Please enable javascript in your browser to view this site!

Defensive strength likely to continue over next 2 weeks before stalling

May 1, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2926, 2916-8, 2900-2, 2892-3

Resistance: 2953-5, 2970-5, 3000-7



MondayTechnical Video 4/30/19 highlighting SPX, TNX, Transports

https://youtu.be/bKR39l8kmv0



Thursday Technical Webinar Link - 4/25/19

https://youtu.be/WMd1dvqN1Vg



Real Vision Interview: Healthcare- Monday 4/29/19

https://www.realvision.com/tv/videos/health-care-starting-to-bottom



Bloomberg Interview - Monday 4/29/19

https://www.bloomberg.com/news/videos/2019-04-29/oil-futures-are-headed-lower-between-now-and-september-mark-newton-says-video





I will be on CNBC Fast Money today 5/1 at 5;20-30 pm EST




SPX - (3-5 Days)- Bullish and yesterday's recovery should help indices make a final push higher above 3000 before a peak- Long barring a close under 2891. Above 2950 likely drives to 3040-70



EuroSTOXX 50- Bullish- Yesterdays' close cleared the 6 day range, paving the way for a move to 3600. Stops on longs at 3425



HSCEI- Mildly Bearish- Movement under 11467 drives down to 11177- Choppy trend oer the last few months, but largely bearish in the latter half of April



Trading Longs: CHD, ED, D, SEE, TMUS, SANM, FIS, MHK, BAC, C, V, IYT, LEN, KEX, GDX, NEM, ZTS, MYL, CAR, PCTY, WIX, TSCO, MAS, TRP, FLT, PCAR



Trading Shorts: BHGE, NOV, SLB, FOSL, WATT, AOS, MAT, SIG, CTXS, OSTK, EXPE



Some very interesting price action in recent weeks. Yesterday saw early weakness repelled with markets pushing back to near unchanged, but a very bullish move out of FInancials and Healthcare in recent days, which have led all other sectors over the last 5 days. Meanwhile, Technology has lagged a bit, given Semiconductor woes followed by yesterday's GOOGL and Samsung decline. AAPL earnings post market yesterday very well could help stocks extend gains further in trading on Wednesday, and despite some minor slowdown in Technology, we still haven't really seen that much of a dropoff.



Breadth came in only marginally positive yesterday and that's been a trend of late, along with momentum waning a bit. Yet even with stocks having pushed back to record highs, and overbought conditions prevalent with Exhaustion signals nearing completion again, it's tough to fight the tape, until proper evidence of weakness arises.



Key to note for Tuesday's trading: We've definitely begun to see some defensive trading take center stage, as Utilities, Staples and REITS all logged gains of more than 1% while Technology rose less than +0.25%. Absolute trends and relative have turned positive in the short run, though the intermediate-term have a bit of work to do before turning all that bullish.





ACTION PLAN- 



Long XLU with target at 61.50 and stops at 57.50 on a close



Long XLP with target at 58.90 and stops at 56.50



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



Sold XOP- and sold IYT which was stopped out Monday



Additional charts and thoughts below.

below.gif

S&P- Snapback rebound bodes well for additional near-term gains- S&P fell in early trading Tuesday, yet failed to break the near-term uptrend and countertrend Demark-based sells are premature by at least 2-5 trading days. One should consider this recent breakout in Financials as being important for the market and while we've seen a defensive tone lately, there hasn't been any real deterioration in Technology sufficient to consider the market weak at this stage. The minor waning in breadth and momentum is something to pay attention to, yet not something to consider making one sell until price proves that it's time.

time.gif

Consumer Staples -Bullish near-term breakout- XLP has managed to engineer a very bullish short-term move back over prior highs, which can allow for some defensive gains in the short run, and a likely period of near-term outperformance to SPX and to Consumer Discretionary. XLP looks likely to rise to 59.50-60 and should be favored for gains into mid-to-late May before selling into this.

Utilities -Short-term Bullish- Intermediate-term look to sell into this move above 60 in XLU- XLU made a similar move yesterday, notching the highest close since mid-March and could help this group outperform in the very near-term over the next 2-3 weeks of May with targets up near 61-61.50. While the intermediate-term trend for Utilities shows prices stalling out at levels just above into mid-to-late May, the near-term suggests this area is one to favor technically and overweight, with stocks like ED, D, ETR, SRE, NEE, AEP, XEL are likely to outperform near-term as a result of yesterday's gains. These should be considered as longs for those with a 2-3 week timeframe looking for stocks which might outperform.