March 15, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2808-9, 2800-2, 2782-5
Resistance: 2821, 2830-2
Replay Link- Thursday 3/14/19 Technical Webinar
SPX - (3-5 Days)- Bullish- Quad-week seasonality continues to suggest higher prices into early next week and both Tech and Financials are still showing strength. Rallies over 2821 should reach 2830-5. Buy dips at 2808-10.
EuroSTOXX 50- Mildly bullish- Expecting some stallout at 3365-70 but Demark signals are present now right at trendline resistance from last year, so the area from 3365-3400 could present some resistance between now and early next week
HSCEI- Mildly bullish- Still right to expect a small push, though doubtful prices get back above 11890 right away. Under 11284 is negative. Until this happens, it's right to stay long-
Trading Longs: FLT, ISRG, DXCM, DHR, GOOGL, PCAR, GDDY, FTS, CPRT, USO, XLK, PNW
Trading Shorts: MHK, VMC, BWA, ROST, CE, OSTK, WATT, K, HBI, EXPE, TRIP
Tough to read too much into Thursday's stalling out. S&P had managed to exceed March highs on a closing and intra-day basis Wednesday, while the NASDAQ remains elevated above its upper 2% Standard Deviation Bollinger band, though both still quite bullish in the short run. This stalling didn't produce any real decline in the sectors that truly matter for this market, that being Technology and Financials (34.11% combined in SPX) The only sector giving up more than -0.50% was Materials which accounts for just 2.66% of SPX. Overall, with no evidence of prior days lows being broken and Technology's run continuing, its right to still favor further gains. As discussed in recent days, the "FAANG" stocks such as FB, AAPL, AMZN, NFLX, GOOGL, are likely to make further progress despite some of the bad news hurting FB Thursday early on.
Interestingly enough, two sectors thought to be important to markets continuing higher have begun to outperform in the rolling 5 days: Financials and Healthcare. The latter was discussed yesterday morning with Services stocks bouncing, and below we'll take a look at Financials.
Outside of stocks, Treasury yields remain pointed lower, The Dollar has attempted to rally, while Crude oil remains pointed higher towards $61-$63 and Gold looks to be turning back lower for at least a mild correction. Charts of Pound Sterling remain constructive near-term, while the EURUSD bounce looks fadeable for a pullback down to 1.115.
Overall with regards to risk assets, still not too much troublesome in the near-term, and it still looks likely that stocks push higher into end of month.
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 KRE- Expect a push higher to test 57.64 into early April and above would be bullish for an advance into 60
Long IYT- Expect that Wednesday's stabilization in the Airlines in the wake of bad news is a positive for this group and the technical minor breakout in Transports follows through
Long TLT- Expect a push up to 124 initially and potentially higher
Additional charts and thoughts below.
S&P likely to turn higher Friday after just a minor blip in yesterday's trading. As daily charts show, after having made new intra-day and closing highs on Wednesday, yesterday's minor weakness which failed to even take out prior lows shouldn't be paid too much attention. Seasonal trends tend to favor strength through Quad-witching followed by potentially a down week next week. For now, not too much to suggest "down" just yet, so we'll still lean long, expecting a push back to new highs for the week.
Those who utilize counter-trend signals like Demark's exhaustion indicators TD Sequential and TD Combo see that stocks like AAPL currently have an 11 count out of a possible 13, indicating that further strength is likely in this before it fades. Near-term targets should lie near the 50% retracement of this decline, or 187.83, with not much standing in the way of prices pushing up a bit more into next week. Given the % weightings in many indices and sectors, this alone might serve as a tailwind for stocks until early next week.
Don't look now, but Financials have stabilized in recent days and have begun to outperform in the last 5 trading sessions, showing outperformance to the broader market, as XLF has begun to push higher. Following the last month of weakness within Financials, this group looks to be slowly but surely trying to bottom out. Relative charts of XLF to SPX show counter-trend BUYs now in place using TD Sequential, the same indicator that suggested this group might be on the verge of weakening in late January. Overall, when groups like Financials start to play catchup, it's still worth holding longs, as Technology and Financials together represnet over 1/3 of the SPX. Overall this is one factor that is a clear "arrow in the quiver" for Bulls that could keep the rally going a bit longer than most expect.