February 12, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2683-5, 2662-5,
Resistance: 2744-7, 2752-5, 2759-60
Monday Mid-day Technical Video
REPLAY LINK: Thursday Feb 7 Technical Webinar
SPX - (3-5 Days)- Bullish- Likely that S&P bounces after last week's minor Wed-Thursday drawdown. Resistance lies from 2745-60 to sell into
EuroSTOXX 50- Mildly Bullish- Likely bounces to complete Demark counts before this sells off
HSCEI- Stallout likely after test of last Sept highs. Trend won't be bearish unless 10770 is undercut.
Trading Longs: WMGI, NSC, CRM, INSP, CSCO
Trading Shorts: TLRY, EEM, MEOH, FLR, CVS
Overall, the lightest trading day of 2019 resulted in indices largely closing unchanged on the day, pulling back roughly 15 handles from earlier highs yet not doing hardly any real damage by yesterday's close. Near-term it still looks likely that prices can push higher to 2745-60, as last week's minor pullback on Wed-Thurs failed to make much headway lower. Momentum has slowed a bit, yet insufficient weakness has been seen to think prices need to go immediately lower. Demark counts still require about 3 days before forming counter-trend sells that might indicate a larger decline can happen.
In the short run, Transports, Technology both look to have another few days of upside, and until/unless 2680 is breached, it's still likely that additional upside can happen. The biggest development from yesterday centered not on Equities, but on currency movement as the US Dollar's gains pushed higher in a way that suggest additional Emerging market and commodity weakness.
Short EEM- Expect pullback in Emerging markets
Short DBC- Expect pullback in Commodities in the weeks ahead
Long QQQ -Targets 175 but would look for evidence of near-term overbought conditions once 173 is hit. Stops under 167.3-
Long XLK with target 69, stops under 64.25 -Never quite got to target and now lower
Looking to short VNQ at 85
Additional charts and thoughts below.
S&P looks to be trying to stabilize after just a couple minor down days last week. Rallies to challenge last week's highs looks likely given this minor stabilization, and something that could briefly get above, near 2745-2760 into late this week. Over the next couple days, gains look more likely than losses.
IYT, the Transportation ETF, made a very decisive breakout type move yesterday that carried up over the highs of the last week to the highest levels since late last year. While the larger downtrend has not yet been surpassed, yesterday's move should allow for further near-term strength in Transports. Stocks like NSC, UNP and CSX look to all be able to make additional gains, and IYT also looks like a technical long.
BBDXY, the Bloomberg Dollar index has now made one of the largest gains in the last 6 trading days than has occurred in the last couple years. Near-term trends remain bullish as part of what's thought to be a larger intermediate-term Topping pattern for the Dollar. Between now and end of February it looks like additional gains can happen in the US Dollar. Breakdowns in EURUSD below support happened yesterday while GBPUSD also extended recent losses. USDJPY rallied above recent highs despite Japan being closed on holiday. Thus, US Dollar still looks to extent gains vs the Majors and this move likely allows for EEM weakness along with commodity weakness (DBC)