July 26, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 3000-2, 2973-4, 2962-3
Resistance: 3021-3, 3040-2, 3073-5
Link to Yesterday's Technical Webinar 7/25/19- 20 min Analysis
My CNBC interview from 7/23/19 on KO (Coca-Cola)
SPX - (3-5 Days)- Bullish- Pullback failed to do much damage yesterday, holding up above the prior day's lows, and Volume compressed on the move. The rally still looks to be intact up to 2040 over the next 5-7 trading days.
EuroSTOXX 50- (3-5 days) Bullish- A bit of a shakeout yesterday, though still rather unconvincing for a real top. Expect just minor consolidation here beore a push back to 3600-50.
HSCEI- (3-5 days) Neutral- We'll need to see move over 11042 for bullish and under 10632 for bearish.
Trading Longs: TTD, BDX, PLAN, CMI, JCOM, BAX, MDT, OLED, DFS, JPM, AYX, SHOP, TWLO, ORI, MNST, MYOK, ACAD, IOVA, PCTY, MRTX, SE, AXSM
Trading Shorts: EA, DUK, PEG, BBBY, URBN, TSLA, CTVA, RCL, CCL, CTRP, ENR, SPB
Minor weakness yesterday failed to do much technical damage, and Volume came in the lightest we've seen in SPY in seven days time. Breadth was nearly 2.5/1 negative, though Wednesday's success helped many breadth indicators bounce in the short run. Thus, not too much damage and a mild breadth recovery that puts Advance/Decline right back up to near former highs from 7/12. While there is some negative momentum divergence here that will be important as markets enter August, for now it remains premature.
Most of yesterday's Tech gains were given back Thursday, though the after-hours rally in both GOOGL and INTC might help to steer Tech back higher on Friday into next week, as their combined after-market gains helped to add around 75 billion in market value as of 5pm on Thursday afternoon. While Thursday's decline was largely blamed on poor earnings, this past week has been largely much more positive technically given some of the constructive developments seen in Financials and industrials, while SOX managed to surge back to new all-time highs. Overall, it's expected that weakness should not persist, but that indices begin their "final" climb into early August before a more meaningful consolidation takes place. At present, any meaningful selloff still looks premature time-wise here in July and dips should be used to buy.
US 10-Year Treasury yields managed to follow suit to the upside in a key reversal to recent consolidation w/ TNX gaining nearly 3 bps in trading Thursday to finish at new five day closing highs. Further selling in Treasuries looks likely into next week, with a good likelihood of yields gaining ground into next week's FOMC. Mid-July yield highs of 2.148, and over to 2.165, look possible into next week.
Long XLF with targets at 30-30.25
Long XLI with targets at 81
SELL EURUSD with targets down at 1.1107
Long GOLD by owning IAU, GLD and also GDX for Gold stocks
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
Additional charts and thoughts below.
Yesterday brought about a minor "give-back" in prices, and as seen in momentum, RSI was much lower on Wednesday's push to new highs. Yet, the trend along with near-term cycles argue for a push up to 3040, so it's unlikely that Thursday's setback gains too much momentum. Additional rallies are likely into early August.
A meaningful push higher in Yields yesterday, that likely should jumpstart the move higher in TNX to 2.16 ahead of next week's FOMC. Emerging markets and commodities were weak as the Dollar's rise also followed suit, and near-term, it looks right to sell Treasuries and/or own TBT for further upward progress in yields
Intel surged after hours on an upbeat third quarter forecast along with 2Q sales and profit that beat expectations. Post market trading carried the stock to $55, a level that doesn't offer any immediate resistance technically. While near-term overbought, this has exceeded the area that marked the gapdown and should be able to carry this to $57-$57.25 before any temporary ceiling, with former highs not out of the realm of possibility given this move which would put INTC up near $59.59, a very strong level and one to consider taking profits into. For Friday, any intra-day weakness from $55 likely is buyable technically for $57.25, thear area which preceded the gap in April.
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