July 19, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2968-71, 2962-3, 2952-5, 2908-10
Resistance: 3021-3, 3040-2
Link to Yesterday's Technical Analysis Video Webinar 7/18/19
7/17 CNBC interview, discussing NFLX, and IBM after earnings
7/16/19 Wednesday Technical Video, discussing SPX, Gold
SPX - (3-5 Days)- Bullish- Minor break of trendline proved brief, now S&P futures managed to close back up above 3003, which is positive
EuroSTOXX 50- Bearish- Break of trend from June is a minor negative and will need to recoup 3500 to expect higher prices. Expect any selloff proves short-lived
HSCEI- Neutral- We'll need to see move over 11042 for bullish and under 10632 for bearish.
Trading Longs: BAX, TWLO, 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, TSLA, CTVA, RCL, CTRP, ENR, SPB
Stocks snapped back just as quickly as they broke down the previous day, and signs of life in Technology coupled with Financials strength were real positives for Thursday's trading. Breadth remained largely tepid, something that's an ongoing concern in the short run, but at present, selloffs are not lasting more than just a couple days before turning back higher.
Specifically, the movement in Transports to rally more than 1.5%, along with Semiconductor issues was thought to be positive for yesterday. Many had turned bearish on the prospects for the Transports after having heard the earnings call for CSX, but the near-term technical trend still bodes well for gains in the days ahead. SOX, meanwhile, should get up to near 1550 without too much trouble before any peak.
Outside of stocks, Yields have pulled back in recent days, which technically looks to be carving out a possible higher low than what occurred in June. Gold and Silver both broke out in recent days, but commodities were lower given some of the carnage seen in Energy in Thursday's session. The extent of this selloff (shown below) is indeed a negative for Crude oil in the near-term and Energy stocks look to also show weakness in trading. Natural gas, for one, looks ripe to retest June lows, and it's right to be bearish near-term on Gas, as well as WTI Crude.
Overall, while S&P just barely got up and over the key 3003 level, Technically it looks like many of the bullish moves which happened yesterday can continue, with regards to Transports and Tech extending further. Thus, although the bear trend looked to have just begun in the US on a near-term basis, it very well could be over just as quickly and prices could turn back higher. Exceeding Wednesday's highs at 3013 for ES_F and 3005.26 for SPX cash would add to the bullish thinking, while any revisiting of yesterday's lows puts a near-term correction back on the front burner.
Long GOLD by owning IAU, GLD and also GDX for Gold stocks
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 immediately recouped the area broken the prior day, putting the bullish scenario back on the front burner. Over 3003 in S&P futures should lead back to 3021-3 in short order and then over this up to 3040. However, this might take time, and there remain issues with breadth which will be something to continue to pay close attention to. Bottom line, trends are bullish with prices over 3003 and pullbacks now should be buyable Friday into next week with 2974 as a stop and 2962-3 continuing to be good support.
DJ Transports remain near-term bullish and pullbacks proved to be a buying opportunity. Transports rallied over 1.5% yesterday, which might have surprised many who heard the bearish news on CSX earnings call the prior day. However, as daily charts of DJ Transports shows above, the trend for this group is very much intact and Wednesday's weakness failed to even give back half of the prior week's gains and did not break the uptrend. Overall, its still likely that Transports can show strength in the days ahead and this could come based on Airlines and also some of the stronger Rail stocks snapping back, like Union Pacific.
Crude oil bearish on break- WTI Crude sold off much more than might be expected if this was just a minor pullback, and puts the bearish case back on the front burner. The act of violating the minor uptrend and undercutting prior lows in combination is thought to be negative, and should allow for Crude to selloff to $53 which is important in the larger triangle pattern at work on weekly charts. Maximum support to try to buy dips lies near $50.79-51 at June lows. This can certainly not be breached without creating a much more bearish scenario for the months ahead. Near-term, i expect further weakenss out of both XOP and OIH and these should be avoided and/or considered technical shorts for aggressive traders looking for undperformance and possible absolute weakness.
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