May 2, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2913-5, 2900-2, 2892-3
Resistance: 2944-5, 2953-5, 2970-5, 3000-7
Tuesday Technical Video 5/1/19 highlighting SPX, TNX, Transports
CNBC interview, Wednesday, 5/1/19- Is Healthcare Bottoming?
Real Vision Interview: Healthcare- Monday 4/29/19
Bloomberg Interview - Monday 4/29/19
SPX - (3-5 Days)- Bullish and still believe markets can move higher, with yesterday's pullback failing to break any meaningful support, with breadth only proving mildly negative. Long barring a close under 2891. Above 2950 likely drives to 3040-70
EuroSTOXX 50- Bullish- Recent strength paves the way for a move to 3600. Stops on longs at 3425
HSCEI- Mildly Bearish- No change- 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
The pullback yesterday failed to break support to think markets need to decline right away. Yesterday's weakness, interestingly enough, was largely in Energy, with Discretionary, Materials, Staples and Utilities all losing ground and dropping more than 1% on the day. Given recent strength in the Defensives, one could argue some backing and filling was necessary, but no meaningful weakness has happened and these are still more likely to recover and trade higher.
Breadth came in less than 2/1 negative, while trendline support from the last couple months remains very much intact. If and when we see a breakdown under this level, it will be right to think a near-term pullback has begun. If this is going to happen, it should happen over the next couple days given yesterday's reversal. Holding on here shifts the weight towards 5/16-8 before any top.
Post FOMC, we saw a mild rally in Indices, then a selloff, and price action got progressively worse during the day. Yields had taken the lead in turning down sharply, and even on the brief post FOMC meeting bounce, Financials were not participating, but then reacted even more negatively when the Yield curve turned down sharply. Overall, ,the burden of proof remains on the Bears to prove themselves after recent success.
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
Additional charts and thoughts below.
S&P- Pullback failed to break support to expect any decline. Post FOMC, stock futures rallied initially, then tanked, but failed to violate the uptrend intact over the last couple months. To have any expectation of a larger decline, the area near 2900 has to be broken and ideally, 2891 which is stated below.
Financials- Near-term strength has brought Financials back to a key area where breakouts can happen. The existing downtrend for this group has lasted since last January's highs. Given the strength in the last few months, prices are now back to testing this key level. Movement above would be one to follow and chase, as it would represent the first real breakout for this group in over a year. Stay tuned.
Healthcare- Bullish Seasonality getting underway-The last 5 years have seen above-average strength between May and July within Healthcare, with July proving the strongest. Each of these three months has averaged more than 1%. Thus, not only has Healthcare begun to stabilize and turn higher, but seasonality and also poltiical factors support this group.