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Late day bounce could prove to be a selling opportunity into early next week

December 7, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2649, 2622-7, 2582-4

Resistance: 2729, 2745, 2764-7




SPX - (3-5 Days)- Mildly bearish with above-average possibility of stalling out on Thursday's late day bounce attempt. A crash seems doubtful given the spike in Put/call, and breadth/momentum are better than a few weeks ago. Bottom line, pullbacks into early next week should be used to buy.



EuroSTOXX 50- Mildly bearish with target at 2900, though Thursday's move left prices stretched. Rallies will need to get back over 3125 to have any real confidence of a low at hand.



HSCEI- Mildly Bearish- Pullback not as severe as US and should be used to buy- Test of 10188 and even 10000 is possible but should be used to buy, as China is relatively stronger than US.



Trading Longs: TLT, IAU, GLD, CHD, LLY, CQQQ, TMO, VRSN



Trading Shorts: BCC, BGG, M, LEN, STX, WDC, ATVI, TTWO, KORS, GIS, CCEP, EZU, STX, WDC, ETN, RL, FLIR, EMR, VMC, OI, NFX, WMB, BCO



Despite the late bounce attempt, it's worth reiterating: the structure has definitely begun to get worse in the last two sessions. Seeing two major rally attempts fail and end up back near recent lows supports the idea of an eventual breakdown, even if it holds off until early next year. Near-term, the late day bounce failed to get back above the area of the gap at 2695, and this will be the first real area of importance for Friday/Monday. For now, we've seen an awful lot of volatility in a short period of time and seasonality studies thus far have proven to be a bust. Breadth yesterday was not nearly as poor as Tuesday's session, and the prior 3.3 TRIN reading barely eclipsed 1 on Thursday, (though much of the improvement was due to the late Rally)



Overall, Yields still look to trend down to 2.80-2% into early next week before Treasuries peak out(yields turn back higher) For now, the Dollar has stalled out on its rally but hasn't turned down all that sharply just yet. Oil has slipped back down to new lows, but yet shows evidence of strongly positive momentum divergence that should signal an upcoming low in price. Looking at Europe, there was a very strong breakdown under 3100 for SX5E, and this will be increasingly important to pay attention to, with prices down at six-year trendline support from 2012.



Sector-wise, it's important to watch Financials carefully in the upcoming days/weeks, as Demark's TD Sequential indicator has flashed a 13 buy signal on XLF/SPX after the recent sharp weakness with TD Combo right around the corner. Any upturn in Financials would be quite positive for the overall market, and this sector has already experienced severe weakness and should be close to turning back higher into next year.



ACTION PLAN- 



Long Gold and Silver- Buying GLD, IAU and SLV for movement higher

Long Treasuries with plans of TNX moving to 2.80-2 before stabilizing




Additional charts and thoughts below.

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SPX hourly charts show the area at 2695 as being important to this picture given that prices have risen to fill the gap from the prior trading session. These areas can often serve as support and resistance and should be respected as the first real area of importance on the upside that could hold after yesterday's comeback. However, given the extent that VIX and Equity put/call spiked, any further pullback likely will prove buyable.

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SPX weekly chart shows 2600-22 being the true "line in the sand" for longs and until broken, it's tough making too much of a larger bearish case for equities based on index prices alone. (The individual stock is down much more, and a different story indeed) Until/unless 2600 is violated, the structure since this time last year is more representative of a larger neutral pattern, and breaks of the minor uptrend which occurred in October, appear to have been contained. Movement back higher is a possibility into year end as well as next Spring before any larger weakness gets underway.

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Put/call ratio on Equities has quickly gone from the lows of the yearly range to the highs in the matter of one week's time. This is important for those looking for lows, as readings had been largely subdued of late, but the spike back to new highs indicates the start of real concern, and from a contrarian point of view, makes for an easier time buying dips during times of fear. Overall, trading lows in stocks look likely sometime next week, and weakness back to the lows into next week should coincide with a chance to cover shorts and consider buying, as opposed to expecting a larger crash.

Minor bounce fails to hold, & breach of Tues S&P 2696 is a negative

December 6, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2649, 2622-7, 2582-4

Resistance: 2729, 2745, 2764-7, 2787





SPX - (3-5 Days)- Bearish for a move down to test 2722-6 and potentially 2600 in the next 2-3 trading days- Bounce proved minimal yesterday in early trading, getting only to 2720 before stalling and then giving way to selling last night in overnight trading



EuroSTOXX 50- Bearish- Pullback to test 3100 underway- Under will lead to 2900.



HSCEI- Bearish- Test of 10188 and even 10000 is possible but should be used to buy, as China is relatively stronger than US.



Trading Longs: TLT, IAU, GLD,



Trading Shorts: M, LEN, STX, WDC, ATVI, TTWO, KORS, GIS, CCEP, EZU, STX, WDC, ETN, RL, FLIR, EMR, VMC, OI, NFX, WMB, BCO



A couple points to address and despite the market being closed, futures volatility has necessitated a few comments:




The structure has definitely begun to get worse in the last two sessions. The minor bounce failed and now has taken out yesterday's lows. So patterns are suggesting a possible retest now of prior October lows after two failed bounce attempts. While an uptick in fear could hold prices near 2600-22 this go-around, the structure looks increasingly like one that will breakdown eventually given the deep retests. We'll need to see a rally back up ABOVE 2764 to have any sort of confidence that lows are in, which at this point, is nearly 100 points higher.



In terms of fear, we've seen volume Tuesday show some signs of capitulation with 15/1 volume Down vs UP and the highest TRIN reading since January (ARMS INDEX) Yet volume was somewhat low given the holiday and the readings occurred near the highs of the range. Thus we need to be worried we don't recreate 2015 in terms of seeing high TRIN readings near the peak. Most declines that show high TRIN readings above 2.5 are successful in pinpointing lows. As of Tuesday's trading, Equity Put/call and VIX really aren't hitting new highs to suggest capitulation like volume did Tuesday



ACTION PLAN- 



Long Gold and Silver- Buying GLD, IAU and SLV for movement higher

Long Treasuries with plans of TNX moving to 2.85-7 before stabilizing




Additional charts and thoughts below.

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SPX Futures have made a very deep retest and unless regained in the next few days, ie.. a Thursday/Friday move back OVER 2764, this suggests an eventual breakdown, which would undoubtedly violate the trend from 2016. Overall, while the sentiment is starting to turn quickly with lots of disgruntlement and talk of the economic recovery turning, the price action is not giving lots of hope right now, with such a deep retracement. Overall, one should buy into the retest, technically. Yet any break of 2600 is a big negative, and would necessitate hedging/shorting and/or avoiding until markets can stabilize a bit.

Europe, aka, the Euro STOXX 50, or SX5E is in much worse shape than SPX and pulling back to test prior lows after just a minimal bounce. one can see the breakdown in October of a lengthy base and recent retest also failed. The deep retracement should allow for a test of 3100 and eventual break to 2900.

2900.png

Crude oil turning higher pre OPEC Thursday and looks poised to move to the high 50's. While the larger trend will need a larger move above $58 to think the intermediate-term trend can change, one can make a case technically that the next 3-4 dollars should be up based on this recent alignment.

Rapid Selloff shows some capitulation, but worth keeping an eye on

December 5, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2696, 2686, 2655

Resistance: 2729, 2745, 2764-7, 2787





SPX - (3-5 Days)- Minor bullish for a bounce to 2729 with 2696 stop on longs- Overall, bounces likely prove sellable near-term based on yesterday's weakness.. and additional 3-5 days of weakness possible near-term before decline runs its course. Expect to stabilize by end of week with 2655 being important.



EuroSTOXX 50- Mildly Bullish, Expect Europe can rally up to 3280-3300, but that remains its first real test, the area of the prior breakdown. Stops on longs at 3159



HSCEI- Bullish- Pullback buyable with stops 10577. Breakout happened Monday and should result in strength in the days and weeks to come. Long with targets initially at 11077, with stops at 10571. Above 11077 can allow for meaningful strength to 11453, and above to 11932




Trading Longs: VRSN, EXAS, AMZN, MSFT, TWTR, FB, XPH, LLY, TMO, MRK, V, MA, LB, MOS, CHD, CQQQ, FXI, FDS, CVS, ETSY, AJG, ICE, CME, VRSK



Trading Shorts: M, LEN, STX, WDC, ATVI, TTWO, KORS, GIS, CCEP, EZU, STX, WDC, ETN, RL, FLIR, EMR, VMC, OI, NFX, WMB, BCO



A couple key points, as yesterday's selloff caught many, including myself, off-guard. After a 6% move in six trading days higher for SPX, we erased nearly half of this yesterday. The positives revolve around momentum being positively sloped on daily charts, DESPITE yesterday's decline. Additionally, we saw the first instance of some capitulation in volume with heavy volume on the downside vs upside which has been sorely lacking for months. Yesterday's TRIN reading of 3.3 was the highest reading since January as volume swelled into declining vs advancing stocks by nearly a 15/1 ratio. While this doesn't 'have' to signal a bottom, particularly if it occurs near the highs of the range (See Dec 2015 for example) it does look meaningful and has been lacking of late.



Overall, the spike in Chinese Yuan which coincided with Treasuries lifting and the yield curve plummeting to near inverted territory has certainly caught the attention of many of late. While this negative turn in sentiment could be important coinciding with a capitulation in volume, we arguably are still a bit low in Equity put/call after this got very compressed into this week on last weeks rally. Additionally, the VIX wasn't as high as it could be either.



For now, there's a small window where it looks right to buy dips into this pullback given the bullish seasonality (though that really hasn't worked that well this year) and bearish turn in sentiment. But any break of 12000 in NY Composite would be a concern to the bullish case (See charts below). So a bit of wiggle room for the next 3-5 days, but it's imperative that we don't have another few days like yesterday, as this would suggest the start of another move to new lows. Stay tuned.



ACTION PLAN- 



Long Gold and Silver- Buying GLD, IAU and SLV for movement higher

Long CQQQ --targets in mid-50s, stops at 42

Long EEM with targets at 44.80- Yesterday's breakout important

Long XLB at 55.60 or better, looking for movement up to 59

Long XPH- Targets at 47, with stops at 42

Long KRE 54.99 with targets at 58.50

Long XRT with targets 48.50



Additional charts and thoughts below.

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QQQ decline was worse than might have been expected coming into yesterday, undercutting this downtrend that had been exceeded, and momentum remains positively sloped on daily charts. Thus we see a violent 3.5% decline following 6 of 8 days higher, which had carried prices up to the tune of nearly 9%. For now, this isn't a sufficient enough decline to think prices have to revisit lows. Additionally, given the recent capitulation in volume yesterday, we should be closer to a near-term bottom which can give way to a Santa rally before any larger selloff next year. The next 3-5 days will be key. For now, no rush to buy dips immediately, but it's imperative that some type of stabilization start to happen in the next few days and NOT get back to prior lows.


lows.gif

The NY Composite has acted very much like the SPX in recent weeks, with a choppy, but volatile pattern. Yesterday's decline hasn't yet broken levels that argue for immediate deterioration, and 12,000 would be important to hold to keep the chances for the Santa Rally alive. Bottom line, 12000-12223 leaves not much wiggle room for the bulls. Thus a good risk/reward to consider buying dips with a "Stop and Reverse" on any close back under 12,000.


