April 11, 2018
S&P JUNE FUTURES (SPm8)
2635-8, 2622-4, 2606-8, 2584-7, 2552-4, 2532-4 Support
2666, 2676-9, 2688-9, 2708-10 Resistance
LINK TO TECHNICAL WEBINAR from Thursday 4/5- https://stme.in/tBobOtxUYL
SPX - (2-3 Days)- Bullish- Meaningful progress Tuesday, but Wed/Thursday could be more difficult until prices get over 2672-7, which is the area of upside importance. Remains correct to bet on an upside breakout of this recent consolidation and prices aren't yet at resistance, but expect the next few days could bring about some resolution for both Technology and Financials
SX5E- EuroSTOXX 50- Mildly bullish for another 2-3 days of gains, but stallout looks likely as prices near 3450-75 into end of week/early next. Bearish SX5E vs SPX and expect European weakness relatively speaking.
HSCEI- Bullish- Additional gains look likely up to 12811, near the 50% retracement and March highs. US Dollar downturn could serve to help prices stabilize now that HSCEI has reached February lows. Long here with upside near 12811 initially and over that near 13114.
Trading Longs: ORBK, ROL, WIX, MPC, SHOP, DDS, CAR, DBC, FXB, FXE, NDAQ, RHT, PM, SQ, TWTR, AKAM, FSLR, GOOS, FIS, TJX, STZ, SHAK
Trading Shorts: UUP, EUO, SIG, CRK, SLB, PCAR, FL, BBBY
Long SPY 261 with initial targets 267-8, with over leading to 275. Stops under 258.
Long DBC for commodity exposure- $16.94 with targets $17.85
Long GBPUSD (1.4123) for move to 1.4370, 1.50, and Long EURUSD 1.2324 for a rally up to 1.265
Long XRT 43.50-44.50 for a move in the weeks ahead up to 47
Long XME 33.50 to 34.50 for a move to 37
Long XLV 81.50 or better with targets near 85
Long XLP 52.83 up to 54.50
Long GLD 125-126 adding above 127 with targets initially 129.50, and stops 125
Tuesday's rally helped to add some conviction to the idea that stocks can move higher in the short run, and managed to successfully close up near the highs of the range, vs failing and closing lower like the prior two days. This bodes well for groups like Semiconductors within Technology and Financials to now make their own push higher and break out of key resistance. As noted in recent reports, both breadth and momentum has begun to turn higher in recent days, and we've seen some evidence of Technology making its first meaningful turn back higher relatively speaking since mid-March peaks which looks important. Overall, while some work needs to be done with regards to resolving this consolidation for S&P, technically yesterday's rally helped many of the charts start to look just a little bit better in the short run. Much work remains to be done to have any sort of hope that this will turn out to be more than just a temporary rally, and the longer-term momentum and trend at this point remain under pressure from mid-March highs. However, given the hit-and-run mentality that's a necessity given this new era of volatility, it still looks right to play for upside, and all eyes will be in Financials, Tech and upside resistance in SPX over the next few days.
One of the more interesting developments in the last few days concerns the sudden surge in Energy which saw ETFs like XLE, OIH and XOP all make meaningful short-term breakouts after nearly two months of sideways consolidation where Eenrgy stocks had all but ignored the move in WTI Crude. The ability in WTI to bottom out late last week and its strong rebound helped XLE hit new weekly highs, and quite a few stocks showed meaningful strength, such as COP, APC, MPC, HP, and some of this year's best performers are still the ones to own in the short run. Bottom line, this sector's bounce doesn't look complete, and right to selectively buy.
Additional charts and thoughts below.
Technology looks to be turning back higher, as relative charts of Tech/SPX have broken back up above downtrend that have guided these relative charts down since mid-March. This looks to be an important near-term positive that can allow for additional upside over the next week. While SOX has some work to do in breaking out above its own downtrend, this sector should be favored for a bounce in the days/week ahead. .
Financials have formed a similar pattern as S&P n the short run, and this consolidation is likely to allow for at least a minor breakout and move higher into mid-to-late April before any peak. Key areas of importance lie near $28 and the group should be favored for a breakout above this "Red line" highlighted above, and when this happens, XLF is likely to show some near-term acceleration higher. This Hourly chart shows the area of importance that should be watched carefully given the XLF's exposure within SPX.
Energy's breakout bodes well for some additional short-term strength out of this sector, as many stocks have begun to follow the bounce in Crude oil higher. Upside targets for XLE lie near $72 up to $72.75 which would be the first real area to consider lightening up into this rally by end of week/early next week. Overall, after many stocks showed Demark exhaustion along with ETFs in February, there wasn't much upside acceleration until the last week, when Energy finally began to rally to follow the move in WTI Crude.