violated to have any real concern on trend. Overall S&P, NASDAQ, DJIA remain in uptrends, and likely can still push up to test recent highs and get over these levels by a small amount before any real larger breakdown gets underway. However, the extent of yesterday's selling should cause momentum to begin to turn lower in the days ahead, and despite the minor recovery into the close, breadth still fell by 3/1. So it's likely that markets are starting to stall out after this big run we've experienced in the last four weeks. However, it's just difficult to think stocks go from high to low right away, and even in a topping process, things take time. A move back to highs would allow for counter-trend Sells to line up and provide a better risk/reward area to sell into as of end of week, vs thinking this happens right away. However, under 2596 on a close, it's likely that this IS beginning, and one should take defensive measures.



Overall, the initial selloff had begun in Futures far before the story about US potentially pulling out of a meeting with China. Later White House Advisor Larry Kudlow made a public comment on CNBC about no meeting having ever been on the agenda for this week, so there was no "pullout" of a meeting, as there was no meeting in the first place. However, interestingly enough, the White House obviously had been watching the early decline in markets and felt the need for Kudlow to address the public to set the record straight. This indicates that the administration does watch markets more than many believe, and that they might use future market weakness as a way to time news events which they believe the public might view favorably. This also, from a sentiment perspective, suggests that POTUS likely goes out of his way to get a deal done, even if he has to spin it in a way that suggests he "won" when China hasn't agreed to all the details.





ACTION PLAN- 



Selling Treasuries, expecting Yields rally up to 2.81-3% for 10-Year Treasuries

Long SPY with stops 259.96, expecting possible rallies back to 268.50-270

Long Crude oil on Tuesday's weakness, with movement up to $55-56 likely in the week ahead



Additional charts and thoughts below.

S&P managed to close right near its first meaningful area of support- 2630-2. While this had been broken in trading, the late day recovery helped prices rebound, and at close, no meaningful trend damage had been done. A rally back to test last week's highs looks likely before this rally from late December rolls over, though a close under 2596 would be important and negative. For now, better risk/reward areas to sell lie up from 2685-2710, and movement to this area by end of week should be significant.

The relationship between Developed and Emerging markets remains trending lower, showing the severe breakdown last year when Stocks peaked last September/October. Thus, while many might suspect that Emerging markets should have weakened as global equities fell, we actually saw a fair amount of relative strength and it still looks right to overweight EM for outperformance. This should begin to accelerate once more meaningful weakness in the US Dollar occurs.

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Treasuries showed some early strength, yet similar to Equities, did not break the uptrend on the close from early January. Thus, it's expected that further strength is likely in yields and TNX should push back up above last week's highs. Momentum remains positively sloped and given the breakout of the downtrend from last year, Yields have begun to push back higher. Overall, yesterday's Treasury strength/yield decline looks insignificant, and should represent a chance to buy TBT/Sell TLT and/or expect yields to trend higher this week.

SPX, DJIA testing make-or-break areas as both Crude and TNX have firmed

January 18, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2590-2, 2574-5, 2560-2, 2552-3

Resistance: 2630-9



SPX - (3-5 Days)- Make or Break- Despite resilience, it still looks right to adopt defensive stance between today and Monday- Movement higher past Monday and/or above 2650 would drive prices higher into 1/26-8 and 2675-2700



EuroSTOXX 50- Bearish- Expecting rallies brief and do not exceed 3150- Turn back under 3000 should lead to retest and/or possible break to new lows



HSCEI- Mildly bullish- Rally to 10600 possible but upside limited this week



Trading Longs: RMD, TNDM, TWTR, LLL, HRS, BGNE, ROKU, RMD, CTB, CHD



Trading Shorts: OSTK, IWM, SMH, XBI, XRT, EMR, CE, ROP,VOD, LVS, GWW, SWK, CBOE, APA, STX, AAL

Overall, stocks are reaching the end of the first cyclical period and have not yet shown any signs of reversing course. The early week breakout has paved the way for a low volume, lackluster breadth type follow-through rally, which has resulted in breadth not following price back to new highs. Overall, there is a finite window which one can be defensive here and attempt to play for a reversal. The first period is 1/17-1/21 which ends on Monday. The second is 1/26-1/28 which lines up with the anniversary of last year's late January high. Interestingly enough both last January and this January have acted similar in many respects. We'll see if this year's 11% rally in 3 weeks ends in similar fashion. This year's technical situation is far worse than last year given the bearish momentum in weekly and monthly charts and prices are now rallying to test (and arguably break, as of Thursday) key technical resistance that had served to mark formidable lows during the Thanksgiving period.