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Gold is starting to perk up again and looks attractive as this has broken a minor trend and stretching up towards monthly highs. This began to strengthen early in the week as yields plummeted while the Dollar stalled out.. Two important pieces of the puzzle that typically warrant overweighting precious metals. Near-term, this looks to push higher to 1270-1300, but until 1375 is exceeded, it's difficult to have too much conviction just yet on this being anything more than just a near-term bounce. One can buy IAU and GLD and look closely for signs of GDX starting to bottom out in the near future.

Emerging market breakout worth following near-term

December 4, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2775-7, 2761, 2722

Resistance: 2802-3, 2814-5, 2841-3



LINK TO TECHNICAL WEBINAR from Thursday 11/14 - CLICK HERE: ThursdayTechnicalWebinar



SPX - (3-5 Days)- Bullish- Additional strength likely to test and exceed Nov highs at 2815 into next week. The ability to exceed that allows for some decent push to 2841



EuroSTOXX 50- Mildly Bullish, Expect Europe can rally up to 3280-3300, but that remains its first real test, the area of the prior breakdown.



HSCEI- Bullish- Breakout happened Monday and should result in strength in the days and weeks to come. Long with targets initially at 11077, with stops at 10571. Above 11077 can allow for meaningful strength to 11453, and above to 11932




Trading Longs: VRSN, EXAS, HRC, AAPL, AMZN, MSFT, TWTR, FB, XPH, LLY, TMO, MRK, V, MA, LB, MOS, CHD, CQQQ, FXI, FDS, CVS, ETSY, AJG, ICE, CME, VRSK



Trading Shorts: ATVI, TTWO, GIS, CCEP, EZU, STX, WDC, ETN, RL, FLIR, EMR, VMC, OI, NFX, WMB, BCO



December started off with a real Holiday surge given the Trade War truce announcement and yesterday's gains likely pave the way for further upside in stocks into next week. Breadth finished at nearly 3/1 bullish while Energy, Discretionary, Technology, and Materials all closed higher by more than 1.5% on the session. WTI Crude along with Grains both closed meaningfully higher, while Treasuries continued their recent positive correlation with Equities as both moved in tandem yet again. Yield curves plunged on 2/10 down to the lowest of the year, while inverting when looking at 3's/5's and directly coincided with underperformance in groups like Financials. For now, this trend of stocks and bonds moving together looks to continue. While Financials had paved the way for market gains over the last week ahead of this past weekend's announcements, it was the Materials and Tech stocks which directly benefitted post Truce news.



However, the most important move looked to happen outside of US and directly with Emerging markets, as China's HSCEI broke out of a trend which has led prices down much of the year, while Emerging market ETF's like EEM broke out of similar trends. This looks bullish for this style group and EM likely can show some further outperformance near-term, which would accelerate on evidence of the US Dollar turning down more forcefully. For now, the pullback in yields while USD stagnates has been sufficient to coincide with a lift in EM as China warms up to the idea of a tariff "cease-fire" .


ACTION PLAN- 



Long CQQQ --targets in mid-50s, stops at 42

Long EEM with targets at 44.80- Yesterday's breakout important

Long XLB at 55.60 or better, looking for movement up to 59

Long XPH- Targets at 47, with stops at 42

Long KRE 54.99 with targets at 58.50

Long XRT with targets 48.50

Exiting TBT longs as yield decline has broken support and right to be long TLT near-term

Exiting EURUSD shorts as recent churning and indecision warrants looking elsewhere with Dollar likely to peak soon, and EURUSD rally by year-end



Additional charts and thoughts below.

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NDX's breakout worth following near-term, as prices got above important resistance near 6950 and likely to challenge and exceed 7200. Many Tech stocks showed evidence of stabilizing near-term and AAPL's ability to close up near highs of the session in particular was thought to be a bullish development which warrants sticking long this stock and Technology as a whole for a holiday bounce. Under 6839 necessary to stop out longs and postpone the rally.

Emerging markets are showing compelling technical evidence of trying to turn higher, as yesterday's trendline breakout was the first meaningful move above long-term trendline resistance since late January of this year. This suggests the potential for some gradual strength in the EM space, and one should consider being long EEM with targets near $44.80.

$44.80.gif

US 10-Year Notes have begun to show larger evidence of rallies of late, and the breakdown in the long end of the curve with 10 and particularly 30 year yields has caused many yield spread combinations to go sharply lower (flattening out ) While the 3s/5/s curve inverted yesterday, the 2s/10s curve has fallen to new lows for the year. This looks important, but for now, very much premature to make too much of until this inverts. (Even then there has historically been a significant lag between when the Yield curve inverts and economic conditions deteriorate. For now, additional flattening in 2/10 curve looks probable.

Pharma breakout bodes well for this sector to outperform further

November 30, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com


SPX Cash Index

Support: 2722, 2700, 664-5, 2649

Resistance: 2550-2, 2764



LINK TO TECHNICAL WEBINAR from Thursday 11/14 - CLICK HERE: ThursdayTechnicalWebinar

Webinar from yesterday had Video faults and was unable to be posted- Mid-day link with video today



SPX - (3-5 Days)- Upside should still prove limited as overbought situations remain and yesterday's late day push did result in some negative divergences. Look to buy pullbacks to and buy back under 2700.



EuroSTOXX 50- No change in Europe- Mildly Bullish, Expect that Europe might to play catchup with US, but Europe far weaker and upside likely limited in the short-run up to 3263 before consolidating along with SPX.



HSCEI- NO change- Mildly bullish, Very close to breakout, which i think can happen between now and early next week- Right to be long here, adding to longs over 10678 with targets at 11077, with stops at 10200




Trading Longs: FB, XPH, LLY, TMO, MRK, MOS, CHD, CQQQ, FXI, FDS, CVS, ETSY, AJG, ICE, CME, VRSK,, PG, COST, CCE



Trading Shorts: STX, WDC, AMBA, ETN, RL, FLIR, EMR, VMC, OI, EZU, NFX, WMB, BCO, CLVS,


The final trading day of November is upon us. We've seen S&P claw back to register a near 1% gain for the month thus far, while NASDAQ is down for November, lower by 0.45%. The Dollar has gained ground, Bonds are showing evidence of near-term rallies (given 10yr yield break) . Commodities have gradually withered given the USD rally and Crude remains hovering around $50 after its sharp pullback, while Gold has disappointed bulls, despite the negative sentiment. Meanwhile Cryptocurrencies have experienced a horrific decline after breaking support which goes against their normally bullish seasonal tendencies in November/December. Overall, a great month for traders, but genuinely difficult one for most investors, and tough for many to have conviction given the possibility of tariff escalation and Powell seemingly set to continue rate hikes, though cleverly coming off a bit more dovish after his recent talk.


Overall, yesterday's pullback was largely disappointing for the bears and finished largely unchanged, but yet stalling out in a fashion that seemed likely technically speaking after the big 100 point S&P run-up to the tune of 4% over 3 days. We've seen Financials and Healthcare dominate in outperforming lately while Technology appears to be slowly but surely firming. Momentum has improved in Stock indices and MACD has turned back to positive following one of the best weeks in the last couple years for DJIA.



In the short run, some additional work needs to be done to have confidence that equities have begun a "Santa Rally" 2750 is key for S&P and getting above that would help prices push higher to the all-important 2810-5 area. While breadth and momentum have improved on better price action, momentum remains overbought, and this juncture near 2750 still seems to be difficult to claim is something to ignore. When weekly and monthly momentum are negative and prices have gotten overbought on intra-day bases, that typically represents the most challenging of environments. My technicals suggest that this should be the start of a seasonal push higher, and not just a minor bear market bounce that should lead back to lows right away. Near-term, further stalling out looks likely, though on a breakout of 2750 in SPX and 6950 in NDX, one has to respect that, and think that kicks off the rally into year-end. Sentiment certainly appears to support this idea, as it remains much more bearish than usual for the end of November. Overall, a mildly bullish stance is recommended, looking to add to bullish exposure on any pullbacks into the early part of December. Some charts that try to make sense of recent movement are shown below.


ACTION PLAN- 



Long CQQQ --targets in mid-50s, stops at 42

Long XPH- Targets at 47, with stops at 42

Long TBT with target 41.35

Long KRE 54.99, looking to add on close over 56 for a move to 58.50

Long XRT with targets 48.50

Short EURUSD with initial targets lowered to 1.1225

Additional charts and thoughts below.

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NDX has pushed up to near key downtrends from October, similar to SPX. This would seem to be decent resistance. Yet, momentum has turned positive on this move given how strong a push higher we've seen. Thus, on any backing off in the days ahead, this should allow for dips to be bought, vs thinking a larger selloff down to lows should occur. Movement over 6950 would be positive for NDX and this should be watched carefully for evidence of trend acceleration, given that December is approaching and sentiment remains negative.

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Pharmaceuticals look increasingly attractive of late, considering the breakout back to new high territory. Yesterday's Cup and Handle breakout in the DRG is quite positive for this group, and quite a few stocks like LLY, MRK, TMO, PFE, and others have been breaking out technically in a fashion that suggests this group should continue to lead. Near-term, one should overweight this part of Healthcare and look to add on dips if given the chance in the days to come.

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US 10-Year Treasury yields have begun to trend in the opposite direction of how they've traded vs Stocks for the last couple months. As this overlay chart shows, both yields and stocks peaked on 10/3 and then bottomed in late October. Then yields peaked on 11/7 along with stocks and trended lower. Lately, stocks have rebounded this week, however, while 10-Year yields have broken down. Given this prior relationship, it might be early to suggest this divergence should simply lead to stocks and bonds starting to rally in unison again. For now, stocks have not rolled over, and TNX appears to have broken down under prior lows. This doesn't suggest an immediate trade, but simply to be cognizant of this relationship when it starts to diverge.

Overbought & near Short-term Targets, but Good participation

November 29, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com


SPX Cash Index

Support: 2722, 2700, 664-5, 2649

Resistance: 2550-2, 2764



LINK TO TECHNICAL WEBINAR from Thursday 11/14 - CLICK HERE: ThursdayTechnicalWebinar

TODAYS TAKES PLACE 1pm EST- Email info@newtonadvisor.com if you don't have details



SPX - (3-5 Days)- Upside limited between today and early next week- Look to short 2750-1, and buy back under 2700.



EuroSTOXX 50- Mildly Bullish, Expect that Europe might to play catchup with US, but Europe far weaker and upside likely limited in the short-run up to 3263 before consolidating along with SPX.



