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Energy could snapback given progress in WTI Crude

July 11, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com

SPX Cash Index

Support: 2968-71, 2952-5

Resistance: 3008-10, 3021-3, 3040-2

Wednesday Technical Video, 7/10/19, highlighting SPX, Crude

https://stme.in/EFTVJ7ZXBy

TECHNICAL WEBINAR TODAY- 7/11- 1pm EST- Click link below at 1pm

Dial-In Number (United States): (701) 801-1211, Access Code: 840-955-999

https://join.startmeeting.com/info69336

My Real Vision Interview filmed on 7/2/19

https://www.realvision.com/tv/shows/trade-ideas/videos/bond-rally-to-reverse

CNBC Fast Money- 6/26/19- 3 Laggard DJIA stocks that should play catchup in Q3

https://www.cnbc.com/video/2019/06/26/the-man-who-called-the-semi-rally-now-sees-these-three-stocks-breaking-out.html

SPX - (3-5 Days)- Bullish- Further strength likely to either 3021-2 or 3041-3 in S&P futures which requires one more push higher in the near-term

EuroSTOXX 50- Bullish- Move over 3514 opens up door for push to 3600-25

HSCEI- Bearish- Under 10640 should lead to 10465 over next few days, but only under 10029 should pullback last more than 2-3 days. Over 11042 is bullish

Trading Longs: INTU, TNDM, MNST, AMZN, FB, NFLX, TWTR, ACAD, IOVA, PLAN, TPB, PCTY, GLDD, MRTX, SE, TSCO AXSM, MYOK, ZIXI, AKBA, MCD, SWAV, CSGP, FIS,AVLR

Trading Shorts: CTVA, CCL, RCL, ATVI, CTRP, XOP, OIH, APA, VLO, ENR, SPB

FOMC Chair Powell's dovishness provided a sense of calm to markets, and should slowly help sentiment to become more and more bullish in the days and weeks ahead into FOMC at end of month. S&P managed to finally get above 3000 and seems poised for further strength up to 3020 or 3041-3 which should be a chance to take profits in the near-term.

Until there is at least some evidence of movement under the last few days lows, it will pay to stay long until Demark exhaustion appears. This looks to be 2-3 days away on most indices and should mark a minor top early next week. However, for now, it still looks right to favor additional follow-through.

Crude oil provided a big positive step in the right direction with its move back up over prior highs just above 60. This looks important and positive for Crude and can allow for additional upside to near 63 in the near-term. Gold also made headway given Powell's dovishness and the drop in the 2 yr yield and the Dollar showed evidence of turning back lower after a healthy rise in recent weeks. For now, it looks right to consider longs in Energy given Crude's lift and/or owning ETF's like USO that can participate in Oil moving higher.

ACTION PLAN-

Long USO with targets at 14.50

Long FANG basket, with AMZN, FB, NFLX being key stocks of focus

Long TBT with targets at 32

Long USDJPY with targets at 111

Long XBI with targets back to 94; Stops on weekly close under 82.87

Long XLV with targets at 95.50, then 100

Long SMH, raising targets to 120

Additional charts and thoughts below.

Image 7-15-19 at 4.27 PM.jpg

SPX Bullish, but approaching a point where this could stall out; For now, additional strength still looks likely up to 3020-3 and above to 3040-3 being possible. Momentum remains positive and not overbought and counter-trend signals are still 2-3 days away on daily charts and getting very close on Weekly charts. For now, breadth has waned a bit on this move to new highs, lackluster for new highs, at 3/2 positive, but yet no evidence of any reversal has been seen. Thus its still right to be long, particularly in Financials, Technology with Energy potentially starting to be attractive after recent weakness.

Image 7-15-19 at 4.33 PM.jpg

Crude made a very bullish near-term move back up above 60, a level that also represented prior lows from May. Thus, resistance important for two different levels and getting above this is positive for further follow-through. The next big level lies near 63 which has even more importance, and getting above would allow for a much larger rally. For now, this Crude gain from yesterday looks constructive and should allow for Energy stocks to start to turn back higher in the short run.


Image 7-15-19 at 4.34 PM.jpg

REITS and Utilities look to make a bit further progress over the next week given their technical resilience and recent bounce attempt. VNQ, the REIT ETF, should be able to challenge former highs, but is then thought to have a good likelihood of peaking again, not unlike what happened a month ago. Yields turning higher should be the culprit for this group to start to weaken. For now, however, a bit more absolute strength looks likely.


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