March 20, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2830-1, 2824, 2808-9, 2800-2
Resistance: 2838-40, 2845, 2852-3
Note: I will be flying to China today 3/20 for a conference i was invited to speak at, which will last until next Tuesday 3/26. I will make the utmost attempts at continuing to generate actionable content and deliver it as i am able and as the connection allows. Thanks for your patience and any unintentional service interruption.
Replay Link- Tuesday Technical Video- covering SPX, XLF, IYT, XOP
CNBC Fast money interview on FDX, Transports from Tuesday 3/19/19
Replay Link-Thursday 3/14/19 Technical Webinar
SPX - (3-5 Days)- Still bullish into late March-Buy Wed-Thursday weakness- Under ES_F 2829 (2821-SPX cash) would allow for 2-3 day pullback, but should be bought with a push higher into late March/early April likely- Still premature for larger peak
EuroSTOXX 50- Bullish- Trendline breakout from last January is a positive for Europe. No evidence of exhaustion yet- Expect movement to 3475-3500 before peak unfolds over the next 3-5 trading days- Buy weakness
HSCEI- no change- Mildly bullish- Movement up to 11862-94 likely which is a 50% retracement of entire pullback from last year's peak
Trading Longs: DHR, HUM, AGN, CI, ALGN, BAC, GS, LNC, WFC, XOP, USO, FLT, ISRG, DXCM, PCAR, GDDY,
Trading Shorts: MHK, TRIP, BBBY, OSTK, WATT, BWA, CE, EXPE
Late weakness resulted in indices giving back earlier gains, but does this turn the trend negative? My thinking is that more needs to be done to prove that markets are peaking out, particularly when Energy and Financials along with Healthcare have joined forces to help Technology. None of the Demark exhaustion indicators are yet lined up and prices failed to even take out the prior days lows.
However, technically one can make the statement that markets are close to a near-term top, given the combination of near-term lagging in some of the leading sectors like Transports. (This sector was thought to be trying to emerge, but Tuesday's 1% down day in this group along with a likely poor showing from FDX certainly will not help this situation Furthermore, Gann-based cycles related to turning points of former highs and lows which project to late March/early April based on angles of the circle suggest we are approaching an important time. (Given decent breadth and better participation, i'm apt to believe this will prove short-term in nature) For those keeping track, this coming week marks a perfect 6 month anniversary to the September 2018 peaks, along with a 3 month anniversary to December. Additionally we see that several of the tuns from November also point to this time in March. Thus, we have a confluence of 90, 120, 135, 180 days from a former turn, along with being an important seasonal time of change (which WD Gann often wrote about) My thinking is that when exhaustion signals line up over the next week, this would have the effect of causing near-term peaks in price, allowing for minor weakness before additional upside occurs.
Specifically, as will be shown below, the resurgence in Healthcare looks promising to join Financials and Energy, while Transports are more bearish, and their lagging might persist with FDX woes in Wednesday's trading..Overall, I am expecting some kind of a peak in price between now and the end of March. Until there is sufficient signs of prices turning down to make new multi-day lows, it won't pay to bet too aggressively on when this has arrived based on other metrics, as price tends to rule all. Investors, if intermediate-term in nature, might utilize further rallies to 2860-70 to lighten up and/or consider hedging, while for traders, keeping a keen eye on breadth and reversal patterns in the indices is of utmost importance.
Long XOP- Crude's advance should lead XOP higher to near 32.50 and its thought that this ETF challenges and breaks out of the consolidation since late January. Stops under 29.75
Long FAANG stocks- though with thinking that AMZN and NFLX make more near-term progress than FB and GOOGL.
Long KRE- Expect a push higher to test 57.64 into early April and above would be bullish for an advance into 60- Stops under 54.65
Long IYT- Target 192.25 initially- Stop 184.50
Long TLT- Target 124. Stop 120.92
Additional charts and thoughts below.
Fed-Ex (FDX) looks to be turning down to retest early March lows given its after hours decline post earnings. (167 Important) This stock's breakdown under the 2 year channel looked negative and the resulting 20% bounce since December really has not helped to improve its structure significantly. (NOte the monthly chart- Not shown, shows 150 as a perfect 50% retracement to the entire 10year rally and important) For near-term purposes, Wednesday-Friday weakness would need to hold above 167, near early March lows. Under would take FDX back down to challenge 150, a more important spot for this stock on an intermediate-term basis. To have real confidence that this can snapback, FDX requires a reversal Wednesday from early lows and turn back higher to take out 187 in the days/weeks ahead. Above that lies 208 and until this is exceeded, this stock likely could continue to lag performance, similar to other Air Freight and Airlines. As mentioned on CNBC yesterday, the Rails are the favored area within Transports, specifically CSX and KSU.
Transports had appeared yesterday like they might be on the verge of starting to make a larger move higher. Tuesdays selling postponed that, and this very well could be postponed further given FDX weakness after hours, which has sent this stock down to near $172. Given the negative week in Transports two weeks ago, the weekly chart remains under pressure and barring an immediate move back to monthly highs, suggests that this group's lagging might persist into April/May. To have faith of the Transport rally continuing, we'll need to see movement back up to 10700 and above which would warrant a bullish stance to 11k-11250. Until then, the combination of yesterday and today's possible weakness suggests this recent underperformance might not end all that quickly.
XLV, the Healthcare Select Sector SPDR ETF, looks to be well positioned for further gains after yesterday's gains back to multi-day highs. This comes at a much needed time when other sectors could join to help take the weight off of Technology alone to do the heavy lifting. Daily charts show February highs to be important, and above that should allow for a further push higher to $95.50-$96. Stocks recommended as near-term technical bullish picks include HUM, CI, AGN, and ALGN.