June 25, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2941-2, 2926-8, 2905-7
Resistance: 2952-4, 2960-1, 2968-70, 2980
Monday Technical Video 6/24/19
Link to Last Thursday's Technical Webinar 6/20/19
My CNBC interview (6/19/19) on Healthcare playing catchup
My CNBC Fast Money interview (6/19/19) on Technology and Chip stocks
SPX - (3-5 Days)- Bearish- It's thought that Monday's decline under last Friday lows could bring about 3-4 days of selling into the G-20 with support 2900- Over 2964 on a close lets the rally continue
EuroSTOXX 50- Bearish- Minor pullback here looks likely also over next few days, as this has stalled out just under prior peaks at 3511. Pullback to 3400-3415 would set up for a push back higher to test 3511 area.
HSCEI- Bullish- Rally up to 11085 looks likely over next 2-3 days with a max near 11273 before this stalls out as US Dollar stabilizes
Trading Longs: TMF, NOW, IPHI, IHI, IOVA, AKBA, MCD, SWAV, KHC, CSGP, FIS, TMO, DHR, AVLR
Trading Shorts: VNO, PLD, SPG, KIM, SLG, HST, SPB, PKG, GPS, UPS, FDX, JBHT, WBA, COTY, APA, SYMC, WDC, URBN
Some minor stalling out looks to be happening, not just with Equity indices, but many sectors as well, as SPX is back down under prior highs from April and many sectors like XLY for example have stalled out and rolled over to multi-day lows. As of yesterday's close, SPX had made its first decline under the prior trading days lows since this rally started back on June 3. Breadth came in about 3/2 negative and most of the strength happened in Materials, but no other major sector was up more than +0.30% in a very lackluster session. Conversely, Energy, Discretionary and Healthcare all declined -0.50% or more. Treasury yields seem to be turning back lower, for what appears to be a more serious area of support just under 2%, while the Dollar's pullback also continued. Gold raced further to the upside to near its first upside target at 1425, and Crude finished just below $58.
Overall, after a 200 point S&P rally in 14 days, some minor consolidation looked necessary coming into this week, and there's no signs that this can't extend a few more days. If Monday's session provided any tell-tale signs about the few days ahead of this week's G-20, it's that it very well could prove to be a very slow non eventful week until markets can get a bit more clarity.
Two items of concern technically: Transports look to be weakening more and more, with the DJ Transportation Avg declining to new multi-day lows. Stocks like FDX, UPS as well as JBHT, looked particularly weak. Additionally, the REIT sector looks to be peaking out near-term, and ETFs like VNQ rolled over to multi-day lows, breaking its uptrend, and suggesting further weakness here might be likely. So these look like two sectors to avoid this week, while Financials also could prove weak given the downward bias in yields
Long XBI with targets back to 94
Long IHI, with targets at 240, stops under 221
Long SMH, looking to buy weakness, with targets at 112
Short VNQ with targets initially near 87
Long TLT with targets at 134, expecting yields to drop this week
Additional charts and thoughts below.
SPX could weaken near-term, but likely to prove minor and buyable into G-20. Movement over 2964 would postpone any decline. Looking back at yesterday, SPX managed to pullback under the prior days lows which represented the first time this has happened on a closing basis since early June. While not a "hard and fast" sell rule per se, many other indices are starting to show some evidence of stalling out and rolling over to multi-day lows, the Transports and REITS being two. Other sectors like XLY failed at former highs and are weakening. Bottom line, some minor weakness could happen in the days ahead, but likely does not get down under 2900 and should be used as a buying opportunity for further strength into July.
REITS starting to rollover. Charts of the VNQ, the Vanguard Real Estate ETF, show this sector starting to weaken in recent days. Prices have pulled back under last Friday's lows after having violated the one-month uptrend. REITS like VNO, PLD, SPG, KIM, SLG, HST all look to weaken in the days ahead. Thus, despite rates being low, there are some signs of this sector starting to weaken, which coincides with thoughts of a low in Yields being very near and could happen as early as this week on further yield weakness.
Transports seem to be weakening steadily after the DJ Transportation Avg. failed to get up over the 50% retracement area of the prior decline and now have violated minor trendline support and fell to multi-day lows. This area should be avoided near-term, and stocks like FDX, UPS and JBHT look like better technical shorts this week on a 3-5 day basis than longs.