March 29, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2785, 2722, 2709-11
Resistance: 2860-2, 2871-2, 2885-7
Thursday 3/28 Technical Webinar Link
Wednesday 3/27 Mid-day Video discussing SPX Transports, Financials
CNBC Fast money interview on FDX, Transports from Tuesday 3/19/19
SPX - (3-5 Days)- Bullish, using 2785-9 as a stop for longs- Expecting 2860 should be challenged and exceeded this week before any top, as time remains a bit early for a top.
EuroSTOXX 50- Bullish- Upside targets for gains 3375-3425- Expect rallies into early April, but the break of the uptrend is a negative and rallies should be sold into late week. Under 3281 turns trend bearish
HSCEI- Minor bearish expecting former 11151 lows hold and allow for rally back to 11550-11600
Trading Longs: COLM, QSR, HEAR, ETSY, COP, HES, DVN, REGN, FB, AVGO, TSCO, LOW, HD, DRI, AAP, DHR, AGN, ALGN, XOP, USO, FLT, ISRG,PCAR, GDDY
Trading Shorts: HUM, CI, MHK, TRIP, OSTK, WATT, BWA, CE, EXPE
Yesterday's trading yet again proved to be a large non-event for Equities as the trading month and quarter comes to a close today with the 12.31% gains proving to be the largest quarterly gain since Q3 2009. This can't last in my opinion, yet we'll need to see a bit more to think stocks are turning down. SPX is largely at the same area it was back in early March nearly 3 weeks ago, with yesterday's 2815.44 close less than 4 ticks above levels hit 11 days ago. Technically, my opinion is that this slowdown should lead higher into next week and a "final" breakout of this range should result in a test and potentially a minor move above 2860-6 before a top into the end of the first week of April. For now, despite the breadth and momentum slowdown, it's premature to exit longs until weakness (on a close) dictates. So for the record, I DO expect a reversal in April , and DO feel that upside is limited. I just can't turn negative here given a real lack of bearish price action. The rotation thus far has helped to bail out the market, and this WFC CEO stepping down likely will help Wells outperform and at 6.7% of the XLF, likely is a positive force for Financials into end of Quarter today.
Outside of Equities the real mover, of course was the US Dollar, inching up again, albeit nearly Half a cent, strong enough to send GBPUSD and EURUSD breaking down, along with commodities and specifically Precious metals. My thinking is this should prove short-lived, though technically it's wrong to step in and fade the Dollars move just yet, as well as the weakness in Precious metals. For intermediate-term investors this washout should allow for a decent buying opportunity into April. For now, this is premature in my view.
Long XRT, targeting 47.50 initially with stops at 43
Long XLY with targets at 118 and stops at 111.25
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 TLT- Target 127.5. Stop 120.92
Additional charts and thoughts below.
S&P still is trading near levels that were seen 11 days ago, so this last few weeks has done little to nothing to the larger trend. As stated in previous notes, given that Demark exhaustion is premature and price has not weakened down under 2785, this looks to be a consolidation that still should be resolved by a move to the upside. Bottom line, it's still right to hold longs, expecting a challenge and move above 2866 before highs are in.
Gold sold off sharply yesterday as the Dollar's rally along with rates stabilizing caused some weakness in the Precious metals space. This erased nearly 80% of the move up in March. Overall, one should hold off on buying dips until 1280 and under this would result in a potentially final move to 1250-65 before this bottoms. Overall, this is looked to be a short-term decline only and the Dollar gains should prove short-lived and then rollover which is likely going to be a positive for Gold. Bottom line, hold off near-term on adding to Gold or Gold stocks, but there should be opportunity to buy into mid-April.
Homebuilders look to be able to extend after moving up sharply in recent days after this recent base. While housing data has been soft of late, technically this group has begun to reverse course and turn higher in recent days. One should consider having longs of some size in ITB, and looking to buy dips if given the chance in the days/weeks ahead.