January 30, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2622-3, 2612-3, 2606
Resistance: 2672-5, 2685-7, 2700
Tuesday Technical Video- SPX, TNX and Gold
REPLAY LINK: Last ThursdayTechnical Webinar- 15 min
SPX - (3-5 Days)- Bullish- Still willing to bet higher for markets given Triangle pattern in S&P and AAPL post earnings 6% jump, which likely helps Technology on Wednesday into FOMC.
EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls. Under 3094 necessary to change this trend.
HSCEI- Stallout looks likely up at 11000-11100 in next 3-5 days. Prices have moved a long way very quickly since early Jan, but this area has had significance since last July and has to be respected. For now, Trend won't be bearish unless 10550 is undercut but one should sell into 11100
Trading Longs: HCA, ROKU, DATA, EVBG, CCI, VTR, WELL, PLD, FOX, NOW, TECK, ARNA, MRK, LLY, REGN, RH, TWTR
Trading Shorts: ILMN, VOD, AMGN, PCAR, OLED, IWM, CE, ROP, GWW, SWK, AAL
Equities managed to largely shrug off early losses yesterday, still finishing within their Triangle patterns, and despite weakness in Technology, this very well could be recouped by bullish AAPL and AMD movement into today's trading. Near-term, it still looks right to bet on a bit higher prices. While breadth and momentum have stalled noticeably,, there still hasn't been any meaningful decline to jumpstart any real selloff in equities.
It's worthwhile to note that NONE of the bearish news events, be it a Govt Shutdown, China, nor the FOMC, have served to derail this recent bounce. Even bearish earnings news out of NVDA and CAT couldn't take down Stocks. Meanwhile good news last night out of AAPL and AMD looks to be helping these stocks and very well could help to lead Tech higher. Thus, it always pays to note when bad news doesn't work, while Good news does.
While the area at 2670-2715 overall is quite important for SPX, there hasn't been any real bearish reversals yet to suggest it's right to be short. Thus, bearish opinions might be served better by owning implied volatlity into the month of February. For sectors to favor, one can turn to the REITS, and to Gold stocks (though extended now, and better to wait for pullbacks (See below))
Long SPY with stops 259.96, expecting possible rallies back to 268.50-270
Long Crude oil with movement up to $55-56 likely
Long VNQ for REIT exposure- near-term target $83.50, but over should drive to 90
Additional charts and thoughts below.
S&P Triangle very much still intact and yesterday's early weakness held where it should have before attempting to push back higher. Near-term, we'll focus on 2671-2 as important on the upside (unchanged from yesterday) while support near 2622 is key and then 2612. It's thought that bullish earnings from both AAPL and AMD very well might help the ailing Tech sector at a time when this is sorely needed after recent Semiconductor weakness. Overall, patterns of these sorts (HOURLY CHART) typically do get resolved by a push higher and it's worthwhile not turning too bearish too quickly on the idea of stocks stalling out (even though momentum has definitely stalled) until prices confirm some type of reversal and turn back lower under 2612 at a minimum. Until then, it might pay to bet on a last ditch push up into 2710-5 before a more meaningful stallout occurs.
Gold stocks have proven to be one of the strongest groups in rallying off the lows from last September, just at a time that the broader equity market was peaking out. Rallies this week in the GDX, the VanEck Vectors Gold Miners ETF shows prices getting over prior lows from the last two years, which is a very encouraging development for the Mining stocks. Near-term, there doesn't look to be a lot of upside however, as prices are now well above the upper Bollinger and will register counter-trend Sells within the next 2-3 days potentially. However, dips should be used to buy, as structurally the miners have improved in recent weeks, and given the negative correlation with stocks from October to January, might be an area to consider for those wishing to diversify away from groups like Technology this year.
AAPL was higher by 6% in the after market following earnings and forecast suggesting some much needed stabilization after the company's stock lost about 1/3 of its market value since October. The decline from October occurred at nearly an exact 1x1 Price/time aspect, falling 90 points in 90 days time to hit 142. While arithmetic charts showed this level not to be all that meaningful outside of a 61.8% Fibonacci level from 2016 (and meaningful trendline down near 120) the logarithmic charts on a monthly basis showed this to be quite important. Often viewing monthly charts on a log basis gives some much needed insight. In this case, the stock had fallen to exactly a key level intersected by the rising trendline from 2016. Now post close, AAPL has bounced to over 163 (if these gains hold ) Heading into the days and weeks ahead, it looks unlikely that the stock will get immediately up over 170, so this bounce might prove to be an initial level to sell for traders, with technical targets found above its 50-day moving average but just under 170 on this first rebound. Longer-term, momentum will need to stabilize a bit to suggest anything more than just a short-term bounce. However, providing this holds this trendline, a more meaningful rally could take place between now and September of this year before peaking.