HSCEI- Mildly bullish, Very close to breakout, which i think can happen between now and early next week- Right to be long here, adding to longs over 10678 with targets at 11077, with stops at 10200



Trading Longs: CQQQ, FXI, FDS, CVS, ETSY, CHD, LLY, MRK, AJG, ICE, CME, VRSK,, PG, COST, CCE

Trading Shorts: TSN, AMBA, ETN, RL, FLIR, EMR, VMC, OI, EZU, NFX, WMB, BCO, CLVS,


An absolute "Melt-Up" yesterday following Powell's speech, with broad-based participation and decent breadth of over 4/1 positive. Nine sectors out of 11 finished up at 1% or greater, while five sectors, Consumer Discretionary, Healthcare, Technology, Industrials and Telecom, finished up greater than 2% on the day. Technology led the way, which was encouraging, but something discussed over the last few days as being a possibility given the setup in NASDAQ and counter-trend Buy signals in Equal-weighted Tech vs SPX.


Overall, this was a convincing move internally, yet as with everything, it likely needs to be consolidated, as prices have gotten overbought very quickly. Charts of 120 and 240 min duration on SPX show RSI over 75, which has coincided with prior peaks in price and/or has shown upside prove limited. Additionally, prices now lie near trendline resistance from the actual October peak lower (Two days ago we saw breakouts of the Nov decline which were important.. now comes the bigger line in the sand) Bottom line, it's likely that prices stall out between now and end of week and make at least a minor pullback into the first week of December. The shape, breadth and momentum on any consolidation will be of utmost importance as to how short-lived it is, and how buyable. Given yesterday's impressive breadth, any pullback on 2/1 breadth or lower should prove to be a buying opportunity at 50% retracement or higher of the recent rally. (5/1 or greater downside breadth that shows SPX undercutting 2680 would be a larger concern regarding a deeper retrace)



ACTION PLAN- 



Long CQQQ --targets in mid-50s, stops at 42

Long TBT with target 41.35

Long KRE 54.99, looking to add on close over 56 for a move to 58.50

Long XRT with targets 48.50

Short EURUSD with initial targets lowered to 1.1225



Additional charts and thoughts below.

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S&P has surged up to the next real area of resistance, found between 2745-2751, which as shown on this 240 min chart, lies right near current levels. 4-hour charts show the presence now of TD Sell Setups while RSI has moved to the high 70s however, indicating that near-term upside is likely to prove limited. From a trading perspective, it's right to consider lightening up between today and Friday, and for aggressive traders, to short movement above 2750, as there likely will prove to be strong overhead resistance. (This might make sense for those wishing to take risk off ahead of this weekend anyhow) Though most of China, as shown below, is in good technical shape, so the extent of any selloff might prove limited for now. For S&P, downside could take prices to 2700 or below to 2685, but should be buyable. The key will be to keep an eye on breadth and momentum over the next 3-5 trading sessions. For now, despite a decent near-term breakout in AAPL, the SPX appears to be near key areas to consider selling.

selling.png

Eurozone stocks, shown by EZU, or officially, the Ishares MSCI Eurozone ETF, have also begun to improve similar to US and Asia and look buyable for a move higher in the weeks ahead, potentially finally starting the Santa Rally. While US has gotten near-term overbought, this breakout in EZU argues for longs in Europe for the first time in the last few months. Rallies to the low 40s look likely and dips in the next week likely prove to be buyable as prices have broken out of the trend which has been underway most of the last six months.


months.png

Ahead of this weekend's G-20 summit and the Trump/President Xi dinner, Chinese Technology looks to be turning higher, which is directly coinciding with improvement in China's HSCEI and SHCOMP indices. This could very well mean that negotiations are in order as opposed to Tariffs and/or that the tariff escalation does not happen as planned. Many of the companies in this group, shown by Invesco's CQQQ, or the China Technology ETF, include weightings of BABA, TCEHY, BIDU, NTES, have begun to stabilize after severe declines in recent months. The daily chart of CQQQ shows this breaking out above a downtrend which has lasted most of the year. Many fundamental analysts have been pounding the table on this area all year as being undervalued, but this is the first time for most of 2018 that the technical picture is starting to change for the better and argues that being long this space is correct. One can buy CQQQ with targets initially in the mid-$50's and stops at $42.

Both SPX and NASDAQ exceeding Downtrends should pave the way for further gains

November 28, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2664-5, 2649, 2633, 2622, 2600-3

Resistance: 2700-2, 2725, 2753-5





LINK TO TECHNICAL WEBINAR from Thursday 11/14 - CLICK HERE: ThursdayTechnicalWebinar



SPX - (3-5 Days)- Bullish- SPX and NDX have both exceeded the downtrend from 11/7 while Treasury yields also look to be trying to stabilize and turn higher. Overall, a move up to 2725 looks likely. Downside has support 2633



EuroSTOXX 50- Mildly Bullish, turning bullish OVER 3190 on a close for a move back up to 3300. Stops on longs near 3114



HSCEI- Mildly bullish, turning more bullish on close over 10678 with targets at 11077, with stops at 10200



Trading Longs: FXI, FDS, CVS, TEAM, ETSY, CHD, LLY, MRK, AJG, ICE, CME, VRSK, CQQQ, PG, COST, CCE



Trading Shorts: TSN, AMBA, ETN, RL, FLIR,EMR, VMC, OI, EZU, NFX, WMB, BCO, CLVS,



A decent push higher yesterday in Equities despite the mass uncertainty still present, given lack of clarity and overall uncertainty regarding both Powell's upcoming plans, as well as the possibility of tariff escalation. Near-term, US markets seem to have shrugged these fears off and rallied to the tune of 0.25% or greater. This was successful enough to let SPX exceed the downtrend from early November (which hits for S&P Futures at 2700) Additionally, prices managed to fill and exceed the minor gap, while NASDAQ showed some followthrough of its own in making the second straight day above the key downtrend from early November.


Overall, despite any "news" being released yet, declaring that tariffs have been resolved, we're beginning to see increasing strength out of Technology in recent days which has now turned in sufficient strength to show positive performance over the last week, only one of three sectors to show such strength. Meanwhile the rally in the US Dollar has coincided with precious metals and other commodities weakening, and such behavior very well might continue into mid-December before any Dollar peak/commodity bottom.


For now, its worth mentioning that a few sectors have begun to trade better in recent days/weeks, and Technology being 20% of SPX, is one of those sectors. While impossible to cast any sort of accurate depiction of how the final six weeks of the year should play out, it's likely that the strength in Financials, Healthcare and now beginning of Tech strength should at a minimum allow some sort of rally to play out, and how long this lasts will have much to do with the degree of participation, breadth and momentum.




ACTION PLAN- 



Long CQQQ --targets in mid-50s initially

Long TBT with target 41.35

Long KRE 54.99, looking to add on close over 56 for a move to 58.50

Long XRT with targets 48.50

Short EURUSD with initial targets lowered to 1.1225



Additional charts and thoughts below.

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S&P has now matched the NDX 100 in its progress in exceeding the downtrend from early September/early October. This happened in the NDX last Friday and was an constructive development in suggesting Tech might be ready to start to trend higher. Now both SPX and NDX are above this downtrend and despite a lack of clarity on many of the key issues that many say are important for markets, the equity indices seem to be onboard and can rally. Overall, i'll stick to my 2700 target as being important to exceed for a larger rally. However, the last couple days were quite constructive and if SPX can get past Powell's speech on Wednesday without any hitch, further rallies should occur into early December.


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Gold experienced its most important and negative day in November thus far, rolling over to negative territory which given the momentum shift, might allow for prices to come in materially but ultimately set up an attractive buying price. Initially, the area at 1205 has importance, and cannot be breached without suggesting a major trend down is underway. The pattern over the last couple months is more bearish than bullish, in showing a rolling period of consolidation. Yet, being above 1195 keeps the trend more neutral than bearish. For now, Gold and the precious metals likely underperform near-term.


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On CNBC yesterday, we had a fruitful discussion on which stock should outperform between MSFT and AAPL, given that the former had now gained ground to come within striking distance of AAPL's Market capitalization. I stated that MSFT looked like the better overall stock given a lack of deterioration (only down 8% from its All-time highs, vs 20%+ for AAPL.) However, AAPL appeared like the better trading vehicle for the following reasons. 1) Prices have pulled back to trendline support from 2016. 2) RSI has neared oversold territory, the lowest since early 2016. 3) Prices managed to close well off their lows on very bad news, the second straight day of prices holding up well at a time when they easily could have weakened materially on the threat of tariffs. Overall, trading bounces look more likely, and should prove more robust in AAPL than MSFT. For now though, MSFT is the superior play, technically given the lack of trend damage. While momentum has begun to stall on MSFT on monthly charts while RSI has dipped, the monthly chart still shows the extent to which MSFT is overbought, while FB is now down near critical SPY support.

Rally is a work in progress, but requires a move over 2700 for conviction, near-term

November 27, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com

SPX Cash Index

Support: 2649, 2633, 2622, 2600-3

Resistance: 2700-2, 2725, 2753-5



LINK TO TECHNICAL WEBINAR from Thursday 11/14 - CLICK HERE: ThursdayTechnicalWebinar



SPX - (3-5 Days)- Mildly bullish- Rally tentative until 2700 exceeded, but some good signs out of Tech and Financials Monday. Downside has support 2633, 2622 and then 2532-50



EuroSTOXX 50- Mildly Bullish, turning bullish OVER 3190 on a close for a move back up to 3300. Stops on longs near 3114



HSCEI- Mildly bullish, turning more bullish on close over 10678 with targets at 11077, with stops at 10200



Trading Longs: FB, FDS, CVS, TEAM, ETSY, FB, CHD, LLY, MRK, AJG, ICE, CME, VRSK, CQQQ, PG, COST, CCE



Trading Shorts: TSN, AMBA, ETN, EMR, VMC, OI, EZU, WMB, BCO, CLVS,

US Equities along with Europe showed some initial signs of recovery Monday, and managed to close up over 1% on the session, with Technology and Financials showing strength of more than 2%. While breadth was lacking on the recovery and faded after starting out +5/1 bullish, the lower volume was expected yesterday given last week's holiday, and the real test lies directly ahead. Overall, this rally will be tentative until S&P can get up above 2700 and produce a stronger session of positive breadth, momentum and volume. Until that happens, it's tough making too much of this rally, as momentum and trends remain negatively sloped on daily, and weekly timeframes, while monthly momentum indicators like MACD have also crossed over to negative territory.

