April 30, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2926, 2916-8, 2900-2, 2892-3
Resistance: 2953-5, 2970-5, 3000
FridayTechnical Video 4/24/19 highlighting SPX, TNX, Transports
Thursday Technical Webinar Link - 4/25/19
My CNBC Interview on Disney and why shares are attractive 4/11/19
SPX - (3-5 Days)- Bullish barring a close under 2877. Upside target 2950- Above 2950 likely drives to 3040-70
EuroSTOXX 50- Bullish- Upside targets at 3600
HSCEI- Neutral- Some signs of stalling, but trend won't turn bearish until 11553 is violated
Trading Longs: BAC, C, V, IYT, LEN, KEX, GDX, NEM, ZTS, MYL, CAR, PCTY, WIX, TSCO, MAS, TRP, FLT, PCAR
Trading Shorts: PG, MAT, SIG, KR, GES, CTXS, OSTK, CI, MHK, WATT, EXPE
A few interesting developments as markets near the end of April. Financials have started to turn up in earnest, with the 2s/10s/ Yield curve breaking out to new steepening highs of the year. Small-caps have also performed well, with IWM breaking out above a fairly well defined base. Meanwhile, the Dollar's rally has thwarted some of the progress in the commodities space and Emerging markets while many of the Metals have turned up anyhow coinciding with the Treasury rally. Overall, in all likelihood, April will turn out to be a stellar month, with gains of more than 3%, marking the fourth straight months of gains, at a time when sentiment largely still hasn't totally embraced this rally.
Concerns of breadth deterioration, momentum waning a bit, and some violent sector rotation largely have had little to no effect in equities as of now. Demark exhaustion remains premature on daily and weekly charts. A few minor cycles hit near 5/1-2, but getting past this likely would result in further gains up to 5/16-7, which is an important area for trend change.
The concerns of recent Chinese deterioration along with Semiconductor weakness at a time when GOOGL looks to have whiffed on earnings, sending the stock down 3% after hours, while Samsung is showing weakness abroad this morning, could turn out to be problematic. Yet, these look to be largely counter-balanced by Healthcare strength and Small-cap relative strength. So for now a very strange and different market than that of January-March. Selectivity is key and it's thought that upside for S&P should be limited to near 3040-75, but yet at present, many are sounding a similar tune, and are skeptical that May can replicate what's been seen thus far this year . The movement in Financials and Tech should prove important, and for now both groups have been resilient of late.
Long XOP with near-term targets at 34.50, stops under 31.75
Long IYT with targets at 209; Stops under 195
Long XLF with targets at 28-28.50- Stops on daily closes under 26.90
Long XLB with targets at 61 and stops on daily closes under 56.80
Long IWM with targets at 162.50
Long Copper for a move up to 308-310
Additional charts and thoughts below.
Crude looks to be potentially peaking out as the uptrend from last December looks to be giving way. This should be watched carefully given that both Crude and Stocks both bottomed on Christmas Eve and now Crude is rolling over. Volatility based on OVX, the Crude Oil VIX, has turned up sharply all of a sudden after being cut in half since last November. Momentum has turned more bearish as well. Overall, near-term support might come in near 60 but rallies likely are to be faded and thinking that addiitonal losses could be in store.
China looks to be slowly but surely giving way at a time of Dollar strength and we've seen 6 of the last 7 days lower, which looks to pullback to test this uptrend from last year before any stabilization occurs. In the short run, the US Dollar breakout looks to have further upside, and it's likely that China's Shanghai Composite also weakens further, which might create some buying opportunities if this reaches 2900.
Alphabet ($GOOGL) (Google breakout failed to hold, and post market reversal could be important in providing a temporary Top. ) GOOGL had shown some decent technical strength into earnings, having risen more than 22% right near former highs. Monday's close actually got above the former highs from last July on a close, above 1285, but post earnings, has dipped back down below. Given that the option market had priced in a 3% move, the post market selling looks right in-line. If Monday's weakness cannot be recouped, this could have broader implications for Technology and produce a possible double-top for this stock. For now, this reversal looks isolated, but Tuesday's trading will be important to see whether Technology can shrug this off. Given last week's washout in Semiconductors, GOOGL decline very well might lead to additional Tech weakness.