June 28, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2912-3, 2900-2, 2878, 2850-2
Resistance: 2939, 2952-4, 2964, 2985
Link -6/27 Technical Webinar, discussing SPX, TNX, BBDXY, Oil, Gold
CNBC Fast Money- 6/26/19- 3 Laggard DJIA stocks that should play catchup in Q3
My CNBC Interview on GOLD 6/25/19
My CNBC Fast Money interview (6/19/19) on Technology and Chip stocks
SPX - (3-5 Days)- Bearish, but over 2939 would turn trends back to bullish on a close- Yesterday's rally attempt failed to get high enough to turn trends bullish and leaves open the possibility of a final pullback Friday/Monday before trends turn back higher
EuroSTOXX 50- Trading lows near- Bearish but looking to cover shorts in 1-2 trading days Minor pullback to 3400-3415 should find support Thursday into next Monday and turn higher for a rally to test 3511 area. Daily closes over 3460 would turn trend bullish.
HSCEI- Bullish- Another stab at 11k looks to be happening and a brief move over into next week looks likely before any trading high. Thus, a bearish position for now looks wrong and its right to be long with stops under 10663
Trading Longs: XLV, KRE, TROW, FII, PNC, L, BOOT, FISV, SEAS, OMC, UCBI, NOW, IPHI, IHI, TWTR, IOVA, AKBA, MCD, SWAV, CSGP, FIS,AVLR
Trading Shorts: JWN, SPB, GPS, PCAR, CSCO, COTY, SYMC, URBN
Final trading day of the month and quarter, S&P has lost four of the last five days, but yet set to record a stellar month, higher by nearly 6%. This week's pullback has barely made a dent in the recent strength seen since 6/3 lows, and now we're seeing evidence of Financials trying to come back to life given the stabilization in Treasury yields. Healthcare's bounce has been constructive technically, though not strong enough to lead thus far. Materials and Energy along with Tech, have all made very good gains in the last month, outperforming all other sectors, though only Tech has real weight in the SPX. Overall, it's thought that regardless of the outcome of this weekend's G-20 which the market has been eagerly anticipating the outcome should be bullish for stocks, technically given the setup on most charts. Thus, any pullback Friday into Monday likely should be one to buy into.
Outside of equities, Gold and precious metals look to have started a minor pullback given the bounce in DXY and TNX, and this is thought to continue in July. It's thought that TNX moves higher to 2.25-.35% and that DXY is near support and should also bounce. Both of these together might hurt EM performance, which for now, still looks to be ongoing. Cryptocurrencies look to have shown a lot more volatility in recent days both on upside and now downside, while Crude oil has risen to sit near key resistance ahead of the upcoming OPEC meeting which will take place next week, directly following G-20. Thus, we're starting to see a lot more volatility lately in nearly every asset class for the first time in weeks. Stay tuned for Monday's report which will take a closer look at the Financials, which i believe are trying to form a bottom.
Long TBT with targets at 32
Long XBI with targets back to 94
Long XLV with targets at 100
Long IHI, with targets at 240, stops under 221
Long SMH, looking to buy weakness, with targets at 112
VNQ hit target, looking to short on rallies
Additional charts and thoughts below.
SPX has now fallen for four of the last five days, yet Thursday's gains are not convincing just yet that lows are in to this pullback. Movement back up over 2939 in SPX cash would give far more evidence that prices could push back to highs. For now, its encouraging that Technology has roared back, and there's some evidence of Financials starting to strengthen. Both of these are positive developments ahead of the G-20 given that recent weakness has lost very little ground. Yet, some evidence of moving back above prior days highs will be necessary towards thinking that a move back to new highs can occur. Given the uncertainty of this weekend's G-20, most are betting that very little progress will happen, and as such, it's right to wait on prices to turn up before thinking this decline has run its course.
Energy has bounced sharply in the last couple weeks and takes 3rd place for June sector-wise out of 11 with performance of 7.8% through 6/27/19 Month-to-date. Yet, daily relative charts of XLE to SPX show that recent strength is merely a "drop in the bucket" compared to the amount of weakness that's taken place from last May. This group has pulled back sharply over the last year and remains the worst performing sector on a 12-month basis and the only one down over the past 12 months, with returns of -16.62%. The next closest sector is Materials, with POSITIVE gains of 0.77%. With WTI Crude having rallied to near 60 ahead of the OPEC meeting, it's important that Crude get back over 60 to have hopes of Crude extending gains and for Energy stock gains to consider. Until then, this area of resistance is thought to be one to sell into heading into the OPEC meeting.
Healthcare looks attractive heading into end of Q2. XLV on a weekly basis looks quite attractive after last week's breakout has consolidated for most of this week thus far. The weekly Triangle pattern for XLV which was exceeded has now pulled back to an appealing area to buy, heading into the most bullish month for Healthcare in the last five years, July. It's expected that price turns higher to test former highs near $96 and get over this for a move up to 100. Overall, this remains one of the better risk/reward sectors to consider over the next 6-8 weeks as a long idea to overweight.