May 3, 2016
S&P JUNE FUTURES (SPm6)
2060-1, 2048-51, 2026-9 Support
2084-6, 2097, 2105-6, 2115-6 Resistance
S&P Futures: Short SPM6- (2086 closing stop-)-Last Friday's drop suggested that a minor pullback should be upon us, and Monday's gains did little to assauge those fears. Gains above 2086 would postpone any selloffwhile dropping under Monday's 2045 should bring about a test of 2026-30.
EuroSTOXX 50- Near-term bearish on the break to multi-day lows. Downside targets lie at 3043, then 3009, with a maximum pullback to near 2970.
Hang Seng China Enterprise index- Bearish- Break of two month trend suggests additional downside can happen in the next 3-5 days before any recovery.
Attractive Technical Risk/reward Longs
KO, TSN, PAY, GRMN, RIO, VALE, ESV, SGMS, SLM, PRAA, GILD, ETFC, NXPI, TXN, ADI, JOY, FIT, WB, FXI, VNTV, MRO, WMB, HES, APA, NAVI, SWN, LGND, MDT, KMB, SBUX, SAFM, BCR, BSX, DVN, ELLI, MSFT, NKE
Bullish, but extended- Buy Pullbacks- X, MBT, AEM, NEM, FCX, GDX, GG, TRXC, EBF, DG, CHD, OC, PM, MCD, AVGO, SONC, POOL
Attractive Technical Risk/reward Shorts: TRIP, MAT, GT, RHI, ANF, GPS, HTZ, CF, SPLS, USG, AWI, WDAY, CIEN, QLIK, LC, SQ, DF, ADS, BBBY, MNK, P, RL, CROX, FOSL, HOG, MYL
Futures managed to completely reverse course and grind higher on Monday, recouping the area of the breakdown and leaving the Bears little wiggle room on thoughts of any impending decline. At current levels there lies just a thin margin to sell into this, with S&P futures having key resistance at 2085 with movement above 2086 being thought of as constructive. AAII sentiment remains quite bearish given this past week's reading which showed more Bears than Bulls, and this, coupled with the quick rise in the Equity put/call ratio, could have suggested that selloffs should prove minimal
For now, the US Dollar decline continued, though both WTI Crude and the Metals pulled back sharply from early morning highs. Given the degree of non-commercial long positioning in these groups lately, further gains might very well prove short-lived, and a chance to sell into rallies.
Treasury yield gains are one reason to have given the pullback in stocks last Friday a healthy degree of skepticism,, as both TNX and SPX have trended very well together, while Crude has lost some of its correlation in recent weeks. (See WTI's ascent from near $40 back on 4/18 while the NASDAQ peaked out and lost 5% in short order. Gains look possible in yield terms, while the 5/30 curve looks to be on the verge of a larger breakout.
Charts and comments below.
S&P near-term pattern remains bearish under 2085, so Monday's bounce should be a chance to sell into gains, thinking that a minor pullback is upon us. Gains back over 2086 would open up the possibility of a larger advance happening right away back to new highs, and should lead up to 2094. If/when this is exceeded, prices likely move back to new high territory.
NDX got down to key support near its Ichimoku cloud on Monday, formed a counter-trend TD Buy Setup and then promptly reversed last Friday's decline. Given that this index took the lead in turning down, it will be important to see the extent of the bounce attempt in the days ahead.
Apple (AAPL-$92.96) now lies near key lows from both late January of this year along with last August, which can't afford to be breached without leading to a much larger selloff in the weeks ahead. AAPL was one of the important laggards within Hardware of late, so it's important for this to show a sharp bounce and recover 112 to have hopes of AAPL beginning some outperformance. For now, this area is important.
The US Dollar index woes are partly due to the Euro gaining ground, and as seen, structurally this remains in very good shape technically and could rally further up to near 1.17 before reversing course.
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