July 18, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2968-71, 2962-3, 2952-5, 2908-10
Resistance: 3021-3, 3040-2
Technical Analysis Video Webinar , 15 min, Today 1pm EST- Dial in (701) 801- 1211, Access Code- 840-955-999
7/17 CNBC interview, discussing NFLX, and IBM after earnings
7/16/19 Wednesday Technical Video, discussing SPX, Gold
SPX - (3-5 Days)- Bullish- Tuesday minor selloff failed to undercut uptrends, and rallied up off its lows into end of day. Uptrend intact and should allow for 3020, 3040
EuroSTOXX 50- Bullish- Close at multi-day highs is bullish, opening the 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: EA, BBBY, URBN, CTVA, RCL, CTRP, ENR, SPB
Stocks experienced their first real evidence of trend damage since early June yesterday. Prices broke trends from late April as well as mid-June, confirming Demark daily TD Sequential and TD Combo sell signals in the process. Near-term, additional weakness looks possible to 2962-3 or a max of 2908-10, but should be buyable for a rally back to new highs. It's thought that this weakness should prove minor in scope and be done by early next week before the start of a rally back. Key areas for time change lie in August, not July, so recent selling likely proves to be a buying opportunity yet again. While there were signs of slowing last week, yesterday was the first evidence of any trend damage, and closing near the lows made it right to respect that, and think that another couple days of weakness are possible before indices stabilize.
Transports suffered losses of greater than 3%. Yet, the prior days had shown much greater strength, so recent weakness has not done much to alter the current uptrend in place for the group. Additionally, stocks like AAPL broke out earlier in the week and still appear like they can move higher. Thus, the recent weakness in recent days is likely to prove temporary, as charts of leading sectors like Semis and Transports are still very much positive.
Precious metals, look to be a key area of focus, and the rise in silver and gold looks to be something to follow, near-term, and could be a way to diversify out of equities after recent strength above 3k in SPX. Silver showed evidence of breaking out yesterday, while Gold is firming and readying a continuation move higher after its own breakout last month. Overall, the metals look attractive here, technically and right to favor.
Long USO with targets at 14.50 - Stops under 11.60
Long FANG basket, with AMZN, FB, being key stocks of focus- NFLX breakdown yesterday and after hours warrants more weakness here
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 finally broke down under uptrends which have held over the last month. While momentum has quickly reached oversold levels on hourly charts, prices are not yet at key support to buy after the break of 2992. Additional near-term (3-5) day weakness is possible down to 2962-3, just below in S&P Futures, while under would lead to a quick move to 2908-10. However, it's expected that drawdowns prove limited and temporary before rallies back to new highs into August. Thus, this weakness should be buyable.
Gold looks to be readying for an upside breakout, after consolidation has taken on the shape of a flag pattern, as opposed to resulting in any real weakness. Gold stocks have outperformed Gold in recent days, making their own breakout. Precious metals are likely to show strength with Dollar and Yield weakness. Though, it was likely over the last week that both yields and Dollar were headed higher, the precious metals have not fallen, but yet have produced mild consolidations that have kept prices near recent highs. GDX broke out two days ago, and Gold stocks have taken an early lead. Yet, Gold itself is consolidating, and it's thought that an upcoming breakout is now more likely than any further technical decline after the June breakout. It's right to lean long, betting on Gold and Silver strength in the days and weeks ahead.
Netflix (NFLX) gapped down post earnings, violating the lows of the six-month neutral trading range that had been intact since January. Any failure of the earnings call to help this regain after hour losses likely will set this stock on a bearish path near-term, with targets down near 275. Given that only two more days are left in the week, a heavy volume gap-down under a lengthy six-month base is thought to be particularly negative in the near-term. However, intermediate-term weekly charts do show weakness to be something to buy into, not look to sell and go away. Thus, with the stock down roughly 13% afterhours or nearly $45 from Wednesday's close, this is one to look to buy dips, (IF AND WHEN) this starts to weaken down under 285 with optimal support at 275 to buy weakness.
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