However, as mentioned in the Weekly Technical Perspective Monday morning, there are some signs of light worth mentioning. Financials have begun to trend higher relatively speaking, and yesterday recorded one of their best days in over a month's time. We've seen relative breakouts in both Financials and Healthcare that are definite positives in the short run, and will have a greater impact when Technology begins to stabilize. To that note, Technology very well could start to turn up with greater velocity in the near future. NDX appeared to have made a very positive close Monday that exceeded near-term downtrends, and relative charts of SPXEWIT/SPX (Equal-weighted Technology) managed to stabilize and have recorded TD SEQUENTIAL buy signals relative to the SPX on daily charts. These, along with the recent uptick in fear given potential spreading of tariffs ahead of the G-20, and positive momentum and breadth divergence over the next week, could allow for markets to start to turn higher.

For now its important for SPX to get back up over 2700 and until that happens, the rally is tentative and very difficult to call a bottom , with extreme selectivity needed.

ACTION PLAN- 


Long CQQQ --targets in mid-50s initially

Long TBT with target 41.35

Long KRE 54.99, looking to add on close over 56 for a move to 58.50

Long XRT with targets 48.50

Short EURUSD with initial targets lowered to 1.1225

Covering SMH, XLK short and selling XLU long


Additional charts and thoughts below.

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S&P futures managed to record the highest close in three days, getting up to, but not over 2670 which was tested a few times yesterday in S&P. Following yesterday's close, we heard reports of potential iPhone tariffs next on deck, but until this becomes a reality and we see prices reverse, it's right to give yesterday's rally the benefit of the doubt as having the potential to push up to 2700-2725. Over 2700 on a close warrants a more positive stance, while any move back under 2647 would be problematic to the bullish case.

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NASDAQ 100 managed to exceed a near-term downtrend in price, something that argues for higher prices in the next couple days and is the first real sign of light for the Tech space, which as we all know, has been hit hard of late. This should drive NDX back up to 7000 while exceeding 7200 would be a greater positive. For now, the AAPL post market woes have not hit the NASDAQ too hard and futures have rebounded from immediate post close declines. Given yesterday's close, it looks right to bet higher on Tuesday/Wednesday, though getting SPX and DJIA to do the same would help the cause for US equities.

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US 10-Year Yields look positioned to turn higher in the days ahead, something that bodes well for Financials to potentially continue their recent strength. As daily charts of TNX show, Yields have stabilized in recent days after having broken prior lows and not accelerated. This Ichimoku cloud chart shows why this area at 3.03-5% is important, and this seems to have held, along with having produced daily exhaustion signals on this yield decline through TD BUY SETUPS. (9 consecutive closes in yield LESS than the close from four days prior) This , along with the fact that Treasury shorts have been cut in half in recent weeks, could result in yields turning up again in to FOMC. It looks right to sell Treasuries , TLT and be long TBT for a bounce in yields in the days/weeks to come, with stops under last week's lows.

Selloff has come within striking distance of early year lows

November 21, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2633, 2622, 2600-3

Resistance: 2670-2, 2700-2, 2753-5



NOTE: Some brief comments this morning and will concentrate largely on indices and structure- More lengthy analysis next Monday- Thanks for your understanding, and Happy Thanksgiving to all celebrating



LINK TO TECHNICAL WEBINAR from last Thursday- CLICK HERE: ThursdayTechnicalWebinar



SPX - (3-5 Days)- Wednesday bounce still tentative until 2670 recouped- Defensive posture still recommended- Early Wed bounce has gotten up to 2658, but will need to exceed 2670 to even have minimal confidence of a low- Downside has support 2633, 2622 and then 2532-50



EuroSTOXX 50- Mildly Bearish-Targets at 3090-3100



HSCEI- Mildly bullish with stops at 10200 and a rise over 10569 allowing for gains up to 10800.



No change to longs or shorts today, but it's important to have some shorts and/or hedges until the trend starts to stabilize

Trading Longs: ETSY, FOXF, AAP, ICE, CME, VRSK, CQQQ, PG, STZ, COST, CCE, FDS, WMT



Trading Shorts: SMH, H, PSX, HAL, SLB, DVN, DHI, ALL,CTAS, LYB, PPG, ALGN, WDC, ETN, LM, WYNN, LVS, MGM, HBI, GPS



S&P got down to within striking distance of 2018 lows yesterday, while NDX was the only index of SPX, NDX and DJIA that broke below October lows. While a bounce has begun early on in US equity futures, it's still difficult to call Wednesday morning a low of any sort until at least prices get up above the prior areas that were violated. For SPX that lies near 2670 while in NDX , a close back up above 6580 is warranted, or even 6700 to be on the safe side.



We saw fear gauges spike a bit but still not at levels seen February and TRIN levels are nearly HALF what they were at Feb lows (1.46 yesterday vs 3+ in early Feb and April) Equity Put/call looks to be trying to break out of a consolidation and its thought that on a further selloff into next week, this would spike over 1 (Currently 0.82) Overall, with trends pointed lower, there's no use in trying to pick lows just yet, as this holiday sentiment certainly has not worked as many thought thus far, and thus its still likely not to work as planned with a potential for cycle lows to materialize on 11/26-7 early next week as opposed to today being meaningful.



ACTION PLAN- 

Long CQQQ --targets in mid-50s initially

Long XLU with target 57

Long XRT with prices near Oct lows ahead of seasonally bullish Black Friday- next 1-2 days expect bottom

Short EURUSD with initial targets 1.13

Short SMH with target 88- This was hit yesterday though evidence that this can continue remains

Short XLK with target 64.75-65



Additional charts and thoughts below.

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NASDAQ is bouncing +0.50% but is only right back to area that was breached yesterday which likely is important as resistance and a selling area (6580) Above is 6700 which is more meaningful in suggesting a low is intact. Downside under 6449 should reach 6330-50 or under at 6235-8 near the 38.2% Fib retracement of the entire 2016-8 advance.

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SPX weekly chart shows how important 2532-2600 is in the larger structure. Under 2600 on a close would be damaging to the longer-term structure, and for now can be possible until/unless fear starts to come into this market far more quickly. For now this area at 2600 is key, with yesterday's 2633 initially important but a break of 2633 takes S&P to 2622 and 2600 quickly which a more significant area towards whether the longer-term intermediate-term uptrend is giving way for SPX.

XSPX monthly chart shows that long-term momentum has already turned down- While prices are holding up thus far above key areas of importance-- 2532-2600. A break of 2600 on a monthly basis would be thought to be problematic. The long-term uptrend from 2009 hits down near 2275, a level that's largely irrelevant near-term given how far away this is, but suffice to say a break of this year's lows would turn the intermediate-term trend bearish, making an eventual test of this long-term trend likely.

Pullback ongoing, but yet signs of recovery look near

November 20, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2671-2, 2666-8, 2633

Resistance: 2753-5, 2764-7, 2776



NOTE: There will be NO Morning Technical Comment published Wed-Friday of this week given the Thanksgiving holiday, nor no Mid-day Comment- This will be resumed next Monday morning- Thanks for your understanding, and Happy Thanksgiving to all celebrating



LINK TO TECHNICAL WEBINAR from last Thursday- CLICK HERE: ThursdayTechnicalWebinar



SPX - (3-5 Days)- Mildly bearish- Test of October lows possible, but downside should prove minimal from here and lead to stabilization, not crash- Pullback to 2671-2 looks increasingly likely and possibly 2633, but doubt that 2600 is breached this go-around- Look to still cover shorts over next 2 days



EuroSTOXX 50- Mildly Bearish-Targets at 3125-50 over next 3-5 days- Selling has proven a bit more muted that normally would have been the case, and still well above Oct lows- Minor weakness likely but expect stabilization by end of week



HSCEI- Mildly bullish with a rise over 10569 allowing for gains up to 10800. Under 10325 turns trend back down.



Trading Longs: ETSY, FOXF, LULU, AAP, ICE, CME, VRSK, CQQQ, FIVE, PG, STZ, COST, CCE, FDS, WMT



Trading Shorts: H, PSX, HAL, SLB, DVN, DHI, ALL,CTAS, LYB, PPG, ALGN, WDC, ETN, LM, WYNN, LVS, MGM, HBI, GPS



US Equity indices backed off very sharply yesterday though with NASDAQ being the culprit yet again, with Technology bearing the largest brunt of this decline and proving in no uncertain terms that the rotation out of Tech is very much underway. This sector has quickly gone from 26% of the SPX to now under 20% as of Monday, though still the largest percentage sector by weight. At present, while volume is not as heavy on recent declines and breadth hasn't been that heavy on the pullback, we're still seeing some meaningful price damage in the indices, along with a general lack of fear on the decline. Yesterday's ARMS index reading showed a 0.80 reading, as volume was fairly balanced with the overall Advance/Decline which showed nearly a 3/1 ratio to the downside.



Overall, investors have struggled to come to grips with where to hide on this decline, and we've seen Equities, Treasuries, commodities and Cryptocurrencies all decline in tandem , not really providing much if any safe haven. Meanwhile the confusion abounds as above-average earnings and good economic strength has failed to lead equities higher. But doe it ever? That begs the question.. when do we trust earnings to be good for stocks.. and when do we not? as we can't have it both ways. For now, trends are lower near-term, and while the selling has not "seemed" as strong of late (Momentum positive on daily charts given the extent of the bounce from late October while breadth has been "less bad" the selling across the board in all asset classes is particularly unnerving during holiday time, with most wishing the markets would take their dose of Thanksgiving "Tryptophan" and quiet down and rally.



Bottom line. under 2671 in SPX is bearish for a retest of 2600 and a move under 6580 in NQ should lead to 6250, the 38.2% Fib retracement area which lines up near April lows. However, one needs to be on alert for some



ACTION PLAN- 



Long CQQQ --targets in mid-50s initially

Long XLU with target 57

Long XRT with prices near Oct lows ahead of seasonally bullish Black Friday- next 1-2 days expect bottom

Short EURUSD with initial targets 1.13

Short SMH with target 88

Short XLK with target 64.75-65



Additional charts and thoughts below.

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S&P's weekly pattern deserves some scrutiny as this broke the trend from 2016, though has held above key Ichimoku Cloud support. While a pullback to 2633 is possible, it's important to note that a violation of 2600 would be quite negative for the picture, technically, and would likely coincide with more substantial selling. At present, the decline in Tech looks to be complete by early December, so it's likely that a bounce of some sort materializes. However, the key area remains near the 2600 area and that has to hold for the bulls to have a chance at a year-end rally.

rally.gif

XLK did breakdown to the lowest levels since early November lows and still looks likely to undercut by a small amount. The next 1-2 weeks will bring about weekly TD BUY SETUPS in XLK which should mark a bottom in this group and result in rallies. For now, this looks premature and pullbacks to 64.50-65 look very possible this week, despite the holiday , before this bottoms.


bottoms.gif

XLF has shown some excellent technical strength in the last week, defying expectations at a time when Technology has dropped off sharply. This is one of the reasons to expect that any lull in the Technology selloff likely should turn trends back higher into end of year. Most of the weakness has transpired in Technology, yet Financials remain quite strong in the last week after a very poor few months, and look to rally. This rally directly follows the steepening in the 10/30 yield curve, while the 2/10 has been largely flat. Overall, Financials looks attractive given this picture at a time when many are searching for alternatives for Technology.