One thing that's of minor concern for the Bears is that many investors seem to have a firm grip on where the key resistance to this bounce lies (this is rarely the case ) Thus most are arguing that this level needs to hold.. myself included. I rarely like to stand with the consensus as this often ends up to be wrong. Overall, if S&P does manage to break out above 2650, this would push out the potential peak until 1/26-8 and likely could occur near 2685-2700, which lines up with another trendline covering highs going back since last September. This would be truly the line in the sand for shorts. Near-term however, its right to be defensive until Monday is past and prices lie under 2650.



One interesting observation is that Crude oil, Treasury yields and Equities remain resilient in the short run and we've seen evidence of yields attempting to push higher in the wake of a possible lifting of tariffs. Note, at the time of this writing, there has been no agreement, yet stocks have moved up in anticipation. Any failure in this regard very well could serve as the catalyst for a decline at a time when breadth and momentum have slowed during this advance. For now, it's right to continue to be defensive until/unless S&P makes it past Monday and prices are over 2650. In this case, a rally into this latter timeframe would occur, up to 2685-2700.




ACTION PLAN- 



RUSSELL 2k FUTURES are a short at 1460 up to 1500. Targets lie near 1250



Long Treasuries, with stop on TNX close above 2.75



Additional charts and thoughts below.

Equities seem to be at very key make-or-break after this rally in recent weeks. The 11% rise in S&P has brought prices to very important make-or-break and S&P managed to exceed 2630 on yesterday's close. Thus, there remains a small window for shorts here, between here and 2650. Any ability to get over 2650 argues for a larger lift which might hit 2685-2700 before this move stalls and reverses. 240 minute charts have begun to show negative momentum divergence on this lift, which is a negative. Yet prices need to turn down under 2596 at a minimum to have concern. While the air might seem quite "thin" at these levels given the breadth slowdown, witnessing the price reversal in the next couple days will be importnat for the short-term bearish case.


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Treasury yields have begun to stabilize after their initial breakout attempt and movement above 2.75% would argue for a continued lift in yields at a time when most have given up on being short Treasuries. CFTC data shows this percentage to have been cut in half since October, so it's likely that any further drawdown in yields proves short-lived with a maximum downside to near 2.5% before starting to turn higher. Bottom line, given Treasury yields propensity to lead equities, i'd view any move above 2.75% as being bullish for the Risk-on trade, and even on minor pullbacks in Equities, it's likely this would prove buyable quickly while a chance to sell into Treasuries.


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I think it's important to watch the Financials sector closely during earnings, as prices have pushed up to near levels that should be important resistance. However, if XLF gets over $26 and relative charts break out above levels that have held since last Spring, it would be right to follow this move. For now, there is evidence of this group likely finding strong resistance given short-term overbought conditions, having retraced 50% of the prior decline. But relative charts tend to make their move prior to absolute and a breakout in this group is something which would likely cause intermediate-term strength in indices until the Spring/Summer, so it's worth paying attention to.

Financials carrying load, but 5 sectors down coupled with breadth divergences an issue

January 17, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2590-2, 2574-5, 2560-2, 2552-3

Resistance: 2623-5, 2630-9



SPX - (3-5 Days)- Selling longs, adopting hedges for trading purpose, Expect Stalling out & turn down by 1/21 at latest



EuroSTOXX 50- Bearish- Expecting rallies brief and do not exceed 3150- Turn back under 3000 should lead to retest and/or possible break to new lows



HSCEI- Mildly bullish- Rally to 10600 possible but upside limited this week



Trading Longs: RMD, TNDM, TWTR, LLL, HRS, BGNE, ROKU, RMD, CTB, CHD



Trading Shorts: OSTK, IWM, SMH, XBI, XRT, EMR, CE, ROP,VOD, LVS, GWW, SWK, CBOE, APA, STX, AAL

Bottom line- No change in the thesis based on Wednesday's move.

