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Technology leads all groups; No tangible sign yet of any reversal

February 5, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2707-8, 2689-91, 2670-2, 2656-8

Resistance: 2733-5, 2742-4



Wednesday 1 hour special 2019 Technical Outlook Webinar -presented to CMT Association

https://cmtassociation.org/video/2019-technical-outlook/





REPLAY LINK: ThursdayTechnical Webinar- 15 min

https://youtu.be/GaetauQeqKY





SPX - (3-5 Days)- Bullish- Despite being stretched, still no compelling evidence that indices are peaking, and Demark indicators will take another 3-4 days at a minimum to complete. Overall, it's right to stay long until some evidence of reversal arises, which could be later this week.



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls. Under 3094 necessary to change this trend.



HSCEI- Stallout looks to be happening after test of last Sept highs. Trend won't be bearish unless 10550 is undercut. One should consider a move back over 11165 to prove short-lived.





Trading Longs: IGV, MEDP, TEAM, SBUX, CRM, PG, HCA, EVBG, CCI, VTR, WELL, TECK, ARNA, MRK, LLY, REGN



Trading Shorts: ILMN, CBOE, CI, MKC, VOD, AMGN, CE, SWK

Equities managed to turn back higher yesterday, after nearly 48 hours of sideways prices. While many are looking for excuses to sell into this move, there still hasn't been sufficient weakness to think a peak is imminent just yet. It's important that at least some evidence of trend reversal occurs (pulling back to the days lows after an early gain, or reversing to close at multiple days lows ) Breadth came in around a 2/1 positive yesterday, and momentum still has not reached overbought levels. Treasury yields managed to rise 3bps yesterday also, so this needs to be watched closely as well because yiedls had not been following stocks of late.



Technology managed to roar back to life yesterday, being led again by the Enterprise software space. This group along with Financials continue to be the top areas to watch for evidence of stocks stalling which for now is premature. Heading into Tuesday, a move down under 2696 would fit the bill, and particularly if prices get below 2672.







ACTION PLAN- 



Long SPY with stops 259.96, looking to sell into 270.50-271 into next week

Long XLK with target 69, stops under 64.25


Long XLI with target 74.25, stops under 69.68


Long Crude oil with movement up to $55-56 likely


Long VNQ for REIT exposure- near-term target $83.50, but over should drive to 90


Looking to short Gold at 1330-40 in next 2-3 days of rally




Additional charts and thoughts below.

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SPX has now exceeded 2715, an area that was thought to have importance in recent days, and has officially gotten back above its 61.8% Fibonacci retracement area. Given that no counter-trend exhaustion is present, and no evidence of any trend reversal has occurred in recent trading days, additional gains still look possible over the next few days of this week. Momentum has not gotten overbought yet on daily charts on this rally, so until there is some evidence of pulling back and reversing course, one would still stay long, while looking to pare down on this rally once Demark's TD Sequential and TD Combo complete (which might take another 3-5 trading days)

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IGV, the Ishares Software ETF. has begun to show greater signs of recent upside acceleration and further gains look likely to test last year's highs before any trend reversal occurs. This group has been one of the hotter areas in the market in recent days, and little immediate resistance looks to stop this trend given a lack of counter-trend exhaustion as IGV managed to move back above an 80% retracement of last year's decline. Overall, one should own Software, looking to buy dips on any pullback in the days to come with targets at former peaks.

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Homebuilders look attractive at current levels and recent strength should continue in the weeks ahead as part of this current mean reversion. This group was one of last year's real laggards, peaking out in May and declining nearly the entire year before bottoming when broader indices did in late December. Its rally has been impressive, breaking out above the entire downtrend which guided this lower last year, and the move above $36 is thought to be constructive technically speaking. Initial targets lie near $38.50 and moving above that would allow for a greater push higher to the low to mid $40's.

Rally getting extended near-term, likely stalls out early next week

February 1, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2670-2, 2656-8, 2622-3

Resistance: 2715-7, 2723-5



Wednesday 1 hour special 2019 Technical Outlook Webinar -presented to CMT Association

https://cmtassociation.org/video/2019-technical-outlook/




REPLAY LINK: ThursdayTechnical Webinar- 15 min

https://youtu.be/GaetauQeqKY





SPX - (3-5 Days)- Mildly Bullish, but Upside likely limited into Next week- S&P, DJIA, NDX and others have neared targets in both price and time, and it looks likely that some type of stallout happens next week. For Friday, this still looks early and the trend remains bullish, so it's right to stay long, until some evidence of trend reversal.



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls. Under 3094 necessary to change this trend.



