April 19, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2900-2, 2892-3, 2872-7
Resistance: 2915-7, 2923-5, 2945-9
Note : No regular report today given Good Friday holiday for NYSE, so I wanted to show a few charts of Europe and Dollar that were encouraging. Have a good holiday weekend for those celebrating, and we'll resume next Monday morning with the weekly report
Thursday Technical Webinar Link - 4/11/19
My CNBC Interview on Disney and why shares are attractive 4/11/19
Bloomberg Interview Monday 4/8- Natural Gas turning higher
SPX - (3-5 Days)- Bullish barring a break of 2900- Gradual waning, which is largely Healthcare related, but Tech, Financials and Industrials are all still positive and ETF's of these sectors have moved to new highs for 2019 and in the case for XLK and XLY, new all-time highs. Above 2915 is bullish for a move up to 2945-9. Under 2877 important for the bear case.
EuroSTOXX 50- Bullish- Europe has been stronger than SPX lately and move up to 3600 likely
HSCEI- Bullish- Movement back to the highs now looks to result in further strength near-term and right to be long and buy minor dips. Under 11423 is negative for further weakness
Trading Longs: WIX, HRS, PEP, KO, TSCO, TEAM, FCX, LYB, CMCSA, MAS, TRP, QSR, THD, DHR, XOP, USO, FLT, PCAR
Trading Shorts: SIG, KR, GES, CTXS, OSTK, CI, MHK, WATT, EXPE
Looking back at last week, we saw some promising developments with XLY, XLK pushing back to new high territory while XLI moved back to new 2019 highs. The NASDAQ 100 actually pushed up and made a new all-time closing high while DJIA, CCMP & SPX are promising in this regard that new highs can likely happen sometime this year. Healthcare has been the big laggard in recent weeks, showing a rather capitulatory decline and indeed important at 13.3% the second largest sector for SPX. For now though, the strength in sectors like Industrials and Financials have helped to bail out Technology, which itself has not been all that weak of late. Overall, insufficient weakness this past week to be all that negative heading into late April from a price perspective, but sentiment is sounding a clear warning now in getting very optimistic and something to watch carefully.
Looking abroad, Europe has rebounded in a very strong fashion in recent days, with DAX recovering its damaging technical position, while indices like SXXP and SX5E have both made promising near-term breakouts. As discussed in recent reports, the monthly momentum breakdown globally will be problematic this coming Fall and into next year. However, near-term, the strength of this comeback since December 2018 has been remarkable and something which for now has been a rally unable to fade, outside of picking spots to try to sell into (which I've tried a couple times in recent months)
Outside of equities, the commodities rally has proven difficult to trust given the US Dollar strength, which managed to build last week (and will be highlighted briefly below) Meanwhile, Treasury yields attempted a brief bounce last week, but yet held exactly where they needed to (on US 10YR ) before softening on Wed/Thursday. The Yield curve meanwhile has shown little to no real evidence of breaking the neutral consolidation that has been in place most of this year.
I'll list a couple European indices with brief comments and then the US Dollar chart which is growing increasingly stronger in recent days. Have a nice holiday weekend, and my technical coverage will resume with the Weekly Technical Perspective on Monday morning.
Long XLF with targets at 28-28.50
Long XLB with targets at 61 and stops on daily closes under 56.80
Short IWM for a move down to 151 from 155.2- Stops above 157.4
Long Copper for a move up to 308-310
Additional charts and thoughts below.
SX5E, the STOXX50, is important to highlight given that Europe has moved up at a slightly quicker rate than US lately. Its breakout a couple months ago of the larger downtrend was seen as constructive, technically, and after a few weeks of consolidation, started to turn back higher sharply. Near-term this remains quite bullish with not much resistance until near 3600. Therefore, this remains a tough index to fade on gains right now, and Europe, similar to the US, is still quite bullish technically, with little to no real technical damage since it bottomed last December.
The DAX, or German Boerse, has made remarkable progress lately in getting back up above not only former lows like the SPX and other US indices have, but also in now exceeding the larger downtrend from the highs made in early 2018. This is a very positive near-term development. So, despite being near-term overbought, the pattern has gotten structurally better for DAX technically and should be able to carry this higher to 12750-13000 without too much trouble.
The Dollar should be on the verge of a larger move given the constricted trading in recent months, and given the downward bias of the 8 year cycle from 2016 highs, i had thought this would start to trend lower. Well the near-term technicals have actually been quite bullish for USD lately, so it's important not to get too negative too soon and let this move play out. Any rally above March highs that takes out this intermediate-term trend will let this pattern push higher into the Summer, which could be near-term damaging for EM , China and commodities before a larger bottom.