S&P getting down to attractive risk/reward area to cover shorts

November 15, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2683-5, 2666-8, 2633

Resistance: 2759-64, 2767, 2787-9

LINK TO TECHNICAL WEBINAR from last Thursday- CLICK HERE: TECHNICALWEBINAR11/08/18



SPX - (3-5 Days)- Mildly bearish but feel downside limited to 2666 between now and Friday- Look to cover shorts on pullback Thursday & S&P should be close to trying to bottom out



EuroSTOXX 50- Bearish- - Targets at 3192, then down near prior lows 3090-3100



HSCEI- Bearish- Pullback under 10354 should lead to a potential "final" move down to test 10k and early Nov lows before December rally. Target could end up near 9700-9800 for covering shorts and buying



Trading Longs: AAPL, FIVE, LULU, XLU, WEC, DTE, SCG, QID, SQQQ, FIVE, PG, STZ, COST, CCE, FDS, WMT



Trading Shorts: SGMS, FXI, EEM, H, PSX, SLB, DVN, TXT, CTAS, LYB, PPG, ALGN, WDC, ETN, LM, WYNN, LVS, MGM, HBI, GPS



S&P attempted a fleeting rally ahead of the open Wednesday that failed to make any structural progress before turning down sharply and violating the early morning support at the 50% retracement area at 2710. This suggested a possible test of 2685, which did in fact occur within a point on Wednesday before another bounce, and prices failed to make much progress before turning down again.



Overall, prices should be within striking distance of trying to bottom out by Friday of this week, with maximum downside in price and time hitting the following week during the shortened holiday week next week. The reasons are as follows: First, signs of positive momentum divergence are materializing on daily charts and hourly. Second, breadth is holding up better during this recent pullback, with barely 2/1 negative breadth on this recent setback. third, hourly charts have gotten oversold and key Tech and index holdings like AAPL are down near important trendline support. Fourth, sentiment has slowly but surely started to get more and more negative, as many scratch their heads as to "why" stocks are selling off while earnings remain in good shape. Fifth, we've entered a very bullish seasonal time which although hasn't worked out thus far, should provide decent entry points ahead of the holiday given the conditions above. Look to use any further weakness Thursday to slowly exit shorts and consider adopting longs, like AAPL (see below) that have fallen to near key trendline support. The Retail space is also attractive and several of those stocks will be covered in detail this coming weekend ahead of the Black Friday seasonal boom for Retailers.





ACTION PLAN- 



Covering XLF shorts

Long XRT to get Retailing exposure ahead of next week, expecting outperformance

Short XLI with targets 70.30

Short EEM with targets 70.25-70.50

Long EUO, thinking that Euro decline continues in the days ahead w/ US Dollar breakout





Additional charts and thoughts below.

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S&P's daily chart shows why it's been right to have a defensive bias in recent days given the severing of the minor uptrend from late October. Prices have now breached the 50% retracement area of this prior October bounce but look to be closing in on support to buy. This could materialize by Friday of this week near 2666-83 with maximum pullback to 2635 in my view by next week before a very healthy counter-trend rally gets underway. Signs of positive momentum divergence are materializing on daily charts and hourly, while breadth is holding up better during this recent pullback, with barely 2/1 negative breadth on this recent setback. While prices closed down near their lows and daily charts continue to look unattractive, sentiment has slowly gotten more negative lately right ahead of the holiday. Overall, while its been correct to bet on downside, we're getting close to a time when it should be right to cover shorts and be long, and that could come about as early as Friday. Look to cover shorts and buy dips at 2666-82.

82.JPG

Apple (AAPL) has finally started to look interesting after a 20% pullback from 52-week highs. This has now reached weekly trendline support (180-5) and shows nearly a perfect price/time confluence from the early October highs (1x1) 43 calendar days along with 43 points down is very close to where AAPL closed Wednesday, and should be an area where this stock can bottom out in the next week. While given the big pullback on heavy volume might seem worrisome on daily charts, the weekly charts provide some perspective as to why this stock might bottom out in the days ahead.

ahead.jpg

Breadth spiked a pretty healthy amount during the rally from 10/31 into 11/7, and as this chart shows, we saw the percentage of SPX stocks above their 10-day moving average (m.a.) spike up to 90%. This looks to be a healthy signal and even on the drawdown this past week, this has managed to hold up at fairly high levels, along with the percentage above their 50-day m.a. at 37%, well above levels seen in mid-October, despite S&P being down near 2700. This is encouraging as breadth has not followed price down lately and should set up for a buying opportunity in stocks in the next 3-5 trading days.

Early rally attempts fail, keeping trend bearish

November 14, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2709-11, 2684-6, 2633

Resistance: 2759-64, 2767, 2787-9, 2793-5

LINK TO TECHNICAL WEBINAR from last Thursday- CLICK HERE: TECHNICALWEBINAR 11/08/18



SPX - (3-5 Days)- Bearish- Look to sell rallies with a move down to test 2709-11 likely initially- An advance back over 2764 is necessary to think any sort of low is in place



EuroSTOXX 50- Bearish- - Targets at 3192, then down near prior lows 3090-3100



HSCEI- Bearish- Pullback under 10354 should lead to a potential "final" move down to test 10k and early Nov lows before December rally. Target could end up near 9700-9800 for covering shorts and buying



Trading Longs: XLU, WEC, DTE, SCG, QID, SQQQ, FIVE, PG, STZ, COST, CCE, FDS, WMT, DIS, DISCA, CASY, PFE, ZTS



Trading Shorts: FXI, EEM, H, BYD, FLIR, PSX, SLB, VLO, NOV, DVN, TXT, CTAS, EMN, LYB, FCX, PPG, ALGN, GPN, WDC, CDK, MAS, ETN, JCI, LM, WYNN, LVS, MGM, SGMS, HBI, GPS



S&P attempted a couple different rallies on Tuesday before pulling back to within striking distance of lows and initial support near 2710. This hits the 50% retracement level from late October and is considered the first real area to consider covering shorts and attempting to buy. Yesterdays early rally failed to take breadth that much higher, which is still negative while prices closed right near recent lows. This still looks early to think that any sort of low of magnitude is in place



However, there were some encouraging signs that need to be mentioned that were not n place last week. First, hourly charts have begun to show positive breadth divergence, given yesterdays early rally attempt. Breadth and momentum improved on the pullback and did not make new lows. Second, counter-trend indications of exhaustion are nearly complete on hourly S&P charts. Third, Financials have shown some ability to stabilize and rally in recent days, bucking the trend at a time when rallies in this group are sorely needed. Finally, near-term market cycles suggest that 11/15-6 could be a low for stocks. Therefore, while the trend is indeed still down for US indices, there should be some attempt at stabilizing and rallying into the shortened holiday week next week.


ACTION PLAN- 

Short XLF with targets near 26

Short XLI with initial targets 71

Short EEM with targets 70.25-70.50

Taking profits in XLP as downturn looks likely near-term

Long EUO, thinking that Euro decline continues in the days ahead w/ US Dollar breakout



Additional charts and thoughts below.

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S&P's daily chart shows the extent of this recent drawdown, which nearly lines up perfectly with the prior lows made in mid-October. While it's much too early to have any kind of thoughts on a Reverse Head and Shoulders pattern in the making for S&P, i'm incline to think this very well might be possible if sentiment continues to deteriorate at this same pace. Recent TRIN readings have escalated, showing far more volume into "down" vs "up" stocks, and Equity Put/call ratio looks to be consolidating on the verge of a final push higher. Overall, trends remain down, yet risk/reward doesn't look as appealing between Wednesday and Friday for shorts. One should utilize movement down to the 50% retracement zone near 2710 to consider covering at least partial shorts and then allow markets a chance to stabilize a bit.

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One consequence of the rising dollar lately has been the rolling over in commodities, which doesn't yet look complete. The severe weakening in Energy has been at fault for some of this move, but this doesn't yet look complete. One should utilize any further weakening in commodities to consider buying into weakness come late November, as it's likely that the Dollar will at that time be close to peaking out and turning back lower. For now, the break of recent lows still argues for a bit more weakness, and Crude's weakening in particular looks to have failed to hold where it needed to and now pulling back in parabolic fashion which could allow for a move down to the low 50s before any stabilization.

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Russell 2000 is now within striking distance of having its 50-day moving average cross its 200-day, an occasion that's labeled the "Death Cross" and which many financial media likely will mention in the days and weeks ahead as being a bearish omen for stocks. However, this looks to be a fallacy at best and has no real predictive power. Over the 8 occurrences of this Death cross in the last 20 years, only two of these were detrimental and occurred right at the bull market peaks of 2000 and 2007. While these often do occur at the onset of new bear markets, most of the signals are well too "late to the game" and occur after a substantial amount of weakness has already occurred. In this instance, we see that RTY index has already declined by 12.5% from late August and is now showing some positive divergence on daily charts. Thus, it looks better to use any further decline in the days ahead to buy weakness, not expect that this continues.

Bounces thus far have failed to gain much traction- Near-term Bear case remains

November 13, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com

Monday mid-day Video- Click the link directly Below

TuesdayMiddayTechnicalVideo



Trend bearish UNDER S&P 2764, and Bullish OVER.



Will be on Fast Money- CNBC today at 5:20pm EST-



Rally today has had a tough time gaining traction. We see the DJIA is negative, S&P is barely up +0.15% while the NASDAQ is still higher by 0.46%. and given the extent of the washout in NASDAQ lately, this isn’t much of a bounce.  Breadth is largely flat today..  and Energy the biggest underperformer given Crude’s further washout today- with WTI down 6% and we see Energy lower by 2%.   Also lower are Staples and Healthcare, while Financials are managing to gain nearly 0.75% and Industrials also positive by nearly the same amount.   Yet Tech only able to muster 0.35% gains is an issue to those expecting an immediate snapback as this sector remains quite weak and difficult to call any sort of bottom until Tech can stabilize.  




SPX- HOURLY Chart-

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S&P on hourly charts shows the failed rally from earlier today and now a move back down to test recent lows from earlier. Overall, tough to be too positive just yet, but there are some signs that are worth mentioning that could bring about an upcoming bounce. Prices are now nearing the 50% level of the entire move from late October (which intersects 2709) while Demark counter-trend exhaustion is nearly complete on hourly charts. Additionally, we're seeing the first instance of positive momentum divergence on an hourly basis, so further declines into end of day and/or tomorrow likely will not lead momentum to new lows. While this isn't a buy signal per se, it is encouraging and bodes well to consider covering shorts near 2709-12.