HSCEI- Stallout looks likely up at 11000-11100 in next 3-5 days. Prices have moved a long way very quickly since early Jan, but this area has had significance since last July and has to be respected. For now, Trend won't be bearish unless 10550 is undercut but one should sell into 11100





Trading Longs: TTD, TEAM, SBUX, CRM, PG, HCA, ROKU, DATA, EVBG, CCI, VTR, WELL, TECK, ARNA, MRK, LLY, REGN



Trading Shorts: ILMN, VOD, AMGN, CE, RO SWK, AAL

Equities managed to follow-through nicely again for the Bulls yesterday and breadth was still about 3/1 positive, so not a lot of concern regarding either breadth being negative on this push just yet, nor evidence of upside exhaustion. Prices managed to close near highs of the session and Demark indicators will start to show up in the next 2-3 days on this rally. (TD Combo could be triggered as early as Friday, though not confirmed, though the Setup count will take an additional few days into next week)



Importantly, SPX, DJIA, NDX, IWM, CCMP all have now broken out of the downtrend which was holding prices since last Fall's highs. This is thought to be a bullish development. Industrials have now also broken out near-term to join recent strength seen in Technology and Discretionary, but yesterday did bring about some above-average strength in the Defensive sectors, as Staples, Utilities and Telecom all rallied more than 1.5%, more than any other. Meanwhile, Financials and Tech both finished fractionally negative. Our thoughts on Financials starting to underperform was very much in effect on Thursday, and this looks to continue near-term.



The key concerns at this stage have more to do with traditionally highly positive correlating things like USDJPY and TNX both turning down sharply in recent days, and this does give worry that one of these moves between TNX and SPX is wrong. (Historically, TNX has won this battle)

For now, Equity Put/call is starting to dip down to low levels (just above .50), but the VIX breakdown makes it look like another 3 days of weakness should happen (not dissimilar from SPX (given Demark counts). Thus while a trend reversal should be near, as always, without proper evidence of any turn, or counter-trend sell, or negative breadth, it doesn't make sense just to sell because prices have rallied. We'll require some hard and fast technical proof now that downtrend lines have been exceeded across the board on many US equity indices.




ACTION PLAN- 


Long SPY with stops 259.96, looking to sell into 270.50-271 into next week


Long XLK with target 69, stops under 64.25


Long XLI with target 74.25, stops under 69.68


Long Crude oil with movement up to $55-56 likely


Long VNQ for REIT exposure- near-term target $83.50, but over should drive to 90


Looking to short Gold at 1330-40 in next 2-3 days of rally





Additional charts and thoughts below.

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SPX has now joined the NASDAQ in exceeding the key trendline that most believed would serve as resistance for this rally and this now makes two different areas that have failed to hold on gains in recent weeks (the first being 2630 near former November lows) This looks to help prices extend a bit more near-term. While targets are just fractionally above at 2715-7 for SPX cash, we're seeing Demark exhaustion being close to complete along with SPX testing its 61.8% Fib retracement of the entire decline from September. Some key cycles hit next week also which might result in a stalling out and trend reversal. For now, the trend remains bullish, but we'll be on alert for evidence of any stalling out reversal of trend or low /negative breadth that might warn of a pullback ahead.


Industrials have now risen back up above key trendline resistance along with the entire trendline resistance area stretching back since 2017. This is near-term constructive for this group (Note GE moving above $10 yesterday, up more than 10% on the day) While the relative picture for Industrials has been mixed of late, the near-term technical situation merits owning XLI for a bit more strength.


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Gold is nearing its first real area of importance, and longs might be wise to consider taking profits from a trading perspective into next week. The area from 1330-40 should have importance in causing at least a temporary top, and weakness in gold in early February. Reasons for skepticism in this trend have to do with counter-trend sells which have just appeared, coinciding with near-term overbought conditions while the Dollar looks to be right at good initial support. While an eventual breakdown in the Dollar would be good for Gold, for now this is premature and this trend is getting stretched near-term. My technical call is to take profits and await pullbacks to buy.

Post FOMC surge kicks off a likely push to S&P 2715

January 31, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2670-2, 2656-8, 2622-3, 2612-3, 2606

Resistance: 2698-2700, 2710-5

No Video or afternoon report yesterday, as I did a 1 hour Technical Webinar for the CMT association, which should provide me a link to share.

