July 16, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 3005-7, 2997-8, 2968-71, 2952-5
Resistance: 3021-3, 3040-2
7/11 Technical Webinar Link, discussing SPX, TNX, DXY, Crude, Gold
My Real Vision Interview filmed on 7/2/19
CNBC Fast Money- 6/26/19- 3 Laggard DJIA stocks that should play catchup in Q3
SPX - (3-5 Days)- Bullish- Still looks like more gains can occur into Wed/Thur- Long with stops on close under 2992. Upside target directly above this week-3021-2 or 3041-3
EuroSTOXX 50- Bullish- Ability to have erased early losses is a positive- Move over 3514 opens up door for push to 3600-25
HSCEI- Neutral- No real change over last few weeks and while this has lagged, we'll need to see move over 11042 for bullish and under 10632 for bearish.
Trading Longs: AAPL, UAL, GDX, PEP, MDT, ORI, CMI, USB, TSCO, MYOK, TNDM, MNST, OGE, TWTR, PEG, ACAD, IOVA, TPB, PCTY, GLDD, MRTX, SE, AXSM, ZIXI, MCD
Trading Shorts: BBBY, URBN, CTVA, RCL, CTRP, ENR, SPB
Signs of fatigue are evident given the lackadaisical push back to new highs on negative breadth, but for now, sectors like Technology and Industrials (Transports) look to be able to buoy US indices in the short run. Trends will remain bullish until there is at least a move under 2992 on a close for SPX, so trying to sell into this move is still likely premature. Counter-trend Sells are now apparent on SPX on daily charts, but would require confirmation (close under close of four trading days prior) before expecting any decline, and weekly charts are still premature in this regard.
As mentioned, Technology remains a very important part of the process for how to view this rally, and yesterday brought about further strength in SOX along with Tech hardware (shown below) which both look to show further gains. SOX remains at least another 2-3 days away from any peak near-term, even after four of the last five days of gains and targets lie near 1550-1570 to sell. Meanwhile, Tech Hardware just broke out of its minor base and is likely an area to favor within Tech this week as this plays catchup.
Outside of these groups, we saw Financials fall in trading, though Citigroup managed to rally back to near unchanged territory after early losses, and this group remains one to buy weakness in this week. Yields fell globally, but this also appears like nothing more than minor consolidation after the strong push higher last night and something to fade, as higher yields into August appear likely.
Long USO with targets at 14.50 - Stops under 11.60
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.
SPX managed to hit yet another new all-time high, though breadth was negative in trading and Counter-trend indicators of exhaustion from Demark are now in place which when confirmed, could result in a minor stalling out. However, targets have not yet been reached and SPX could still push up to 3040, thanks to Tech and Discretionary, before any peak. The area at 2992 aligns with the uptrend from the last few weeks, so we'll use this as a gauge for being Long/short. Being above still warrants a long stance, and we'll bet that a bit more gains can occur this week.
Hotel Restaurants and Leisure remains a strong outperformer within Consumer Discretionary, and last week's minor breakout is allowing for near-term relative strength that should continue in the days ahead. Stocks like CMG, MAR, HLT, WYNN, SBUX, MGM have all had above-average performance for this sub-group, and this area should be favored for additional strength. It's likely this index reaches 1350 from its current 1307.74, so many of the Hotels and Casino stocks remain attractive.
Tech Hardware and Semis still likely to carry market a bit more this week. If the action yesterday was any clue, we saw an important development in S&P 500 Tech Hardware breaking out of its small range which should help lift this back to former highs. This is encouraging and while AAPL dominated, AAPL remains a very important stock for the indices and ETFs and getting above 205 should send AAPL to 215. Overall, it's tough seeing a market decline when stocks like AAPL are making breakouts. Thus, this sub-sector, and AAPL for that matter, look to advance further and are technical longs.
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