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Russell 2k vs SPX is right back down to former lows, an area of real importance and given the degree of momentum lift in the last month coinciding with an 8% lift in prices off the lows, it's likely that this can probably stabilize and turn back higher next week and rally into December. The so-called "Death cross" is happening in Russell 2000 with 50 crossing below the 200 day moving average, but these have been notoriously unreliable and aren't really all that predictive of bear markets.

Upside looks limited in the short run for Stocks- US Dollar rally likely into late Nov

November 9, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2790-1, 2774-5, 2763-5, 2742-3, 2730

Resistance: 2817-9, 2825-7

LINK TO TECHNICAL WEBINAR from yesterday: TECHNICAL WEBINAR11/08/18



SPX - (3-5 Days)- Upside limited- Sell rallies at 2820-5 and under 2790 is short for move down to 2763-5.



EuroSTOXX 50- Bearish- Thursday's reversal should have put in a near-term top for Europe and it's right to bet on prices pulling back next week - Targets down near prior lows 3090-3100



HSCEI- Bullish, Rally up to 11100 likely, then stalling out.



Trading Longs: PG, STZ, COST, DG, CCE, FDS, WMT, DIS, DISCA, CASY, PFE, ZTS



Trading Shorts: BYD, CDK, INCY, BMY, CX, AN, KMX, MAS, ETN, JCI, LM, WDR, MS, FTNT, SWKS, WYNN, LVS, MGM, SGMS, HBI, GPS



S&P showed some definite signs of stalling out, but by day's end, had not made sufficient deterioration to violate the uptrend from 10/29. However, upside looks limited here technically, and it looks right to pare down longs, sell into 2820-5 and utilize movement down under 2790 to short, expecting movement to at least 2763-5 initially.



Outside of S&P, the Dollar showed very strong upside yesterday, and should help the Dollar rally over the next 2-3 weeks, which should be bearish for Emerging markets in the near-term and potentially also commodities, specifically precious metals given the resilience of Treasury yields in holding up. Overall, it looks right to sell into this recent bounce in EEM, expecting pullbacks in the days ahead.



Sector-wise, XLF and XLI will both register TD Sell setups ( Nine consecutive closes above the close from four days ago) as of Friday's close. This is the first sign of upside exhaustion in both sectors since the bounce began in late October. It looks right to sell longs here and consider betting on both to turn down over the next 3-5 days. Bottom line, after the 200 point S&P rally in 7 days, the market looks to be in need of consolidation, so it's best to step aside, and/or hold off on initiating too many longs in the near-term, awaiting consolidation.



ACTION PLAN- 



Short XLF expecting stallout and turn back lower to 26-26.50

Short XLI with initial targets 71

Short EEM with targets 70.25-70.50

Long XLP with targets at 58.90

Long EUO, thinking that Euro decline continues in the days ahead w/ US Dollar breakout





Additional charts and thoughts below.

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S&P showed some definite signs of stalling out, yet failed to break the trend from late October. Breadth was negative but only partially so and most of the weakness occurred in Energy, as WTI Crude extended its decline yet again. Overall, upside looks limited for S&P as prices have reached an important time zone for trend change in my view, having rallied 38.2% in time of the prior pullback while having retraced 61.8% in price terms. Breaks of 2790 would solidify this rally as having made a minor peak, suggesting weakness down to 2763-5. At present, it looks right to hold off on longs after the 200 point S&P move over the past seven days, and consider hedging and/or utilizing shorts for at least a minor "give-back" next week.

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EEM has shown evidence of failing to break out above the long-term downtrend from earlier this year, given the breakout in US Dollar yesterday. This is a negative in the near-term for Emerging markets for November, and anticipate weakness over the next 2-3 weeks before this can bottom out yet again. While the Dollar should be within a month of peaking out and turning down in 2019 technically, for now, additional rallies still look likely and this could serve as a detriment for Emerging markets this month. Bottom line, avoid adding to weakness in EEM right away, or consider shorting over the next couple weeks before a better risk/reward entry to buy appears. 

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Europe looks to have hit its first major resistance after having bottomed out near the key 3100 area in SX5E. Evidence of trend exhaustion is in place and it's likely that Europe stalls out and turns back lower. One can consider VGK, or FEZ as shorts, and/or EUFN, the Euro Banks ETF. Technically I expect a pullback over the next 3-5 days in SX5E, which could give up at least 50% of the bounce we've seen since late October.

Expect Stallout and Trend reversal by end of week

November 8, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2742-3, 2730

Resistance: 2817-9, 2825-7

LINK TO TECHNICAL WEBINAR from last Thursday: https://youtu.be/M0QTkufNncA

-Today's Technical webinar starts at 1pm EST-



SPX - (3-5 Days)- Expect stallout and Reversal between today and next Monday- Prices have moved too far too quickly. 2817-2825 stands out as being important for Thursday



EuroSTOXX 50- Mildly bullish- Look to sell into gains at 3275-3300 Thursday/Friday, expecting a stallout in Europe. Still expect European underperformance to US



HSCEI- Bullish, with a good likelihood of a rally up to 11100.



Trading Longs: PG, STZ, COST, DG, CCE, FDS, WMT, DIS, DISCA, CASY, PFE, ZTS



Trading Shorts: AN, KMX, MAS, ETN, JCI, LM, WDR, MS, FTNT, SWKS, WYNN, LVS, MGM, SGMS, HBI, GPS



S&P showed very strong one-day performance yesterday, exceeding the 61.8% level of the entire selloff from early October, on breadth of more than 3/1 positive. Consumer Discretionary, Healthcare, Technology all gained more than 2.5% while every sector except Consumer Staples managed to turn in performance of greater than 1%. While seemingly bullish price wise, indices have now gotten overbought on an intra-day basis while the weekly and monthly trends remain negatively sloped. While this appears like a very constructive comeback (and will start to make investors bullish again on the prospects of markets moving back to new highs), it looks to have happened a bit too quickly.



Specifically, both XLI and XLF, the two sectors which helped to jumpstart this rally, will show daily signs of Exhaustion on this bounce by Friday at the latest (most likely) Technology has managed to achieve a minor breakout just yesterday, but also is nearing an area where this likely faces some strong resistance into next week. Ideally, Stock indices would stall out and turn down for a minor 38-50% pullback of what's been gained since 10/26/9 before turning back up.



Outside of stocks, both the US Dollar and Treasury Yields turned down sharply after Election results revealed "no surprise" and the near certainty that gridlock would rule the political spectrum in the final two years of this presidency. Near-term, peaks in Treasury yields and in the US Dollar seem to be near. Yet, at present, there's no definite sell in either and by end of day, both yields and the Dollar had turned back higher, holding where they needed to. (One can make a stronger case that Yields hold former highs and peak out along with stocks in the next 2-3 days) Overall, with regards to equities, it's tough technically to think that Wednesday's surge should translate into an uninterrupted move back to highs. If anything, it's still highly likely (given the damage done from 9/20 into 10/26-9 that this proves to be a two steps forward/one step back type process. After a very big rally in recent days, it looks to be nearing that first important crossroads, and a near-term peak looks likely in the next 2-3 trading days.



ACTION PLAN- 



Taking profits in XLF and shorting at 27.50-.75

Taking profits in XLI and shorting 74-74.50

Long XLP with targets at 58.90

Long EUO, thinking that Euro decline continues in the days ahead w/ US Dollar breakout





Additional charts and thoughts below.

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S&P managed to recoup a bit over 62% of the prior drawdown from early October into Wednesday's close. As daily charts show above, Bollinger band resistance lies directly above, and intra-day momentum has gotten overbought as a result of the quick 175 point S&P move since 10/29. While this looks attractive in terms of a snapback, momentum remains negative on weekly charts, and short-term overbought conditions while the broader trend in breadth and momentum trends are negative is a concern towards thinking that prices extend too much more. Technically, we're nearing a 38.2% Fibonacci time retracement as of Thursday after 10 calendar days higher while having pulled back 26 calendar days from 10/3 into 10/29. Additional Gann based resistance shows this coming in on Thursday or Friday of this week, while Demark's 120, 180 and 240 minute charts show a confluence of counter-trend exhaustion. Bottom line, we should be close to a time when stocks stall out after this impressive price rally off the lows. Breadth as has been mentioned, really has not been all that impressive, outside of yesterday, so we'll continue to monitor this closely. But it looks wise to consider taking initial profits in the next 1-3 trading days and anticipate at least a minor reversal.

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HSCEI looks likely to be on the verge of a breakout of the entire downtrend from earlier this year, which should drive this higher up to 11100. While US and European stocks look to potentially peak out in the short-run, China might very well breakout near-term and outperform for 3-5 days before stalling out. However, this near-term outperformance should lead to the start to a larger bottoming out for China, and in particular in relation to US stocks. Near-term, FXI and CQQQ look like attractive risk/reward longs. 

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US 10-Year Treasury yields look to be closing in on their first real area of resistance near former peaks, and Demark TD Sell Setup should register exhaustion by this Friday. While yesterday's yield pullback provide premature, it looks likely that such a move very well might be in the cards for the weeks to come. One should look for yields to stall out into mid-November on the upside and one could consider buying Treasuries and/or TLT, while selling TBT in the next 3-5 trading days, particularly on a bit more yield strength.

Early Results show no "Blue Wave" materializing, suggesting no Election Surprise for Markets

November 7, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com

SPX Cash Index

Support: 2742-3, 2730, 2707-9, 2696-8

Resistance: 2763-5, 2773-5, 2781-2, 2791

LINK TO TECHNICAL WEBINAR from last Thursday: https://youtu.be/M0QTkufNncA


Early Election results show no real "Blue Wave" materializing as of 10pm Tuesday night



SPX - (3-5 Days)- Bullish- No change- Additional gains likely following the mid-term elections based purely on price action alone (without viewing poll results) Upside targets lie near 2782 and then 2791. Buy dips at 2730 and under near key support at 2707-10



EuroSTOXX 50- Mildly bearish- Yesterday's pullback to three-day lows suggests this bounce for Europe very well could prove complete. Gains possible up to 3275, Expect that Europe should largely still underperform US.



HSCEI- Bullish, with prices now up to make-or-break resistance with a realistic chance of breaking out in the days ahead. Over 10700 bullish for move up to 11100, and look go buy dips, provided prices don't break 10330



Trading Longs: PG, STZ, COST, DG, CCE, CME, ICE, FDS, SBUX, OLLI, SCVL, ROST, C, FITB, KEY, WMT, JWN, TBT, DIS, DISCA, CASY, PFE, ZTS



Trading Shorts: LM, WDR, MS, DUK, D, SO, NI, XLU, WYNN, LVS, MGM, SGMS, HBI, GPS



S&P trend still shows no real faults in the short run, and as of yesterday's close, managed to reach the highest levels since October 22. While breadth was only mildly positive at less than 2/1, the pattern has improved after the last few days of choppiness. Markets also showed all 11 sectors finishing positive, with both Technology and Financials managing to register gains of more than 0.50%. At present there still isn't much to suggest an imminent reversal technically with regards to either price, nor momentum, and price targets still lie marginally higher into end of week/early next, with S&P potentially reaching 2782 up to 2791 before any stalling out.



