April 25, 2018
S&P JUNE FUTURES (SPm8)
2684-6, 2662-4, 2655-6, 2636-7, 2620-1 Support
2718-20, 2724-6, 2747-50 Resistance
LINK TO TECHNICAL WEBINAR from last Thursday, 4/18/18- -https://stme.in/yadt92dtNf
SPX - (1-2 Days)- Bearish- The early rally failed and getting under 2657 turns the near-term trend down. While it was thought to start the week that prices should fall this week, i had held out hope given might hold up into 4/25, the market clearly had other plans and this drawdown in technology ended up metasticizing into other sectors. Im expecting a test and break of 2600 and likely challenge of February/April lows into early May, if not sooner
SX5E- EuroSTOXX 50- Bearish-Trend reversal looks imminent for Europe which rallied into its 61.8% retracement level of the prior decline from January, which coincidentally hits right at the flattened 200-day moving average, while TD SELL SETUPS are now complete per Daily charts. Pullbacks down to 3400-30 look likely initially.
HSCEI- Still Neutral short-term after churning near the lows for the last month. HSCEI requires a move back over 12450 to have a shot at a larger rally, which for now is subdued with prices locked in range-bound consolidation. Downside under 11850 would bring about a selloff.
Trading Longs: VXX, QID, GLD, DBC, SOXS, NDAQ, DXC, TWLO, GDX, PGR, AOS
Trading Shorts: MU, MCHP, SWKS, WDC, STX, SWKS, NTAP, IBM, TUP, SAFM, FDC, BEN, XRAY, DRQ, CMI, HSY, HOG, LUV, SIG, FL, BBBY
Short SPY from 265, with targets down at 256.
Long TLT from 117.50-118.25, with TBT having reached targets, expecting 10-Year Treasury yields to fall after the rise to 3%
Long DBC for commodity exposure- targeting $17.85
Short SMH with target 93.88-94.25
Awaiting entry on GBPUSD- Looking to buy 1.3785-.90 in 3-4 trading days- Had hit earlier target near 1.4370 and reversed sharply, so awaiting entry- No position
While it was thought that this week as a whole should be lower on a 3-5 day basis, the hourly divergences seemed to point towards strength on Tuesday. Well that happened but proved incredibly brief and the reversal breached key support of the last few days which caused some extreme acceleration down into end of day before just a minor bounce. S&P lost around 80 handles from 7 am until 2 before regaining 15, but trends are quite negative at this point on daily charts, and it looks wise to use any early strength to sell into, technically, expecting a test and possible break at this point of April lows.
Semiconductors continued lower after breaking April lows, and the FANG weakness resulted in Technology breaking trends vs the SPX which likely will serve as a headwind in the short run. While Financials were "less bad" and have been relatively holding up better given Treasury yields making a run on 3%, this group remains negatively sloped vs SPX relatively, and doesn't look ideal to pick lows in the Banks given a lack of real stabilization. The other shoe to drop came out of Industrials Tuesday with stocks like MAS, MMM, PCAR, CAT, LMT, ALK, DE, PH all falling more than 5% in Tuesday's trading alone. XLI has dropped down to test monthly lows which should be a real point of importance for Industrials over the next couple weeks. The defensive sectors managed a decent bounce yesterday, as this stock market weakness helped to spur the trend towards safety, and Telecom stocks in particular managed some good relative strength, while Utilities and REITS also bounced, despite no real rally in Treasuries.
The one change occurred with US Dollar reversing its recent strength on Tuesday, which resulted in precious metals rallying while Treasury yields look to be stalling out near 3% at a time when everyone unanimously is eyeing this as being psychologically important, and thinking that the rate rise is a key reason for equity weakness. Technically we've seen evidence over the last week that warned of a possibility of a stalling out given weaker than expected breadth and momentum on this bounce, while Semiconductor and Financials weakness served as a definite catalyst, sector-wise.
Additional charts and thoughts below.
S&P-Trend has begun to accelerate lower, indicating that the highs for this particular cycle are likely in, and weakness into end of month/early May is likely. Daily charts had already turned negative late last week on the initial weakness, so it looked to be just a matter of time before the entire trend started to weaken. One should utilize any intra-day strength Wednesday to lighten up on longs, adopt hedges, or consider shorting for the tactically aggressive, expecting an upcoming test of April lows. Given the bearish structure since late January, these might hold initially, but should give way to weakness down to near 2450 before any low of magnitude is in.
Technology looks to have broken down under the trend from mid-February, which could result in a serious headwind for Tech in the weeks ahead given its percentage weighting in the SPX of greater than 25%. The longer-term trend remains very much in effect, but relative charts show this trend break as having a good chance of violating April lows in the days/weeks ahead.
Transports breakout attempt ends in failure- The Decline yesterday in Airlines and Rails was quite damaging to the TRAN, and we've seen prices now pullback into this range which had been ongoing from mid-February. Resistance came in near the same levels that had been hit over the last couple months, just below 10850, and sets up for a pullback down to 10k-10100 over the next 2-3 weeks. Overall, this breakout failure does look important and negative in the short run, and it looks early to buy dips in the Trannies.