November 21, 2018
Mark Newton CMT, Newton Advisors, LLC
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.
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.
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.
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.