March 29, 2018
S&P JUNE FUTURES (SPm8)
2585-7, 2561-8, 2546-8 Support
2627-32, 2662-5, 2675-7, 2797 Resistance
LINK TO TECHNICAL WEBINAR from Thursday 3/22- https://stme.in/ErK5Yc2zM
SPX - (2-3 Days)- Bearish- Still looks early to abandon a bearish stance, S&P likely has one final pullback (on this current decline) down to 2561-8 area, and would look to cover shorts into this early next week. Use bounces to sell, unless 2634 is exceeded on an hourly close, which would postpone an immediate decline.
SX5E- EuroSTOXX 50- Bearish- Prices have attempted to hold February lows, yet the counts are not in place for any kind of low. Therefore, one should still hold off on trying to pick bottoms here and expect a final pullback down to near 3170 near the 50% level of the rally from 2016 which should be an excellent area to buy dips.
HSCEI- Bearish- Looks like a complete retest of February lows can occur, so 11679 is the area to consider covering shorts
Trading Longs: FIVE, VICR, LULU, VNM, EWM, TLT, TWTR,
Trading Shorts: FB, DB, CS, SLB, SYY, GGP, BBBY, XLI, ITA,SIG, PCAR, EZU, FEZ
Short IWM 150.31, with targets 147-148.50 in the next 3-5 days
Short SPY 259.83 with targets 255-6
Short XLI 73.22 with targets 71.95, then 71.50
Short IYT with targets 179.50-180
Long EURUSD 1.2276 to 1.23 with targets 1.2650 and stops 1.2240
Long GLD 125-126 adding above 127 with targets initially 129.50, and stops 125
Short EZU with targets at 42, then 41.70
Long TLT with targets 122.50
It still looks early to abandon a bearish stance, and while it was right to consider covering some shorts early on Wednesday, by end of day, the multiple rally attempts had all failed, and SPX and most indices literally sat churning near lows for most of the day. This kind of consolidation is not indicative of a strong trading low, and more often then not, requires a final flush which should be used to cover shorts over the next next 4-6 trading days into early April. S&P likely will attempt a larger retest of February lows into early next week before any snapback rally, and its' right to play for 2561-8 area in June futures as being a near-term support target where possible stabilization might happen while a larger decline leading to rapid acceleration to test 2532 lows from February 9.
Overall, after the sharp bounce into Tuesday, the subsequent late day pullback failed to bring momentum back to oversold levels. Yet, signs of fear still look to be lacking, and no outsized volume into declining vs advancing issues. Many are hoping for recent weakness back to the lows to hold the 200-day ma for SPX, yet the price action doesn't seem as capitulatory, and yesterday's churning near the lows all day was seen technically as more of a warning sign than a low developing. Markets likely need to see sharp rebounds by some of the key FANG names that have outperformed during this prior uptrend, and stocks like FB and AMZN don't yet look to be on the best footing. (FB in particular still looks to weaken down to near 145 before any real low in place. Outside this group, ETF's in XLI and XLF in particularly have not shown the sufficient downside counter-trend exhaustion to call for a low of any sort. Yet, weakness into early next week would in fact raise fear levels, while bringing about the kind of Demark TD Countdown signals that would warrant taking a stab at buying. For now, it's still premature and extreme selectivity is needed when trying to fight this downside volatility.
Additional charts and thoughts below.
The NY FANG index is down to what could be near-term support to buy dips. However, much of this looks to revolve around AMZN, and GOOGL, the latter which has sold off to near February lows, vs thinking FB, and/or NFLX are at any type of meaningful bottom This Ichimoku Cloud chart however, does seem to suggest support in this daily chart, while a TD Buy Setup (9 consecutive closes under the lows of the close from four prior) is now in place, right at the level of the trend from last Fall. This might at a minimum, allow the FANG basket to stabilize and try to turn higher, and one should watch this carefully in the days ahead. While the price action in the indices seems to warrant more weakness, if it is selective while Technology can outperform, this would give a decent signal to the possibility of an upcoming turn back higher.
Both XLI and XLF give some compelling reasons as to why it remains a bit early to consider buying dips on this equity pullback. Patterns have not been convincing of any sort of low at hand and further weakness looks probable which should test $72, or even $71.50 in XLI before any real low. Demark Countdowns show a current 11 count, which should lead to pullbacks to new weekly lows before any sort of low likely is at hand into next week. For now, this churning isn't seen as bullish price action.
OIH- The Oil services ETF by VanEck Vectors made a fairly important breakdown yesterday which still argues for a bit more weakness in this sector, as the minor trend from early February was violated as of yesterday's close. TD signals remain at least 2-3 days away, so this structural weakness likely will follow-through a bit in the upcoming days into next week before any sort of low. Pattern-wise, this lackadaisical consolidation in the last month looks completely different from WTI Crude, this divergence likely could lead to WTI peaking out sometime in the next few months and following suit to what Energy stocks have done of late. Looking back at this pattern since last Fall, the severe downturn violated this uptrend from August and churned sideways before today's breakdown, which likely leads to additional weakness. Bottom line, this still looks premature to consider buying Energy, and yesterday's breakdown looks like a negative, technically.