March 12, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2771-3, 2759-60, 2729-31, 2705-10
Resistance: 2795-6, 2808-10, 2816-8
Monday Technical Video
REPLAY LINK: Thursday 3/7/19 Technical Webinar
SPX - (3-5 Days)- Bullish- The act of getting back above prior week's lows at 2767-72 along with surpassing trendline resistance should produce a lift to test and exceed March highs. Breadth proved to be far stronger yesterday on the upside than any of the down days last week.
EuroSTOXX 50- Minor bullish on Monday's rebound- Gains to 3350 look possible, with movement up over 3375 needed to create meaningful strength.
HSCEI- Mildly bullish- Snapback rally likely to echo what happened in the US, Europe, with gains to 11500- above would allow for rally to 11775
Trading Longs: AAPL, FB, GOOGL, DG, DECK, FTS, DKS, CPRT, USO, XLK, PNW
Trading Shorts: HAE, HBI, DVA, EXPE, TRIP, CTSH
Monday's sharp rebound was sufficient to think that a rally is now underway which should exceed March highs, pushing higher into late March/early April before any stalling out. (and could potentially challenge last Fall's highs) Breadth expanded substantially on yesterday's move to nearly 4/1 bullish, and we saw both Technology and Financials gain ground by at least 1%. In total, 8 sectors out of 11 were up 1%+ on the session, and we saw important rebounds in both Semiconductor and Retail stocks, which had been under serious pressure in the last week.
Overall, the act of getting back up OVER 2772 for S&P Futures and above 2767.66 in SPX cash along with NDX-7073, NASDAQ Comp 7501, is thought to be a very bullish development. S&P exceeded the downtrend from last week, and did so on a very encouraging move in Technology, with the so-called "FAANG" stocks like AAPL, FB and GOOGL all making meaningfully positive breakouts in Monday's trading.
It was thought that technically the trend was bearish until 2772 could be surpassed, and that happened yesterday. Prices had neared the lower Bollinger band (2% Std Dev) and yesterday's breadth was far more positive on the upside than any of the negative days seen last week. Sentiment wise, we'd seen a contraction in bullish sentiment on just a minimal pullback, something which was thought to limit any further drawdown. Thus, while it was thought that a correction could be upon us last week, it appears to have been incredibly short-lived for now and has gotten back up above areas that alleviate short-term concern.
Long FAANG stocks- FB, GOOGL, AAPL, AMZN, NFLX, thinking additional upside is likely for this group and could begin to outperform after a long consolidation
Long XLU- Upside target 58.80, with stops under 56.25
Additional charts and thoughts below.
S&P- Further gains likely to exceed March highs - S&P rally yesterday accomplished two positive things technically. Prices moved back up above 2772 which had marked last Monday's lows. Additionally, prices broke out above the minor downtrend in place since last week. This is thought to allow for a further rally to challenge and surpass March highs. While momentum remains negatively sloped on daily charts, it's positive on a weekly basis, and we've seen a breakout in the popular FANG group which has a heavy weighting in Technology and Discretionary. It's thought that yesterday's move might lead to a rally into late March/early April before a peak.
Technology's "FAANG" group should rally further in the days/weeks ahead- NY FANG index on Daily charts managed to completely reverse the breakdown seen last week. Furthermore, prices exceeded the downtrend which has been in place since early last year. This looks to be important and positive (often the false moves can produce bigger snapback rallies than the breakouts themselves, as short-covering and technical buying starts to chase the breakouts ) Overall, stocks like FB, AAPL and GOOGL all look to have broken out above meaningful resistance yesterday, while AMZN, NFLX are well positioned for such a move, but still basing at this time. Overweights look prudent given the degree of the consolidation since last year which now looks to have led this group higher and broken out as of Monday's 3/11 advance.
POT stocks look bullish for further gains following Monday's rebound.The "Pot" stocks, judged by the BI Global Cannabis Competitive Peers index, which includes 99 different companies, made a sharp rebound yesterday that managed to recoup former lows and close out near the highs of the day. Additional gains look likely here to challenge the trend near 225, making this pattern out to be a triangle pattern that could offer upside in the weeks ahead, as opposed to have failed in its movement higher. Overall, i see higher prices in this group, and it's not wrong technically to consider diversifying and playing for further gains.