June 12, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2892, 2880-2, 2873-4
Resistance: 2911-2, 2930-1, 2945-7
Tuesday Technical Video, discussing SPX and TNX
Link to 6/6/19 Technical Webinar: 20 min, covering SPX, DXY, Crude, Gold
Real Vision Interview, 6/3/19, discussing SPX, TNX stabilizing & moving higher
My CNBC interview from Thursday 5/29 on SPX, and 3 stocks to favor
SPX - (3-5 Days)- Bullish- Two straight days of stalling out, though this still isn't sufficient to call a Top, and Demark exhaustion is premature by 2-3 days. Stay long while using tight stops at 2880 for longs on a close while resistance likely comes in near 2930
EuroSTOXX 50- Bullish- Europe was more bullish than US yesterday and should continue between now and Thursday/Friday to 3411-3450 before stalling out. Support lies at 3341
HSCEI- Bullish- HSCEI likely to show 1-2 more days of gains, but a bottoming US Dollar could put pressure on this and gains to 10821 should be used to take profits. Under 10304 would drive decline.
Trading Longs: TNET, SWAV, NVTA, TPB, KHC, CSGP, FIS, TMO, DHR, AVLR, MNST
Trading Shorts: EEM, SYMC, WDC, STX, CHRW, SIG, ANF, URBN, XLC, FOSL, BBBY, GES, EMR
Markets definitely have begun to tire, in the short run, and we've now seen two straight days of pulling back materially from early highs. While there hasn't been sufficient weakness to think a top is in, breadth has been subpar and could remain that way the rest of the week before a larger stallout. Overall, Upside looks limited this week, and targets lie between 2930-45 to take profits and expect at least a 1-2 week pullback, which very well could get jumpstarted following the FOMC meeting.
Emerging markets have shown better than average strength in recent days, with bounces in EEM, ILF, EWW, EWZ and others. In the short run, the declining DOllar has largely been responsible for the bounce in EM, but this looks to be nearing completion in the short run after its recent big selloff. US Dollar likely should bottom out in the next 1-2 days, and I expect China and Emerging markets to selloff and underperform.
Max Targets for Sector ETF's before these stall out and turn lower
XLY-- Target 120
XLK-- Target $79.70
XLF- Target 27.90
XLI- Target $78.40
Long IHI, with targets at 240, stops under 221
Long XLF with initial targets at 28, with stops under 25.92
Long KRE with targets at 57 and stops under 51.41
Long XLU, targeting 61.25-61.50. Buy weakness at 58
Short XLC- expecting pullback to 44.50 and then a max near 43.70- stops at 47.05
Additional charts and thoughts below.
S&P has now pulled back for two straight days from intra-day highs, yet has barely made any real headway to the downside. Similar to yesterday's message, after 6% gains in 6 trading days, prices are getting stretched, but we'll need to see more to have any real conviction of prices turning down. Under 2880 would allow for minor weakness, but only a move under 2837 should result in a larger decline. Meanwhile, upside targets lie near 2830 up to 2845 and should be more likely than not, given the incomplete Demark signals coupled with ongoing uncertainty amidst a positive momentum trend. Yet, breadth has been very mild of late on this rally, and nearly flat for the last few days. This should be watched carefully in the days ahead for evidence of any negative breadth on gains, or other signs of Tech or Financials stalling after this bounce. For now, it's right to stay bullish, but yet proper to keep a close eye on the exits which i think could be prudent by end of week from a trading perspective.
EEM- Emerging Markets ETF- At resistance- Look to take profits- In the last week, we've seen signs of the Emerging market space outperforming as the Dollar has pulled back. This looks to be near completion, and US Dollar likely should bottom out technically in the next 1-2 days, with downside exhaustion very similar to the upside exhaustion now being seen in EEM. One should consider taking profits on EEM longs right as price is nearing the 50% retracement, and upside here should prove limited from 42-43 while on the downside, prices could very easily pullback to test recent lows in the high $30's. For now this looks like an appealing risk/reward trade to avoid/short for aggressive traders, but likely depends on the Dollar starting to bounce.
Crude oil starting to show evidence of stalling out, and pullbacks back down to recent lows look increasingly likely. Similar to Equities, the last 2-3 days in Crude have gone sideways, as part of this existing downtrend. Movement back up over 55 would be necessary to help this breakout, which for now, looks premature. Sector ETFs like XLE look similar and might weaken into next week on a pullback in Crude. For now, this recent outperformance in Energy looks like something to sell into and is not a bullish development.