August 30, 2018
Mark Newton CMT, Newton Advisors, LLC- Contact: firstname.lastname@example.org
S&P 500 ETF Trust SPDR (SPY)-
291.10, 290.3, 289, 288.50, 287 Support
291.16-19, 292.18, 292.88 Resistance
LINK TO TECHNICAL WEBINAR from last Thursday- https://www.youtube.com/watch?v=3gkpjm_QUZM&feature=youtu.be
SPX - (1-2 Days)- S&P now at upside target-2915-8- Reversal (based on my work) should be likely within 3-5 trading days- Avoid shorting without tight stops given the momentum, until prices reverse. Watch for evidence of any failure given Tech near resistance, as a sharp pullback between now and next week would be one to follow. Stops on longs at 2876- Risk/reward favors selling into gains, as Upside does appear limited
SX5E- EuroSTOXX 50- Mildly Bullish, One final thrust higher into Thursday/Friday looks correct, with rallies finding strong resistance at 3475--3525. Look to sell into this and/or short via FEZ, VGK into end of week. Unlikely that late July highs are exceeded, Movement uner 3404 should lead down to 3340 initially near late June lows.
HSCEI- Mildly bullish, but expecting no higher than 11350 before turning back down to challenge lows- Rallies should be sold into Friday on any push up above 11230.
Trading Longs: BIIB, ABMD, RP, EUO, MNST, NAV, LOGM, MPC, ANDV, VLO, C, KSU, UNP, INCY, HUBS, SAIL, NKTR, IDXX, SWN, GRMN, TOWR, TEAM, NEP
Trading Shorts: WDC, STX, MU, OC, MDP, NTCT, CQQQ, EEM, DBC, MHK, WHR, HIG, GT, HBI, BWA, LVS, CVS, AMBA, AVGO, SF, FEZ, VGK, DE, ITW
S&P has gotten up to what I believe should be a decent resistance target, so for aggressive traders, one can short with tight stops. For those who wish to wait for the reversal, a move down under 2876 is necessary before having conviction that a near-term peak is in place, and this might take between Aug 30-Sept 7. When this is confirmed, we should have a move down to 2800 at a minimum into Sept 19-21 and potentially into early October. Favor Defensives, Healthcare, Energy near-term, and avoid Technology and Industrials.
Overall, stocks moved higher into near-term targets for SPX and XLK, so now the waiting game begins. While Energy and Healthcare looks to extend on a relative basis, the near-term rally for many sectors might encounter resistance at these lofty levels. Aggressive traders can try to short S&P at 2916-19, but closes over 2925 stop out shorts and its proper to stand aside and just favor attractive stocks, and sectors like XLV, OIH, XOP, XLE until this Futures move runs its course. Any reversal at this point would be respected and needs to be watched out for carefully between now and Sept 7.
Demark signals are now within 2 days of being complete on SPX, NDX, CCMP, DJIA, IWM, SML, MID, for the first time since late January. While we've mentioned the possibility of these lining up quite a bit in recent days, they are important, as at least one piece of the puzzle, and should be respected if and when they're confirmed. Confirmation will take the form of price pulling back to new 4-day low closes and important to watch for. 180 and 240 min charts have just signaled these counter-trend signs of exhaustion and daily charts will likely have two in place by Friday. Overall, upside risk/reward is poor in the weeks ahead. Until this happens it's best to favor a mild DXY rally and look to sell EURUSD, EEM an most Emerging market currencies, while using the mild bounce in Treasury yields to buy Treasuries on the long end for what should be a crack of recent support at last week's lows.
Long XOP with targets at 45.50
Long XLU with targets at 55
Long XLV with targets at 95, 100
Long XLP with targets 54.60-55, Stop at 52.95
Looking to short XLK at 75.50-75.80
Short EURUSD with targets 1.15
Additional charts and thoughts below.
The Healthcare SPDR ETF, XLV has just pushed back to new all-time high territory as of last Friday and accelerated yesterday, which keeps this ETF in a positive near-term technical state. The act of following through vs finding resistance at former highs should likely allow for at least a bit more near-term technical strength before any reversal. Minor pullbacks that stall out near the base of the breakout should be buyable with targets up near $95 and then $100. Until XLV breaks its uptrend from late June, this sector should still show decent absolute performance, and on a broader market setback in September, this might hold up relatively better given the defensive Pharma sector.
Healthcare just in the last two weeks has made sufficient progress to exceed the entire relative downtrend from 2015. This could be a potentially very big development for Healthcare starting to show some above-average outperformance at a time when Technology could pullback into September. A break of a 3-year relative downtrend is impressive, and we saw outperformance from some of the laggard Biotechs today like ALXN, CELG which made impressive continuation follow-through moves. This sector was mentioned in the Annual Technical report as being one to favor for 2018, so fortunately this group managed to show decent enough strength to make it above the 3-year downtrend. Relative charts show XLV having pulled back after its huge rally from 2011 into 2015 and looks to have stabilized right near the base of the breakout. This has bullish implications for this sector, and looks like one to continue favoring and overweighting for relative and near-term absolute performance.
AMZN has now rallied nearly 8% in the last 8 trading days, or over 100 points to within striking distance of 2000 for the first time ever. Morgan Stanley helped this stock accelerate today with its target raise to 2500, and coincided with some of today's acceleratoin that helped the NDX along with the Consumer Discretionary sector given its weighting. Overall, technically, it's very difficult to avoid this stock, as we've seen over the last few years, but the MS upgrade seems ill-timed , largely on the extent that momentum is now as overbought as we've seen in nearly 20 years. After doubling in price since this bottomed last August, AMZN now is showing weekly RSI over 84 which historically has been a difficult time to consider buying the shares, despite the ongoing uptrend, since 2015. Of course, for those that can weather 15-20% corrections and buy more, one has survived in good shape. However, monthly RSI is now at an 89.5, the highest since 1999, from where the stock, along with countless others, fell into 2002/2003. Moving above its weekly and monthly Bollinger band makes this unattractive to consider, and a better area to buy lies near 1650, which is about 15% below current levels. The data below shows when RSI peaked on weekly charts and the resulting decline which in many cases, happened within 1-3 months and saw the stock lose 10-20% or more. There's no guarantee that this marks the peak, as there's been ZERO signs of weakness. But this stands out as being a technical warning sign that should be heeded in my view, and AMZN looks unlikely to have upside above 2020 into next week before the start of a correction.
7/31/15- 580 peak. One month later was trading 451 into late August
11/6/15- 675.. and 2/2/16- 474
9/30/16- 930 and then 11/11/16 traded down to 710
6/2/17- 1008 and then 9/29/17- 931
2/2/18- 1498 peak and then the following week down to 1265
3/9/18- 1617 and then fell to 1352 into April