April 13, 2018
S&P JUNE FUTURES (SPm8)
2624-6, 2606-8, 2584-7, 2552-4, 2532-4 Support
2659-61, 2676-9, 2688-9, 2708-10 Resistance
LINK TO TECHNICAL WEBINAR from Thursday 4/5- https://stme.in/tBobOtxUYL
SPX - (2-3 Days)- Bullish- Thursday's lift to the highs of the recent range shows no signs of slowing this time around, and it's thought that higher prices are likely into next week. Initially a move over 2700 is likely before this comes to an end with ideal targets being near 2750-60.
SX5E- EuroSTOXX 50- Fractional upside possible, but should underperform the US on this rise and face resistance at 3400-3500.
HSCEI- Rally up to trendline resistance and move above 12500 would result in acceleration higher. Make-or-break on a 1-2 day basis-
Trading Longs: WYNN, VEEV, ROL, WIX, MPC, CAR, PLNT, DBC, FXB, NDAQ, SQ, TWTR, AKAM, TJX, STZ
Trading Shorts: VNQ, XLU, AZO, EXPE, TSCO, HOG, LUV, UUP, EUO, SIG, SLB, FL, BBBY
Long SPY with initial targets 267-8, with over leading to 275.
Long DBC for commodity exposure- $16.94 with targets $17.85
Long GBPUSD with targets1.4370, 1.50
Long XLK to 67.24 up to 68.20 in the next 2-3 days
Long XRT with target 47
Long XME with target 37
Long GLD 125-126 adding above 127 with targets initially 129.50, and stops 125
Short VNQ with expectations of a test of 72.65 and breach which could lead to 70
Short XLU with targets down at 47.88-48.25
Thursday's rally helped prices get back to the highs of the consolidation, and in the case of S&P and NASDAQ, above highs from earlier this week on a close, which bodes well for further upside into end of week/early next week before any peak. Given that Financials and Technology both led in trading and made meaningful "mini" breakouts of the prior range, it's thought that these groups combined have a >40% weighting in SPX,and should lead at least marginally higher. Bottom line, while its been right to fade movement to the highs of this consolidation in recent weeks, this time around shows signs of being able to extend, and long positions look correct technically, holding off on selling until prices get back up above 2700.
The Dollar bounced yesterday while Gold sold off sharply as yet another breakout attempt might have been put on hold. Key developments center on the US 10-Year Treasury note yield, which exceeded 2.81%, paving the way for a move up to 2.95%-3%. So a bond selloff looks to be underway and coincidentally, the ranges in both bond yields and Equities look to have been broken out of to the upside Thursday. Bottom line, it looks right to trust this move for now, and sell Treasuries /buy TBT for a move higher in the days/weeks ahead. German bund yields look close to also turning up and could begin to narrow the spread between Treasuries and Bunds. Upon hitting spread widths of 2.35-7, its right to sell Bunds vs Treasuries, expecting this to narrow.
Given the push up in yields, most yield sensitive stocks should underperform and its right to avoid and/or short XLU and VNQ and many of the constituent stocks within these ETFs. Both XLU and VNQ broke down under support while the relative charts to SPX also began to weaken.
Additional charts and thoughts below.
The QQQ, or NASDAQ 100 ETF, looks to have made a solid move back over the highs of the recent consolidation and should lead higher into early next week before any peak in price. Technical targets lie near $164 initially and then 167.
Treasury yields look to have achieved their own breakout yesterday, similar to what happened to equities in moving above the highs of the recent consolidation.. Movement up to near 2.90% looks possible and could be used as a chance to sell Treasuries, sell TLT, and/or buy TBT given a good likelihood of further yield gains in the days ahead.
The REITS along with Utiltiies look to be near-term sources of weakness given the Treasury yield breakout yesterday and the bond selloff likely coincides with yield sensitive stocks pulling back in the days ahead, showing underperformance vs the broader market. Relative charts of VNQ to SPX have violated uptrends from February as of yesterday's close, and this group should be avoided and/or considered as a possible area for technical shorts in the next 1-2 weeks as yields rise.