Upside should now prove limited for global indices, with S&P likely to start to weaken and pullback and any strength would face strong overhead resistance between 2630-40 between today and next Monday



Markets appear to have made good progress on Wednesday from a price perspective alone, yet most of the DJIA's 141 point move was made by Goldman Sachs which accounted for over 120 points. Stripping out that gain shows a very lackluster move in stocks, where breadth yet again signaled only about a 3/2 gain, and 5 sectors out of 11 finished down on the day. Only Financials was higher by 2.2%, yet XLF is now at resistance, having recouped 50% of the prior decline and no other sector was higher by more than 0.41%, led by Materials on the day. Energy, Discretionary, Healthcare, Staples and Telecom were all lower and Technology barely escaped with a positive day at +0.05%.



Overall, the reasons for skepticism here, despite a 3 week uptrend, are as follows: Indices have moved between 10-15% in the last 15 trading days since Christmas eve, and have finally reached the 50% retracement levels (or fractionally below) from the decline from September/October. Structurally this area remains difficult as several lows were made at this area and now offer resistance on this rally. Additionally, Demark based exhaustion has just arrived on SPX, DJIA , CCMP, NDX and many sectors after this bounce, and indices lie also just below a very important area of Ichimoku resistance. As stated in recent commentary, while the breadth initially on this advance was impressive, in recent days that has faded and our minor range breakout in recent days barely has registered positive breadth readings. Cycle wise, there are a plethora of various near-term cycles that converge between now and January 28th. Therefore, my feeling remains that into end of week, we're likely to stall out.



ACTION PLAN- 



RUSSELL 2k FUTURES are a short at 1460 up to 1500. Targets lie near 1250


Short XBI with stops above 85.50


Short XRT- Short with targets down near 41.60


Long Treasuries, expecting pullback under 2.60


Additional charts and thoughts below.

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Nasdaq Comp is now right at key trendline resistance as of Wednesday's Advance. As relayed yesterday the following area important and make this a high risk area: 1) Trendline resistance of the last few months 2) Demark exhaustion completion 3) Ichimoku Cloud directly above. Under 6877 on a close is a negative, and one should look to sell into 7085 up to 7150 as this area looks very strong on the upside.

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Financials have now retraced 50% of the move down from last year's peak. This area is important and likely causes a stallout in this group after a huge move on Thursday that many believe gives real reason for optimism.. Technically of course, we see that prices are now into this zone where a plethora of former lows were made for XLF. Given the tried and true technical principle that former lows now become resistance on retests, it's likely that XLF stalls here in the next 3-5 days and does not make it higher than 26 before turning back lower.

lowe.gif

The NYSE All-stocks Advance/Decline has now reached areas that have been important in causing peaks late last year, and Demark indicators are 2 days away from signaling similar exhaustion. It's thought that the next 1-2 days should bring about negative breadth even on rallies, or barely positive before markets turn lower next week.

Peak now possible between Wednesday - Friday this week

January 16, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2590-2, 2574-5, 2560-2, 2552-3

Resistance: 2623-5, 2630-9



SPX - (3-5 Days)- Mildly bullish up to 2630-40- Expecting Reversal Wed-Friday- Use early strength Wednesday to sell/flatten out and adopt hedges



EuroSTOXX 50- Bearish- Expecting rallies brief and do not exceed 3150- Turn back under 3000 should lead to retest and/or possible break to new lows



HSCEI- Mildly bullish- Rally to 10600 possible but upside limited this week



Trading Longs: TWTR, XRX, AVGO, LLL, HRS, BGNE, XXTM, ROKU, RMD, CTB, CHD



Trading Shorts: IWM, SMH, XBI, XRT, EMR, CE, ROP, OSTK, VOD, LVS, GWW, SWK, CBOE, APA, STX, AAL

Bottom line- Upside should now prove limited for global indices, with S&P likely to face strong overhead resistance between 2630-40 between Wednesday-Friday of this week. Reversals of trend look likely technically, and one should consider using strength Wednesday to flatten out and/or adopt hedges for an above-average chance of a drawdown into next week.



