July 31, 2019
Mark Newton CMT, Newton Advisors, LLC
SPX Cash Index
Support: 3000-2, 2973-4, 2962-3
Resistance: 3021-3, 3040-2, 3073-5
Tuesday Technical Video, 7/30/19
Link to last Thursday Technical Webinar 7/25/19- 20 min Analysis
My CNBC interview from 7/23/19 on KO (Coca-Cola)
SPX - (3-5 Days)- Bullish- No change given prices snapback into the close in Futures, and it's thought that overnight gaps in AAPL could prove to be a positive for Technology and for markets into FOMC. Movement higher still expected into FOMC with targets 3040-3
EuroSTOXX 50- (3-5 days) Mildly Bullish- Europe seems to have begun more of a near-term topping pattern than has been seen in S&P with yesterday's pullback to the lowest levels since 6/28. For now a snapback rally into end of week is possible, but momentum seems to be slipping and it will be necessary to regain the losses of the last few days quickly to avoid a larger break in August. Resistance lies at 3500, 3570-5 and then 3600-25.
Trading Longs: GBTC, IFF, PPG, AMZN, ETSY, GSK, BG, LMT, TTD, BDX, PLAN, JCOM, BAX, MDT, OLED, DFS, JPM, AYX, SHOP, TWLO, ORI, MNST, MYOK, ACAD, IOVA, PCTY, MRTX, SE, AXSM
Trading Shorts: SIG, KSS, EAT, XRT, OSTK, SNAP, BLUE, EA, BBBY, URBN, TSLA, CTVA, RCL, CCL, CTRP, ENR, SPB
Despite the early day selling Tuesday, there turned out to be little to no real technical damage by Tuesday's close. After hours AAPL earnings resulted in a surge in S&P September Futures by 4:15 that helped prices largely reclaim most of the early losses. Prices ended up at 3013.18, a level that lies right near Monday's intra-day lows. Overall, much could depend on AAPL ability to hold overnight gains, which as of Tuesday evening had driven the stock up over early May highs in post market after hours trading. Holding above 215 would prove to be a positive for Technology through the balance of this week, while a reversal could be more negative.
The rally in the US Dollar over the last week has proven to be a negative for Emerging markets, while both Crude and gold pushed higher. While Crude's rally looks to be a bounce to sell into, the move in Gold looks more bullish, and has the potential to extend.. Outside of these developments, we saw some evidence of Small caps bouncing sharply yesterday while Cryptocurrencies appear to be trying to stabilize after a very difficult July.
Overall, it's thought that a late week stab at highs should occur technically, as little to no real damage has occurred. However, there has been some breadth and momentum slowdown over the last week as prices have stalled, and this happens to coincide with Exhaustion signals appearing on SPX right as prices are near upside targets at 3035-45. Trends remain bullish, but yet it's right to not be as complacent heading into the month of August, and both Technology and Financials should be watched carefully for any evidence of these sectors starting to wane.
Long XLF with targets at 30-30.25
Long XLI with targets at 81
SELL EURUSD w/ bounce from 1.11 proving temporary and selling off to breach 1.11
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.
Despite yesterday's mild drawdown in S&P there hasn't been much to detract from the current trend, which remains upward sloping albeit with some definite signs of slowing lately. Movement higher has proven less robust, which can be seen not only in breadth turning in flat readings over the last week, but also in momentum, which on 4-hour charts, shows a steadily declining pattern of lower highs over the last month. So while little to no real damage has been done, the key takeaway revolves around the internals that might not be reflecting the same degree of strength that was seen back in early June/July. Much of this, when combined with counter-trend exhaustion tools and Fibonacci projections from former highs and lows, pinpoints 3035-45 as being quite strong in the near-term as an area that might hold gains into and/or directly after FOMC before at least a mild setback. For now, we'll keep an eye on this further in the days ahead, along with monitoring any evidence of trend change, shown by this trendline from June undercutting former lows in S&P Futures.
A 2% rally in Crude.. but does this change the structure? WTI managed a sharp rally on Tuesday, but given the shape and momentum of daily charts, this move should still encounter strong overhead resistance, and does not change the trend dramatically at this time. The area at $60, along with $61 both have importance, technically, and it would take a move back over 61 to expect Crude starts a sharper rebound. Thus, technically the move in Crude likely should be a selling opportunity, as well as those that are long Energy stocks as markets head into early August.
Apple (AAPL) Bullish gap after hours.. But can it hold? AAPL looks to be set to gap up above the resistance angle of this Triangle consolidation that's held this stock largely range-bound since last Fall. Post market after-hours trading saw AAPL climb above $215, the level marking intra-day highs from 5/1 (the most recent peak in the chart above) This would seem to be a bullish development, and volume likely will pick up in trading on Wednesday as the stock gaps. However, near-term signs of Demark based exhaustion will be complete in AAPL in all likelihood by Thursday's trading, making the likelihood of a continued acceleration throughout August to exceed last year's highs unlikely at this time. Technically I expect that gaps that hold above 215 on a close Wed 7/31, should still not make it above 224 before stalling and backtracking in the month of August. Traditional technicals though would certainly argue this gap is positive if it were to hold. Cycle-wise, the area at 8/14-17 has some importance in this stock based on taking half the range of both high to high and low to low and projecting forward. An additional date to consider that oculd be important for trend change lies at 10/13-16 for AAPL.
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