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All quiet ahead of FOMC w/ 2nd lightest SPY trading of the year

July 30, 2019

Mark Newton CMT, Newton Advisors, LLC


SPX Cash Index

Support: 3000-2, 2973-4, 2962-3

Resistance: 3021-3, 3040-2, 3073-5

Monday Technical Video, 7/29/19

Link to 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- Mild sideways action with prices closing at same levels as last Wednesday within one tick. Movement higher still expected into FOMC with targets 3040-3

EuroSTOXX 50- (3-5 days) Bullish- Similar to S&P, a bit of a sideways range in recent days, yet trend still bullish. Expect push higher to 3600-25.

HSCEI- (3-5 days) Neutral- No change here, very much sideways range in last few weeks. We'll need to see move over 11042 for bullish and under 10632 for bearish.



Little to no real volatility in US or European stocks Monday, as trading looks to be lessening ahead of this week's FOMC meeting. Volume on SPY proved to be the 2nd lowest of the year and by the close, S&P futures finished less than 1 point from where they had closed last Wednesday. Defensive sectors gained some ground, while Financials and Discretionary gave up some ground after recent strength last week. (AMZN in particular looks to be near an important area of support where this can stabilize and push back higher and is important to mention given its weight within the Discretionary stocks.)

The moves of interest came from Healthcare, which pushed up to multi-day highs on MYL (+12.57%) while CI, RMD, HOLX, JNJ, MCK, EW, CAH, HUM were all higher by 1.5% or more. Meanwhile, energy was quite weak, with XOP selling off to new monthly lows and pronounced weakness also out of OIH, despite WTI Crude being higher on the day. The US Dollar continued its mild ascent, and most of the EM space lagged in trading. Overall, despite some minor rotation back into Defensive sectors, Monday proved to be largely very quiet, and the days ahead could very well prove to be a mirror image of yesterday's trading, though with an upward technical bias.

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.

Image 8-2-19 at 4.28 PM.jpg

A very slow push higher indeed over the last few weeks, and daily charts show literally very little net change since last week. By Monday's close, S&P Futures were at the same levels which they closed last Wednesday within a point. Additional upside here looks likely to 3040, and counter-trend exhaustion signals look to be 3-4 days away from triggering upside exhaustion. Until some evidence of weakness arises, it should be right to expect markets to still push higher into early August before a stalling out.

Image 8-2-19 at 4.29 PM.jpg

An interesting push higher in Healthcare which has lagged badly this year on a 1 month, 6 month and YTD basis. S&P 500 Healthcare index has just moved to multi-day highs which is the first positive technical development we've seen out of this sector in the last few weeks. Additional gains look likely after this severe underperformance, and rallies to test June/July highs look very possible.

Image 8-2-19 at 4.29 PM.jpg

Energy remains a sector to be avoided near-term, and XOP has just fallen to new lows for the year. With just two trading days left in the month of July, XOP looks to reach the lowest levels since 2016, though based on a monthly close, would represent a new all-time monthly low close for the ETF. (Exploration & Production ETF) Until XOP can regain 24.66, trends are bearish and additional weakness looks likely.


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