While markets had gotten near the vicinity of this resistance from a price standpoint, time had not yet lined up, but this seems increasingly likely given the presence of Demark -based exhaustion on daily and intra-day charts of various duration, while Global indices are approaching the one-year anniversary of last year's major peak. NASDAQ, Technology and Financials are all near key levels and this helps to add conviction to this idea of a stallout. Moreover, Crude oil, Treasury yields and SPX have all moved in unison in recent weeks and now all three have been showing some evidence of stalling, with Treasuries starting to show the greatest amount of strength. My Weekly Technical Perspective highlighted 10 stocks to consider as Technical shorts and the last couple days likely have allowed for an even better risk/reward entry.



Additional reasons for concern include the degree to which breadth and momentum have been to slow after an initial sharply positive Surge off the lows in late December. This last few days showed hardly any net change and breadth was flat. While this could be expected after such a big move like we'd seen, in excess of 10%, yesterday's minor range breakout occurring on such light breadth while momentum was lower was a potential near-term "nail in the coffin" for US indices. It's thought that Treasury strength occurs which in turn will lead indices back lower for a potential retest and minor break of lows (which then should be bought, technically) The reason to think indices retest has more to do with Structural concerns and wave pattern from November/December which would present an ideal buying opportunity on any break to new lows. While the improvement in Technology and positive breadth from December are reasons to expect pullbacks are buyable, at current levels markets look like poor risk/rewards for longs in the short run.



ACTION PLAN- 



RUSSELL 2k FUTURES are a short at 1475 up to 1500, but this area could be tested into next Monday/Tuesday before reversing. Any shorts from yesterday have to be given leeway up to 1500. Targets lie near 1250


Short XBI with stops above 85.50


Short XRT- Early break yesterday which rallied back- Short movement over 44 to 44.75 with targets down near 41.60


Long Treasuries, expecting pullback under 2.60



Additional charts and thoughts below.

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S&P minor range breakout was certainly constructive, but breadth nor momentum managed to follow price to new weekly highs, which might have been expected after the four-day stallout. Yet now we see prices up into this key range to sell, over 2600 and just under the area at Thanksgiving 2018 lows near 2630-1. For those proficient in Demark, Wednesday likely brings about the first TD SELL SETUP (9 consecutive days where the close is higher than the close from four prior) while being UNDER TDST. In plain English, this kind of setup often arrives at turning points and should allow for at least a minor stalling out. Given that we've seen a few volume and breadth warnings in recent days, this looks to be an attractive risk/reward technically to sell into on Wednesday on any strength, particularly up to 2630-40.

2630-40.gif

NASDAQ Composite shows with a bit more clarity why this area is very important in the days ahead, and this first move off the lows likely runs into strong resistance. We're seeing a combination of three important factors: 1) Trendline resistance of the last few months 2) Demark exhaustion completion 3) Ichimoku Cloud directly above. Thus, its thought that this rally stalls out this week, potentially as early as Wednesday, and turns down. Under 6877 on a close is a negative, and one should look to sell into 7085 up to 7150 as this area looks very strong on the upside.

upside.gif

Healthcare is one group that looks attractive to own after its recent weakness, though favoring the Pharmaceutical stocks vs buying Biotech, which might weaken a bit more in the next two weeks. Relative charts of XLV to SPX have pulled back to what's considered to be good support to buy dips for a bounce in this group which should help the sector continue its intermediate-term outperformance.