As mentioned in recent days, the success of both Financials and Industrials in recouping former lows was thought to be a very important technical development in two sectors which represent a combined 23+% of SPX. The growth vs. Value trade looks to have held former lows and stabilized, while the credit markets have stabilized quite a bit in the last two weeks. Overall, while Technology has been still somewhat shaky and less robust than we saw during the first part of 2018, other sectors seem to have stepped in and picked up the slack. Bottom line, where there are understandable worries about the degree of momentum damage having been done on the selloff into late October (and the resulting bounce hasn't been all that strong in turning breadth up that sharply) at present, it seems premature to fight the near-term uptrend. Heading into Wednesday, it looks wise to still have a long bias, using dips to buy.



ACTION PLAN- 



Long XLF, with targets near 27.50

Long KRE given pullback to Fall 2017 lows - Expect bounce to high 50s

Long XLI, looking to add over 70.67 for a move to 74.50-75

Long XLP with targets at 58.90

Long EUO, thinking that Euro decline continues in the days ahead w/ US Dollar breakout





Additional charts and thoughts below.

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NDX shows ongoing emerging base with initial breakout followed by minor consolidation & then yesterdays rally making some meaningful headway at a time when Election uncertainty ruled the day. However, still right to think Equities can trend higher with results showing no Election surprises, while trendwise, it's right to play for a move to 7300 at a minimum. This should go a long way towards helping Technology make a decent bounce into end of week. Only a pullback down under 6850 would postpone a further rally into end of week.

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Crude downtrend showing no real signs of exhaustion, and still right to bet on a pullback to near $60 or slightly below before a bottoming out in WTI Crude. While energy snapped back in recent days and has acted a bit better, the commodity remains under relentless pressure, and shows neither positive momentum divergence, nor counter-trend buys per Demark that would allow for a bounce to unfold. Therefore, additional pressure likely in Crude.

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Consumer Staples breakout argues for additional strength. Just in the last couple days, we've seen XLP breakout to the highest levels since early February. Daily charts can allow for at least another 3-5 days before peaking, and initial targets lie near 58 before this stalls and consolidates gains. But we've definitely seen a trend of the defensive Staples kicking into high gear lately, breaking out on both absolute and relative terms vs SPX. Stocks like CCE, PG, STZ, COST are all attractive and should be overweighted for further near-term gains. These stocks might be worth looking at, for those looking for Technology substitutes.

Market rally should continue, despite Election uncertainty

November 6, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2722-4, 2707-9, 2696-8, 2673

Resistance: 2743-5, 2751-2, 2763-5, 2773-5

LINK TO TECHNICAL WEBINAR from last Thursday: https://youtu.be/M0QTkufNncA



SPX - (3-5 Days)- Bullish- Expecting S&P move up to near 2775 following mid-term Election before any serious stalling out occurs. Yesterday's weakness was largely limited to Technology, and largely served to disguise the strength in other sectors. Buy dips at 2722 and a max near 2707-10



EuroSTOXX 50- Mildly Bullish-   Gains possible up to 3275, but expect that Europe could stall out, and should largely still underperform US. Insufficient evidence of weakness to avoid and near-term trend still positive



HSCEI- Bullish, looking to buy any pullbacks given the chance in the next 3-5 days. Movement back over 10700 a chance to press long bets as this would signal a larger breakout of the entire downtrend this year.



Trading Longs: DG, IIN, CI, CCE, EWZ, CME, ICE, FDS, SBUX, OLLI, SCVL, ROST, VZ, MCD, C, FITB, KEY, WMT, JWN, TBT, DIS, DISCA, CASY, PFE, ZTS



Trading Shorts: LM, WDR, MS, DUK, D, SO, NI, XLU, WYNN, LVS, MGM, SGMS, HBI, GPS, GILD, KMX, MNK, KMB, AMP



Stocks still look to be able to rise further despite some minor stalling out over the past few days prior to this week's Mid-term elections. Looking back, yesterday proved that technology does not necessarily have to work every day for stocks to be able to log decent gains. Trends have remained bullish since 10/26 and still look early to fade, despite the importance of mid-term elections. Momentum and breadth have been steadily rising, and yesterday's 1% gains out of 5 different sectors bodes well for additional strength on Election day and following into end of week, with targets near 2775 before any stalling out. Overall, Demark exhaustion is premature and prices are not all that overbought on daily charts, while still understandably weak on weekly and monthly. Yet, insufficient signs of weakness out of the NASDAQ yesterday were present to think this bounce has yet arrived at levels to sell.



Technology was definitely the weak link and most of "FANG" stocks fell off with NDX down an early 1%, yet rallied back sharply to only close lower by -0.50%. Meanwhile, Energy, Financials, Utilities, REITS and Staples all rose more than 1%. While the defensive tone to yesterday's move was more present than not, the huge gains in Financials helped this group break a six-month + downtrend in relative performance that still bodes well for Financials to advance in the days ahead. Thus, when casting some degree of skepticism at the degree of rally which has transpired, it's important to see Financials and Industrials both having broken back into prior ranges, a constructive development.



ACTION PLAN- 



Long XLF, with targets near 27.50

Long KRE given pullback to Fall 2017 lows - Expect bounce to high 50s

Long XLI, looking to add over 70.67 for a move to 74.50-75

Long EUO, thinking that Euro decline continues in the days ahead w/ US Dollar breakout





Additional charts and thoughts below.

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S&P- Rally yesterday given five sectors showing 1% gains or more is a positive development for stocks, despite technology not performing. Hourly charts for S&P show last week's breakout and then what appears to be a choppy few days of some overlapping price action. While under 2700 would be a negative for this chart, leading down to 2685, it looks more likely that the momentum continues and this can reach 2765-75 in the days ahead, which would then be used to trim longs, expecting consolidation. At present, this still looks very much premature. Use minor dips to 2722 to buy with more critical support at 2707-12 near the area of last week's breakout.

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Financials breakout bodes well for additional near-term strength in this group and is overall a positive for US stocks. Over the last few days, we've seen some compelling evidence of Financials starting to exhibit much better relative strength than they've shown in some time. XLF vs SPY as a ratio has exceeded the downtrend from April, and is early to peak out on this rally. Thus, the next 2-3 days should bring about even more Financials outperformance, and this group should be overweighted for further strength. Technically speaking the act of getting above a downtrend that's held for six months or longer typically will be quite the positive development towards thinking this group can rally further. 

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Technology still holding up well- Despite yesterday's huge underperformance by Tech, we still see constructive patterns at work in XLK, not dissimilar from what's transpired in SPX. XLK backed off just two days after the breakout of this one-month trend, and even on yesterday's weakness managed to close well off early lows, a constructive signal. Overall, it's still likely that Tech can hold and attempt a larger bounce than what's happened since last week. While this sector remains out of favor compared to ones like Healthcare, it's right to use Monday's late day rally to own XLK, expecting a rally back to test and exceed last weeks highs.

Three consecutive 1% gains for SPX still argue for strength, despite AAPL woes

November 2, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

SPX Cash index
SUPPORT-  2718-20, 2707-9, 2696-8, 2673
RESISTANCE- 2743-5, 2751-2, 2763-5, 2773-5


LINK TO TECHNICAL WEBINAR from yesterday: https://youtu.be/M0QTkufNncA

SPX - (3-5 Days)- Mildly Bullish- Still expecting that S&P should move up to 2745 with a maximum near 2765 before some consolidation sets in post mid-term Elections.  Use dips to buy Friday near area of the breakout near 2707-12

EuroSTOXX 50- Mildly Bullish-  Still expect Europe to underperform US, but 3100 looked to b very good near-term support for SX5E, so expect that Wednesday's end of month rally likely follows through a bit-  Long in small size, looking to add on weakness

HSCEI- Bullish OVER 10220, bearish under-  The last few weeks have been largely neutral and while it's looking increasingly likely that a low is close, it's necessary to see proof of the price strength. 

Trading Longs: IIN, CI, CCE, EWZ, CME, SBUX, ROST, NVDA, XLNX, TEAM, BABA, TLYS, FB, VICR, YEXT, TNDM, VZ, MCD, C, FITB, KEY, WMT, JWN, TBT, DIS, DISCA, CASY,  PFE

Trading Shorts:  DUK, D, SO, NI, XLU, WYNN, LVS, MGM, SGMS, HBI, K, GPS, GILD, KMX, MNK, KMB, AMP

 

Still difficult to fade this move in S&P despite the 100+ handles off the lows this week as we've seen some constructive price action and improvement in both breadth and momentum.   While AAPL dropped post close Thursday, futures dropped only temporarily and further into the evening as of 9pm were solidly back in the green, while NASDAQ had recouped most of its loss and was trading flat.  Until/unless we see S&P give back the area of its recent breakout, which lies at 2707-12, it's right to use any minor weakness to buy, expecting further strength into next week before any meaningful stalling out.

Overall though, this week's rebound has been a real success at a time when the market direly needed it.  The 3 back to back 1% days have only occurred on four other occasions in the last 10 years:  February and June 2016, October 2011 and May 2009.  Each of those occasions marked a chance to follow those rallies as all extended further , and were not a chance to sell into right away.  Technically speaking, this week's gains have exceeded the downtrend from early October along with having regained prior lows from early October, both bullish developments.  Additionally, momentum has begun to trend back higher sharply on a daily basis after having shown positive divergence in recent weeks and the price breakout helped this to start to rebound yet again.  We've seen Financials and Industrials both make convincing movement back over prior lows that were seen from this past Spring/Summer and both XLF and XLI look to have made false breakdowns that were immediately recouped.  Overall, While Friday might start out on the downside, it looks right to use weakness to buy dips after the 100+ S&P point move we've seen since early this week.  While weekly and monthly charts still have ample work to do to repair momentum, the Daily trend still appears like higher prices can happen into mid-term elections.  


 

ACTION PLAN-  

Long XLF, adding on close over 26.31
Long KRE given pullback to Fall 2017 lows - Expect bounce to high 50s
Long XLI, looking to add over 70.67 for a move to 74.50-75
Long EUO, thinking that Euro decline continues in the days ahead w/ US Dollar breakout



 

Additional charts and thoughts below.

