June 20, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2917-8, 2905-7, 2892, 2884-5
Resistance: 2953-5, 2968-70
Technical Analysis Video Webinar, 15 mins. Today 1pm EST Dial-In Number (United States): (701) 801-1211, Access Code: 840-955-999
My CNBC interview (6/19/19) on Healthcare playing catchup after recent underperformance
My CNBC Fast Money interview (6/19/19) on Technology and Chip stocks
SPX - (3-5 Days)- Bullish to 2954- S&P and other US indices likely to test April highs before any slowdown- For S&P this lies at 2954, with 2905 being important as support
EuroSTOXX 50- Bullish- Tuesday's rally should lead to a test of April highs near 3511. One should use any minor weakness to buy dips down to 3363 and expect further strength into early next week
HSCEI- Bullish- Expecting this bounce continues to 11071 before stalling and offering a pullback as a chance to buy dips
Trading Longs: NOW, IPHI, TNET, IHI, XBI, MRTX, IOVA, AKBA, EXEL, MCD, PLAN, ROKU, TNDM, TNET, SWAV, NVTA, TPB, KHC, CSGP, FIS, TMO, DHR, AVLR
Trading Shorts: SPB, AWI, CROX, SIG, SYMC, WDC, STX, URBN, FOSL
Equities appear to be in a technical Sweetspot given Fed accommodation with yesterday's Fed decision representing no real surprise for stocks. The combined Inaction along with dovish tilt helped both Stocks and bonds rally in unison along with causing a selloff in the US Dollar. Overall, SPX and other US Indices are now within striking distance of April highs, while momentum is not yet overbought and trends remain bullish near-term. While breadth has arguably not been as strong as desired in recent weeks, we've seen some evidence of Technology stabilization in joining the strength in Industrials, Discretionary and Healthcare to buoy the markets during a real time of indecision.
Healthcare in particular has shown some real mean reversion in recent weeks, jumping from the worst performing sector YTD, to the best performing sector in the last month. Yesterday's 1% gains helped the group gain further ground on other sectors and XLV hit the highest levels of hte year. Overall, this group should be favored for further outperformance in the days/weeks ahead.
Powell's comments however, did lead the Dollar to turn down sharply yesterday while Treasury yields fell back lower.. Both of these coincided with a sharp rally in precious metals and we saw Gold break out above 1365 after hours while Treasury yields slippped down under 2%. Near-term, the move in Treasuries should prove short-lived and should prove to be a selling opportunity for US Treasuries into next week for a more substantial low. With regards to Gold, prices are stretched near-term and despite a decent breakout back to new highs, this will need to be consolidated before expecting an immediate move above 1400.
Long XBI -Long half unit, and using any pullback to 83-84.50 to add, expecting July rally back to 94
Long IHI, with targets at 240, stops under 221
Long SMH, looking to buy weakness, with targets at 112
Additional charts and thoughts below.
SPX is now within striking distance of both April 2019 peaks as well as All-time highs, which look to provide only minor resistance before prices can break through to targets near 3040-75 into August. Near-term, prices might seem extended, but gauges like RSI are not yet overbought, while momentum is certainly positively sloped and trending higher. Overall, it should still pay to favor further gains.
Healthcare is coming back with a vengeance, as this Sector ETF managed to move to the highest levels of the year on Wednesday, turning in performance that many will start to notice quickly. This worst performing sector of the year is now the best performing sector of the last month, and XLV looks to continue higher in the short-run. Medical Devices are leading in performance, while both the Biotech sector and Healthcare Services sector have engineered short-term breakouts that bode well for both of these groups to show further strength in the weeks ahead. Pharma stocks showed very good performance, but indices like DRG are rapidly approaching former highs that likely offer at least some minor resistance before this group continues. However the group as a whole remains within a very seasonally bullish time, so this recent relative strength looks likely to continue. Near-term resistance for XLV lies near 96.
Gold has finally managed to push up to new four-year highs after-hours to levels near 1380 which breaks the resistance trend hit no more than two other ocassions since being formed in 2014. Overall, this does look important and positive on an intermediate-term basis. However, in the short run, prices are stretched and it will be better to look to buy dips vs chase prices above 1380. However, this is the move that many were waiting for and will be widely telegraphed in the days ahead, as something to follow. While in broad agreement on the positive intermediate-term implications of this move, in the near-term, it does seem right to hold off for pullbacks to buy dips for the majority of long positions for those not involved.