Range-bound trading offers no clues, yet Technology has begun to improve

January 15, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2560-2, 2552-3, 2524-6

Resistance: 2598-2601, 2608-10, 2623-5, 2630-9



SPX - (3-5 Days)- Bullish - Insufficient weakness Monday to turn bearish & prices unchanged over last 3 days. One final push higher looks possible to 2630-40



EuroSTOXX 50- Mildly bullish for 1-2 days for a final push above 3100- Area near 3150 important and trend reversal likely into next week



HSCEI- Mildly bullish- Rally to 10540-10600 possible but upside limited this week



Trading Longs: TWTR, XRX, AVGO, LLL, FITB, NOC, UPS, ROKU, RMD, CTB, CHD



Trading Shorts: ED, AES, NEE, GWW, SWK, XBI, XRT, STX, AAL


Bottom line- A tricky area for US indices. Technically upside should prove limited. However, we haven't seen sufficient weakness to think trends are turning down just yet. Prices closed at similar levels that were hit last Wednesday, so the last three days have been literally unchanged in net progress for either direction. Given that Financials have strengthened a bit in recent days, while Equal-weight Technology has begun to act better, I'm willing to lean long heading into Tuesday, but with close stops at 2560 on a daily close. Provided that S&P remains above this level, one should have a long bias for the next few days, expecting that this consolidation is resolved to the upside near-term before any greater stalling out and possible retest.

Key to mention is that Crude oil along with US Treasury yields and US stocks have all stalled recently, though with greater signs of pullbacks beginning in the former two, with Crude and TNX starting to turn lower. For equities, the pressure in stocks like AAPL has served to mask some of the strength being seen in this sector lately, and stocks like NVDA, ADI, SWKS, XRX, MCHP, AVGO are all higher by 4.50% or more in the last five days


Many Industrials stocks showed decent strength yesterday with favorable short-term patterns in NOC, UPS, LLL, while the Utilities fell to multi-day lows given PCG's bankruptcy filing, and other Utilities like ED, AES, NEE also showed real weakness on this news which might cause further underperformance in this sector over the next few days. Overall, the combination of strength out of Financials and broader Tech while Industrials are hanging in, and Healthcare has weakened down to key support all suggest that it still might be tough to fade the market on Tuesday heading into Wednesday. Yet any further push to new highs likely starts to bring about negative divergences that should make any further rally sellable into late week.



ACTION PLAN- 



RUSSELL 2k FUTURES are a short at 1475 up to 1500, but this area could be tested into next Monday/Tuesday before reversing. Any shorts from yesterday have to be given leeway up to 1500. Targets lie near 1250

Short XBI with stops above 85.50


Short XRT- Early break yesterday which rallied back- Short movement over 44 to 44.75 with targets down near 41.60


Long Treasuries, expecting pullback under 2.60




Additional charts and thoughts below.

below.gif

S&P has largely gone nowhere since last Wednesday with S&P closing within three points of levels hit back on 1/9/19 last week. The uptrend for S&P Futures, as shown above, remains intact with no discernible break. Additionally, upward pressure in the broader Tech space, Industrials and Financials were all positives for stocks Monday, despite the minor downdraft. Bottom line, until/unless stocks close under 2560 in SPX, it's still right to expect this neutral trend in recent days to be resolved higher. Above 2595 adds conviction, and drives prices to 2630-40.

Financials managed to push back higher to new multi-day highs yesterday, something which helps this group in the short run, given Citigroup strength and seeing some of the bounce in some of the Regional banks. Overall, this might serve to help provide a minor tailwind for Stocks over the next few days, though strong overhead resistance looks to be directly above at $25 for XLF. But this looks to be a factor which might prevent Stock indices from immediately falling just yet, and the next 1-2 days should be positive for Financials as earnings season has gotten underway.

underway.gif

Technology has shown some broad-based strength in recent weeks, despite the ongoing weakness in AAPL. We've seen stocks like NVDA, AVGO, SWKS, ADI, MCHP, PAYX, all move over 4.5% higher in the last week, and the Equal-weighted Technology index, SPXEWIN, in relative terms to SPX has broken out of a trend going back since June. This should be a positive for Technology for the weeks ahead and potentially into Spring/Summer. So while near-term upside might prove minimal for indices after this move, it's likely that this group's outperformance might keep any further drawdown to a minimum and provide buying opportunities for the market on any consolidation into late January/February.

