June 14, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2884-5, 2873-4, 2867, 2853-5
Resistance: 2897-9, 2911-2, 2930-1
Link to Yesterday's Technical Webinar, discussing SPX, TNX, Crude, Gold and more
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- Thursday's gains should lead to a move back to new weekly highs into FOMC before markets reverse. For now, bullish with stops on daily close under 2874 and upside target between 2930-45.
EuroSTOXX 50- Bullish- Europe rally should continue between now and early next week to 3411-3450 before stalling out. Support lies at 3341
HSCEI- Bearish- Rollover in Emerging markets is affecting China and HSCEI and pullbacks to minor new lows are anticipated over next 1-2 weeks before this bottoms. Under 10288 should lead to pullback to 10067, an area to cover shorts and buy.
Trading Longs: MCD, ETSY, SMAR, PLAN, WEC, CMS, SO, PNW, ROKU, TNDM, TNET, SWAV, NVTA, TPB, KHC, CSGP, FIS, TMO, DHR, AVLR,
Trading Shorts: SIG, WLL, APA, XEC, HP, CXO, EEM, SYMC, WDC, STX, CHRW, ANF, URBN, XLC, FOSL, BBBY, GES, EMR
US and European markets continued higher Thursday, extending gains and making further strength Friday into next Monday likely before a stallout. ETF's listed below like XLY, XLK, XLF, and XLI all have targets directly above, and show similar signs of pending exhaustion that will be in place on minor new highs, which could come about as early as Friday. It's thought that the FOMC decision next week could be a turning point for indices, as these meetings often can be pivotal for markets. In this case, breadth has been rising, though not as sharply as during previous rallies, and it's thought that this week's sideways activity Monday-Wednesday has caused an ever so slight dip in momentum, which should make any move back up above 2915 likely prove short-lived into FOMC before a pullback into the OPEC meeting 6/25. For Friday, further gains still look likely, and it's right to be bullish.
One item of concern is the degree to which stocks and bonds are now rallying in tandem. This has occurred at various times throughout history, and largely was the case back in March of this year. Yet, given that yields and stocks have trended together more recently in the month of May, this recent divergence likely could mean that one of these moves is wrong. Technically speaking, Treasuries still look to continue higher near-term with yield targets at 2.06 down to 2.00% into next week's FOMC. For Equities, a bit higher prices also looks right, with 2930-45 a definite potential once SPX gets back over 2915. Technically one can make a good case for selling into the stock and bond rally on a bit more strength over the next week. For Treasuries, a few methods point to possible intermediate-term lows in yield being made in mid-June. For stocks, a short-term correction is possible into 6/24-5, but likely would be buyable. Stay tuned.
Max Targets for Sector ETF's before these stall out and turn lower
XLY-- Target 120.50
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
Additional charts and thoughts below.
S&P Trend still short-term bullish and move back above 2915 likely into FOMC- Looking at this week, the SPX sideways motion has now begun to turn back higher, based on Thursday's gains, and still looks early to turn bearish. While this week's sideways range has taken a toll on short-term momentum, prices failed to turn down sufficiently to think the market had begun to rollover. Movement up to 2915 likely and over to 2930-45 which would be an area to sell into if reached Friday into next Tuesday. At present, bullish stance is preferred.
US 10-Year Treasury yields look to be rolling over yet again and a TNX pullback to 2.00-2.06% is likely into the FOMC meeting next week before Treasury yields attempt a more serious intermediate-term low. Over the next 3-5 days, long positions in Treasuries are preferred, along with TLT, but movement back to new lows in yield would warrant taking profits and reversing this, for a potential two-month bounce into the fall. This would call for TBT longs, selling TLT and being short Treasury futures for a possible move to 2.25-2.35. At present, a move back to test lows in yields looks likely.
Transports have made some decent progress of late, and Thursday's rally was sufficient to break out of the entire downtrend from early May. This is encouraging as this had not yet been accomplished by this leading sector, but merely by the broader US indices. Near-term, prices should encounter resistance at either 10341 or slightly above at 10500 before giving some of this rally back into late June. However, the amount of strength that Transports have shown lately is encouraging in recent days, and should mean that further rallies can happen into Fall once this consolidates gains. For Friday/Monday, additional gains look likely.