April 26, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2916-8, 2900-2, 2891-2, 2873-4
Resistance: 2945-9, 2953-5
Thursday Technical Webinar Link - 4/25/19- 20 min Market Analysis
My CNBC interview Thursday 4/25 on AMZN, MSFT, AAPL GOOGL and which i prefer
My CNBC Interview on Disney and why shares are attractive 4/11/19
SPX - (3-5 Days)- Bullish barring a close under 2873. Upside target 2945-50
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: IYT, LEN, LSTR, R, KEX, GDX, NEM, ZTS, VRTX, A, MYL, CAR, PCTY, HES, WHD, XOP, USO, WIX, TSCO, MAS, TRP, FLT, PCAR
Trading Shorts: PG, MAT, SIG, KR, GES, CTXS, OSTK, CI, MHK, WATT, EXPE
Consolidation was the theme for Thursday's trading, but just by a minor amount, but volume picked up for SPY to the highest we've seen in over 3 sessions and breadth was negative by roughly a 3/2 margin. Treasuries saw some backing and filling to prior day's gains, while the Dollar was largely unchanged. The key movement concerned gains back into Healthcare, which has been ongoing for the last few days, while Industrials suffered given big losses in MMM along with UPS and FDX
Given Technology strength, the rebound in Healthcare, and Transports breaking out (outside of Thursday's mild pullback) it still looks likely that SPX has a date with 2945-50 into next week. The period near 5/1-2 looks to have importance as a possible period for a turn, time-wise, but otherwise, we just haven't seen sufficient deterioration in SPX to warrant a bearish stance.
Demark signals have largely proven inconsistent with indices on daily charts, and new counts have begun, while the weekly counts are still very much premature by roughly 3 weeks, so no real exhaustion exists currently, and that window from early April ended up producing little to no real turn. It will pay to keep a close eye on Technology, and Financials with Yields having turned down. Specifically post market on Thursday, we saw a decline in the Chip stocks in after market trading post Intel's full year revenue forecast Cut. So stocks like NVDA, AMD and INTC could likely all still open up down to start trading Friday. However, until the SOX actually breaks support and we see real weakness in Equity index prices, most of this bad news hasn't had much effect on price.. yet. Stay tuned.
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.
SPX still looks to push higher as pullback attempts have proven futile and short-lived intra-day. Tuesday's gains proved to be the biggest of the week thus far in what otherwise has amounted to very tight range-bound trading for the SPX which largely began in early April. Overall, movement down under 2891 on a close would arouse suspicion, and then 2873 is important also as support. Barring any movement under these levels, minor intra-day weakness should be buyable and closes over 2936 should have 10-15 points of upside near-term.
Healthcare bounce underway. The rebound this week in Healthcare was something we discussed on yesterday's Webinar call (link above) and is considered a mean reversion bounce after a huge period of underperformance over the prior couple months. (This of course followed very GOOD performance last year, so we saw classic mean reversion also to start 2019 with the top performing sector like Healthcare being sold to start the year.) This oversold bounce has key resistance near 89.80 or about $1.50 higher. Over that level would allow for a larger rally to commence for Healthcare, which fits nicely into a seasonal period of strength for this group. Pharmaceutical stocks look particularly attractive to own for gains and any slowdown in the broader market rally normally turns attention towards this more defensive part of Healthcare for outperformance.
Industrials pullback should be nearing support within 1-2 days. While this sector was the market's biggest decliner on Thursday, with outsized losses out of MMM, UPS, ROK, MAS, WAB, each falling more than 6%, both absolute charts of XLI along with relative charts of the Equal-weighted Industrials complex (SPXEWIN index-Bloomberg) vs SPX look to be near support. We had covered the Transports in prior emails discussing how this was a positive move and likely to carry Industrials higher. Yesterday's reversal in the group thus far looks likely to prove short lived for now, with MMM and UPS both near key levels after big declines on Thursday. However, it's worth watching relative charts of Industrials if in fact this starts to breakdown vs SPX and violate this ongoing uptrend. That would be a possible sign of further deterioration that could hurt the broader market.