November 27, 2018
Mark Newton CMT, Newton Advisors, LLC
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.
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.
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.
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.
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.