S&P-  Still early to sell gains- Expect move to 2745-65 into early next week before stallout.  S&P has now recouped around 61.8% of the prior pullback from 10/17, yet still has not signaled that pullbacks are imminent.  Following three straight 1% days of gain, targets lie between 2745-2765 on this first move off the lows.  Then following consolidation, it's likely that additional gains occur.  For now, despite the post close AAPL decline, targets should still lie above near 2745, and tough to sell here expecting any meaningful pullback.  2707-12 is the true line in the sand, and until that's breached, it pays to stay long and buy dips.  

dips.gif

AAPL-  Post earnings decline should be buyable down to 206-  Under on a close postpones gains, and hold off til 195-200.   AAPL took up much of the post market attention as the announcement of no further unit numbers being announced resulted in a sharp decline post market, and AAPL fell down to this week's lows, near $206 in after market trading.  This will be a key level to hold for this stock given its weighting in many ETFs, and failure to immediately rebound back over 212 and/or any breach of 206 is likely to result in some near-term selling pressure for AAPL.  This would violate the near-term uptrend on daily charts, while the weekly charts have strong support down near 185, or another 10% down, which connects the longer-term uptrend from 2016.  Overall this stock has held up in much better fashion than most of its peers throughout the October pullback, so a minor decline post-earnings won't detract too meaningfully from its longer-term uptrend.  AAPL remains an outperformer and in better technical shape than stocks like AMZN or FB. 

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Sell Utilities-   Utilities look to have bounced to a key area to sell, when looking in relative terms of XLU vs SPX as shown on daily charts above.  This ratio broke down sharply in early 2018 when rates started to trend higher, and while choppy through most of this year, the pattern remains negative.   Given that US equities have begun to trend back higher in the near-term, along with Treasury yields still maintaining their own uptrend, it looks right to sell into the Utilities, expecting underperformance with stocks and bond yields moving up.   Utilities like DUK, D, NI, and SO are a few of the technically unattractive stocks to avoid at this time and/or consider shorting for aggressive traders.  Further weakness looks likely as this relative chart starts to turn back lower.   XLU getting under 52.80 should mark the start of a slow pullback to the high $40's.  

US Equity index breakout worth following into Election

November 1, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2707-9, 2673, 2626, 2600-3

Resistance: 2736-7, 2743-5, 2773-5

LINK TO TECHNICAL WEBINAR from last Thursday: 10/25- https://youtu.be/pk7vNaYq5-U



SPX - (3-5 Days)- Bullish- Long for a move up to 2745 and then 2773-5 into mid-term elections using any pullback Wed-Friday to cover shorts and buy dips. Support should materialize near area of the breakout near 2707-12 and should be good to buy weakness



EuroSTOXX 50- Mildly Bullish-  Still expect Europe to underperform US, but 3100 looked to b very good near-term support for SX5E, so expect that Wednesday's end of month rally likely follows through a bit- Long in small size, looking to add on weakness



HSCEI- Bullish OVER 10220, bearish under-  The last few weeks have been largely neutral and while it's looking increasingly likely that a low is close, it's necessary to see proof of the price strength. 



Trading Longs: CI, CCE, EWZ, CME, SBUX, NVDA, XLNX, TEAM, BABA, TLYS, FB, VICR, YEXT, IIN, TNDM, VZ, MCD, C, FITB, KEY, WMT, JWN, TBT, DIS, DISCA, CASY, PFE



Trading Shorts: K, GPS, GILD, XLU, KMX, MNK, SGMS, KMB, AMP

It looks right to be bullish on Equities in the short run, thinking yesterday's rise has the potential to continue. Wednesday's surge managed to successfully break out above near-term trendline resistance as well as exceed prior LOWS from 10/11 on the first move down. The combination of these developments is positive, and bodes well for further follow-through in the days ahead. Yesterday was the first sign of price confirming many of the bullish divergences in breadth and momentum that we'd been seeing in the last week and now should allow for at least a short-term healthy bounce into the mid-term Elections. While breadth came in only around 2/1 positive, we did see robust technical strength out of both Technology and Financials, the latter group which broke out above prior lows from this past Summer and broke out above minor downtrend lines. Given that sentiment had been overly pessimistic of late and seasonality remains very positive for this time of year into the mid-terms, long stances look correct, using any minor pullback Wednesday-Friday to buy dips. 



Overall, it's worthwhile to mention that markets failed to deliver any of the real capitulation which was thought necessary before turning higher. Equity put/call and TRIN both failed to deliver the kind of fear based readings that were seen back in February and April. Yet, near-term, this doesn't look to matter all that much, as price confirmation delivered the gains necessary to help indices likely extend. Charts below should help to put some of yesterday's gains into context. 





ACTION PLAN- 



Long XLF, adding on close over 26.31

Long KRE given pullback to Fall 2017 lows - Expect bounce to high 50s

Long XLI, looking to add over 70.67 for a move to 74.50-75

Long EUO, thinking that Euro decline continues in the days ahead w/ US Dollar breakout





Additional charts and thoughts below.

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NASDAQ managed to make a very bullish one-day rally Wednesday, exceeding the downtrend from early October (shown in red) along with getting back OVER prior lows made on October 11. The combination of these developments is quite constructive for a further rally in the days/weeks ahead. Upside targets lie near 7285-9 and then above near 7400, while any pullback n the days ahead should provide opportunities to buy dips provided that 6590 is not breached. For now, this should change the picture from near-term bearish to near-term bullish and a rally is expected into the Elections.  

elections.gif

Financials made a very impressive rebound indeed yesterday, not only exceeding the one-month downtrend from early October, but also recouping the prior trendline support that had held since February of this year. XLF specifically looks to have made five completed waves down from late September, which should set the stage for a near-term bottom in this decline. Overall, this likely should result in at least a healthy bounce in this group in the short run, as this recent deterioration looks to be fully recouped on the rally back above $26 in XLF. Overall, given that XLI and XLF both look similar, this looks like a positive development for US stocks in general in the days ahead

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Ratios of Growth vs Value which had shown signs of turning down from late September, now look to have reached initial support which can allow for this recent pullback to stabilize and likely turn higher. As daily charts of the IVW vs IVW show, this pullback in Growth has hit levels which were in place back in October and also July and May, making this a likely formidable level of support which needs to hold. Given the NASDAQ's reversal today back up OVER prior lows from early October, this index could very well take the lead and help Growth to rebound at a time when most have clearly given up. Note, the larger chart shows this consolidation in recent months as part of the longer-term uptrend, so additional deterioration will be necessary to truly "throw in the towel" on the growth trade. For now in the days/weeks ahead, it seems right to favor a growth rebound, and IVW is preferred over IVE.  

Lows look to be near- Movement Above 2707 is BULLISH for SPX

October 31, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: info@newtonadvisor.com

SPX Cash index
SUPPORT-  2623-5, 2615, 2589
RESISTANCE- 2707-12, 2722-4


LINK TO TECHNICAL WEBINAR from last Thursday: 10/25- https://youtu.be/pk7vNaYq5-U

SPX - (3-5 Days)- Mildly Bullish-  Increasingly thinking that lows might have been made on 10/26, despite no real capitulation in volume-  Small longs here, looking to add over 2707 on a close, and using any pullback Wed-Friday to cover shorts and buy dips.  Support 

EuroSTOXX 50- Mildly Bearish thinking that we'll need to get over 3200 to have any inkling that SX5E can rise, getting more constructive over 3282-  Still could churn near the lows for awhile longer, and much depends on other global indices turning higher, which might lead the way

HSCEI- Bullish OVER 10220, bearish under-  The last few weeks have been largely neutral and while it's looking increasingly likely that a low is close, it's necessary to see proof of the price strength. 

Trading Longs: NVDA, XLNX, TEAM, BABA, TLYS, FB, VICR, YEXT, IIN, TNDM, VZ, MCD, ZION, C, FITB, KEY, CME, WMT, JWN, TBT, DIS, DISCA, CASY,  PFE

Trading Shorts:  KMX, MNK,  SGMS, MRVL, MXIM, AVGO, KMB, AMP,  PH, VMC

 

Increasingly i'm thinking that indices might have made their low for this current decline on 10/26 and that a snapback rally is underway.   While movement OVER 2707 is necessary on a close for confirmation, we're seeing more and more evidence of positive breadth divergence, better momentum of late (gradual stabilization) and 5-wave declines having been made in XLF, XLI and good support in IWM near prior lows that's now starting to stabilize.

Additionally, many continue to mention the need for capitulation, something i've mentioned here countless times.  Yet, the more investors that come out of the woodwork suggesting this is a necessary ingredient, adds to the likelihood that this is priced in and we very well won't see it this time around.  Additionally, movement OVER 2707 would then result in a squeeze, as many have turned bearish in the last week, given understandably negative developments with momentum.   The media has gone out of their way to make sure the public understands this is the worst month for the NASDAQ since 2008, and increasingly the sentiment has gotten more and more subdued.   However,  a decline doesn't always materialize in a straight line, and we've seen definite signs of stabilization lately which could make further weakness become a definite buying opportunity for a larger bounce. Overall, trends are negative and a pullback on Wednesday/Thursday would not be a surprise whatsoever.  Yet the longer that indices hold here after the initial decline and fail to make further downside and begin to stabilize.  the more likely it is that a bounce gets underway, even if short-lived and leads to another retest in mid-November.  For now, the seasonality is quite positive ahead of mid-term Elections and is another factor to consider.  We'll be watching 2707 carefully in S&P and this time around, won't be as surprised if this area gives way  (which would turn the near-term trend back to bullish ) 
 

ACTION PLAN-  

Long XLF, adding on close over 26.31
Long KRE given pullback to Fall 2017 lows - Expect bounce to high 50s
Long XLI, looking to add over 70.67 for a move to 74.50-75
Long EUO, thinking that Euro decline continues in the days ahead w/ US Dollar breakout



 

Additional charts and thoughts below.

1.gif

S&P pattern is very much trending lower, yet the stabilization has built up in impressive fashion lately, and amidst all the talk of the "worst month for stocks in 10 years" we see increasing churning and a lack of downside progress lately that would match up with the degree to which bearish sentiment has started to rise.  Overall, there remains a very well defined area of risk for the bears at 2707 in S&P-  Getting over this would likely cause a fairly serious squeeze, as both Financials and Industrials have begun to act a bit better of late.   So while one can't rule out minor weakness Wednesday, and it certainly is still a bit premature to call this decline over from a price perspective, shorts should have tight stops and movement OVER 2707 would argue for upside acceleration at a time when many least expect it.   Bottom line, keep aware of the trend, and consider using dips to cover shorts and/or buy stocks of interest in small size for a bounce, looking to add on proof of this downtrend being exceeded.
 

Increasingly , both XLI and XLF look to have made 5-wave declines in the last week which should now give way to a sharp counter-trend rally.  While getting under the prior lows from this past Summer is definitely a negative technically, any bounce that gets back above has the potential to set off a squeeze that could carry XLI up to 73.50-74.  Overall, it's right to be not as bearish here given this structure and stabilization coupled with recent uptick in fear, despite the lack of capitulation.  Going forward, any bounce that gets back above these former Summer 2018 lows (now resistance) would be an important short-term technical bullish catalyst.

3.gif

Russell 2000 vs SPX has managed to stabilize near former lows, which is a temporary positive development after the selling we've seen since mid-September.  The ability to bounce more should be a real positive for stocks in the short run.