April 2, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2854, 2840, 2820
Resistance: 2875-6, 2880, 2885-7
Monday 4/1 Mid-day Technical Video Link
Thursday 3/28 Technical Webinar Link
CNBC Fast money interview on FDX, Transports from Tuesday 3/19/19
SPX - (3-5 Days)- Mildly Bullish, expecting 2880-5 but raising stops to 2819 for longs on a closing basis. SPX looks close to making a near-term top, as counter-trend exhaustion is very close, within 2-3 days, while negative divergence is now present on this rise while Technology is close to resistance. For now, a mildly bullish stance is correct for the balance of this week, until more meaningful reversal gets underway.
EuroSTOXX 50- Mildly bullish- expecting 3425-3460 into next few days before a stallout and reversal. Stops on longs under 3325
HSCEI- Neutral- Prices have reached highs of one-month range, and while 11900 can't be ruled out. the risk/reward is not as good near-term. Under 11420 is a stop for longs
Trading Longs: COLM, UBNT, QSR, HEAR, ETSY, REGN, FB, AVGO, TSCO, HD, DHR, XOP, USO, FLT, PCAR
Trading Shorts: OSTK, CI, MHK, WATT, EXPE
Yesterday's surge carried S&P and DJIA to the highest levels since last Fall, while NASDAQ remained fractionally under last week's highs. Breadth came in nearly 3/1 bullish and Technology and FInancials both showed above-average strength, while Transports played catchup, as Industrials were higher by 2+%, helping the DJIA make a more convincingly bullish near-term breakout.
Overall, upside at this point seems rather limited in the short run given a 2% gain over the last three trading sessions. Specifically, we're beginning to see signs of negative momentum divergence while Counter-trend exhaustion is due by end of week. Additionally, Technology is now within striking distance of former peaks, and in dire need of relief from other sectors. Thus, while sentiment could turn a bit more positive on early week gains, the risk/reward of new longs from Tuesday-Friday is sub-par. While this doesn't bring about a chance to sell into gains for anything meaningful just yet (and any Tuesday weakness would actually be buyable), Im not expecting that strength is meaningful in getting above 2900, but likely stalls out at 2880-5 by Friday. Overall, i am entering Tuesday with a "mildly bullish" stance between now and Friday, though am not looking at initiating any new index longs, and will be looking to pare down longs into end of week this week on a bit more strength as a few more technical pieces come into place. For now, a selectively bullish stance is a must given the extent of recent gains and where indices lie.
Long XRT, targeting 47.50 with stops raised to 44.65
Long XLY with targets at 118 and stops raised to 113.50
Long XOP- Targets 32.50, stops raised to 30.35
Long FAANG stocks-AMZN and NFLX are catching up and target for NYFANG index (bloomberg is 2800 with stop at 2612
Long TLT- Target 127.5. Use this weakness to add to longs with stops under 123
Additional charts and thoughts below.
S&P not as great of a risk/reward near-term after it moved to close at the highest levels since last Fall. We're seeing some evidence of negative momentum divergnece and counter-trend exhaustion is now just 2-3 days away, which likely will create some near-term resistance and produce some kind of stalling out into end of week. Heading into Tuesday, after a 2% rise over the last 3 trading sessions, I'm not in favor of pressing longs and given the 60 and 120 minute confluence of Demark sells on intra-day charts, actually feel like Tuesday might prove to be a minor down session before prices push on to 2880. Upside at this point is a bit more limited than this time last week, but yet no definitive evidence of any reversals and yesterday's rally came on nearly 3/1 positive breadth with a strong move out of Financials and Technology. The right positioning seems to be to hold longs for now, but not initiate new longs in the indices, and one would use minor dips to buy on Tuesday with the thinking that a bit more upside can happen over the next 3-4 trading sessions.
Technology looks to be making its final "last-gasp" type rally which could send this back to former peaks, but it's thought that this group should stall out this week on further gains, and that upside should prove limited. The SOX chart i posted last week also has shown gains back over 1430 and within striking distance of highs made last March and June 2018 which should prove important. Bottom line, while the trend remains very much intact, one should look towards areas like Retailing, written about in the Weekly yesterday morning, vs looking to press bets in Technology. It's my opinion that this group should stall out, even if temporarily, by end of week, making gains good to sell into. As discussed, reasoning revolves around counter-trend sells along with prior peaks providing resistance.
After yet another round of Failed votes has thrown the BREXIT deal into further disarray, the Pound Sterling looks increasingly likely to turn back lower in the short run, after a number of weeks of stalling out after just a meager rally. While price action has been largely unchanged vs the US Dollar largely since the end of January, it's notable that recent lows failed to produce any meaningful buy signal from an exhaustion standpoint, similar to what happened at prior lows. Prices remain trending lower from last year and the risk/reward seems to favor selling the Pound as May sets to convene yet again Tuesday. A close under 1.3010 should cause selling down to 1.2785, while movement back higher over 1.3213 is needed to have any sort of confidence in a rise. Thus, the pattern near-term is quite mixed, and on weekly charts it looks more negative, in the next 3-5 weeks, as seen above. Movement down towards recent lows would offer more support to buy, vs thinking any meaningful upside is yet likely.