July 23, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 2968-71, 2962-3, 2952-5, 2908-10
Resistance: 3019-3010, 3021-3, 3040-2
Monday Technical Video 7/22/19 discussing SPX, SOX
Link to Thursday 7/18/19 Technical Analysis Video Webinar
7/17 CNBC interview, discussing NFLX, and IBM after earnings
SPX - (3-5 Days)- Bullish- S&P regained more than half of last Friday's decline, recouping trend from mid-June. Over 3006 in SPX cash (3010-Futures) would be quite positive for a rally to 3020 then 3040
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: AYX, SHOP, BAX, TWLO, AAPL, ETSY, UAL, GDX, PEP, MDT, ORI, CMI, USB, TSCO, MYOK, TNDM, MNST, TWTR, ACAD, IOVA, PCTY, MRTX, SE, AXSM, MCD
Trading Shorts: EA, DUK, PEG, BBBY, URBN, TSLA, CTVA, RCL, CTRP, ENR, SPB
Stocks managed to churn higher largely on Technology strength. As mentioned last week, it looked like Tech was getting closer to resistance, but SOX should be able to get to 1550-70 while SMH approached 120. This now looks to be imminent for SOX and it's thought that this area likely could stall out, while Tech hardware outperforms.
Outside of Technology strength, Monday was a very lackluster session, with no other sector up or down more than 0.55% with Energy showing small positive gains and Staples underperforming the most. The US Dollar made brief upward progress, while Yields finished at 2.046 on TNX.
Key for the days ahead will be regaining last Friday's highs at 3010, which would be very positive, allowing S&P to push higher to 3020 and then 3040. This is the base case scenario of S&P technical direction for the next 1-3 weeks, while on the downside, getting down under 2969 is a must for any real concern, and under 2962 turns trends near-term bearish, thinking a test of 2900-5 occurs. For now, premature to get bearish and right to expect Monday's gains to continue.
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
Selling SMH today(Tues 7/23) and XLV .. will revisit both
Additional charts and thoughts below.
SPX looks to have had a successful retest of prior lows, and as seen on this hourly chart going back since mid-June, managed to turn back higher to near 2990 after having tested 2969. In the short run, this area is "No-Man's Land" and will need to get back up above 3010 in Futures, (3006 in SPX cash) to have real confidence. However, thats the most likely outcome, in my view for the next week, and expect to see 3020 challenged and exceeded despite the lackluster breadth. Movement back under 2969 needed for any type of concern.
SOX, or Philadelphia Semiconductor index, looks to have entered the resistance zone mentioned in recent reports, which also has similar resistance in SMH at 120. Counter-trend TD signals are now complete, right under prior highs (Demark) and this can likely allow for a stalling out in this part of Technology. Other areas like Tech hardware (more on this below) look more attractive in the near-term. One should consider using this rally to take profits in Semis sometime this week, ideally between 1550-70.
Tech Hardware indices like Bloomberg's S&P 500 Technology Hardware & Equipment index (S5TECH) is more attractive for the next 2-3 weeks than Semiconductors, but weekly charts show this group also nearing key resistance right near prior highs that could allow for some stalling out. Overall, it's right to be long AAPL here technically for a move to 215. However, the group as a whole might stall out this week into next as prices near prior highs. Given that Tech is 20% of SPX, this goes a long way towards explaining why SPX technical targets are 3040 to a max near 3075 as opposed to 3300 like some Strategists are suggesting.
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