Yesterday's close keeps trend bullish a bit longer; Expecting 1/15-17 peak

January 11, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2569-70, 2552-3, 2545-6, 2526-8

Resistance: 2600-2, 2608-10, 2623-5, 2630-9



SPX - (3-5 Days)- Bullish into next Tuesday- Yesterday's close postpones immediate drop- Upside limited, but expect 2630-40 is possible before peak



EuroSTOXX 50- Mildly bullish for 1-2 days for a final push above 3100- Area near 3150 important and trend reversal likely into next week



HSCEI- Mildly bullish- Close to a turn, but a bit more upside possible over 1-2 days- 10540 -10600 important


Trading Longs: RMD, CTB, CHD, CNP, EVTC, FE, TLK, YUM, LII, EW, AMT, CASY, DORM, FIVN

Trading Shorts: EMR, WY, ETN, MTW, RTN, BYD, WY, CE, FLR, XBI, XRT, MGM, WYNN,, STX, QRVO, AAL

US Benchmark indices made a respectable close yesterday with no meaningful reversal just yet. Closing up towards the highs of the prior day's range, with higher close than open and Demark counts premature by 3 days, it appears like a bit more strength can happen. Most are eyeing 2600 as important, but technically the November lows have more significance which are found near 2631 in SPX cash and 2639 Futures. So there could be some short covering by those who have stops set at 2600, as this isn't all that meaningful as the actual lows hit near Thanksgiving (now possible resistance HIGHS)


Breadth was lackluster in trading yesterday, roughly 3/2 positive and we saw both Crude and TY Yields stall out , not dissimilar from Equities. Financials still lagged performance, barely finishing positive, while Discretionary and REITS were negative on the session. Industirals and Utilities both got a boost, the latter which looks attractive for a 3-5 day long bet, and should be overweighted heading into 1/21.

Sector-wise, Retailing and Airlines took a breather, and both of these groups could stand to weaken further in the next 1-2 weeks after the recent upside they've seen. Industrials managed to turn in a positive session, yet much of this was the Aerospace/Defense names along with GE which is leading the entire Industrials group YTD. Industrials do look likely to extend gains another few days, but rapidly nearing resistance on this rise and structurally remain in poor shape.



ACTION PLAN- 


Long XLU with targets 55-56 into next week


RUSSELL 2k FUTURES are a short at 1475 up to 1500, but this area could be tested into next Monday/Tuesday before reversing. Any shorts from yesterday have to be given leeway up to 1500. Targets lie near 1250


Short XLF- Maximum upside for XLF should be near 25

Short XBI with stops above 85.50


Short XRT- Early break yesterday which rallied back- Short movement over 44 to 44.75 with targets down near 41.60

Long Treasuries, expecting pullback under 2.60




Additional charts and thoughts below.

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S&P managed to close up near the highs of the prior days range. Thus, no evidence of any reversal, and exhaustion counts remain premature until next week. Thus, dips likely are still buying opportunities for those that focus on very near-term trading patterns, and should lead to even further strength into early next week. Note, yesterday's strength doesn't cancel the likelihood of a selloff, which looks likely in the near future. Though some evidence of either counter-trend exhaustion, or actual price weakness is necessary before thinking that a pullback is imminent. For now, while prices seem close, this might be delayed for a few days more.

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Utilities showed decent outperformance yesterday, and when eyeing relative charts of the Utes vs SPX, this group has pulled back to levels that make sense to consider buying dips. Strength in the defensives during a stock rally typically can serve as a warning sign of an impending turn. Yesterday's sector performance seemed to be doing just that and relative charts of the Utes still look attractive after their recent breakout and pullback. On an absolute basis, movement over 54 is necessary to regain its seven-month uptrend, but this looks possible in the days ahead.

Pharmaceuticals vs Biotech, when looking at ratios of this sector spread, has now fallen to levels which makes sense to switch back to Pharma, which largely coincides with a more defensive stance. The break of the uptrend back in early January was something highlighted here early on, and has led to a decent bounce in the Biotech space. Now Biotech , based on XBI, is stretched and up near resistance, while Pharma has been weak for several days. Relatively speaking, the reason to switch back to Pharmaceutical names has to do with a combination of exhaustion signals on the relative charts, combined with the ratio hitting the lows of this Daily Bollinger. I expect Biotech to begin to pullback, and stocks like ISRG, REGN are up to good resistance near-term.