There will be a Technical Webinar TODAY for clients at 1pm EST. Details below



Technical Analysis Video Webinar, 15 mins. Today 1pm EST- https://join.startmeeting.com/info69336

Dial-In (701) 801-1211, Access Code: 840-955-999



Tuesday Technical Video- SPX, TNX and Gold

https://stme.in/rBEeWSFRfn





REPLAY LINK: Last ThursdayTechnical Webinar- 15 min

https://youtu.be/RIHXNWdJgDw





SPX - (3-5 Days)- Bullish- Expecting this is the likely final rally of this move off Dec 24 lows, but should move a bit higher into 2710-5 before stalling and reversing course. Still long here, buying dips as targets have not been met



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls. Under 3094 necessary to change this trend.



HSCEI- Stallout looks likely up at 11000-11100 in next 3-5 days. Prices have moved a long way very quickly since early Jan, but this area has had significance since last July and has to be respected. For now, Trend won't be bearish unless 10550 is undercut but one should sell into 11100





Trading Longs: CRM, PG, HCA, ROKU, DATA, EVBG, CCI, VTR, WELL, PLD, FOX, NOW, TECK, ARNA, MRK, LLY, REGN, RH, TWTR



Trading Shorts: ILMN, VOD, AMGN, OLED, CE, ROP, GWW, SWK, AAL

Equities extended gains post FOMC, and the move above 2672 coinciding with Powell comments helped Equities accelerate on above-average breadth. Bonds rallied as well (more on this later) while we saw decent stabilization in both Crude and Gold as the Dollar fell sharply down to support. Technology and Consumer Discretionary both led the rally while Financials lagged performance.



Overall, yesterday's move likely kicks off a "final" push up to near 2710-5 that lines up with many technical and price/time targets for SPX off the December 24, 2018 lows. While the move on above-average breadth is certainly a good sign technically (with NASDAQ and IWM having broken out above downtrends from Fall 2018 peaks), prices are growing stretched, and are unlikely to move much further without the need to consolidate gains. Sentiment should start to turn more positive in short order now, given that Powell has all but turned "dovish" in his comments (whether this is true or not is a different story, but he seems to be realizing that accommodating the market is a positive, which in turn helps deflect the heat off him, as well as providing some cushion for the economy)



The one technical concern is that breadth did manage to flatten out over the last couple weeks on this US Equities "triangle" (likely 4th wave Elliott) from Jan 18. Thus a push higher now will likely result in negative momentum divergence, along with representing structurally the final move up in a 5-wave advance off late December lows. Additionally, bond yields have turned South sharply in recent days. Often it pays to watch when bond yields diverge from equities (as was the case in late November) and equities end up eventually following bond yields. (More recently the correlation has been quite positive and strong for yields and equities since October) This looks to particularly affect Financials in the short run (See chart below) and this group should lag. However very good price action out of Industrials, Discretionary and Tech.



In the days ahead, I am specifically looking for evidence of breadth turning less robust, signs of counter-trend indicators (Demark) lining up (will take 3-4 days) and/or any evidence of S&P reaching 2715 and reversing sharply. For now, most of this seems still a bit premature. Thus it should pay to stay the course, use dips to buy and look to sell over 2710 into early February.





ACTION PLAN- 



Long SPY with stops 259.96, expecting possible rallies back to 268.50-270



Long Crude oil with movement up to $55-56 likely



Long VNQ for REIT exposure- near-term target $83.50, but over should drive to 90





Additional charts and thoughts below.

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BULLISH BREAKOUT near-term in S&P!! S&P Triangle was broken yesterday into and after the FOMC meeting, coinciding with Powell's dovish shift which seems to have had a very bullish effect on equities, regardless if this in fact plays out. Near-term, it's likely that this move does allow for more strength up to S&P 2710-5, but should be used to pare down risk into next week. Near-term momentum should begin to wane in the days ahead and one should look for evidence of breadth stalling out.




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Financials have begun to show some evidence of stalling out in recent days, with XLF up against solid resistance and relative charts of XLF/SPX hitting trendline resistance and starting to rollover. Demark sells are now present and have been confirmed for XLF/SPX, indicating that avoiding and/or underweighting Financials might make sense. Near-term, this pullback in yields should be watched carefully for its effect in eventually dragging down US indices. For now, after a strong January, I expect Financials to take a breather.





This move in the US Dollar is quite negative in recent days, and plays into my thinking about a larger decline getting underway in short order. Near-term, this area does have some significance as support as this was hit a few other times. However, with January coming to a close and prices at new three-month lows and on the verge of a larger breakdown, one should look at Emerging markets, Commodities, and/or for FX traders, owning EURUSD, and/or GBPUSD. Shorting UUP and EUO also might make sense for those who are seeking currency ETF ideas. I will continue to highlight this as this move begins to play out, but this is one of this year's key themes, that the Dollar begins a larger pullback and should materialize in a way that benefits commodities and commodity related stocks.

AAPL post Earnings 6% jump could help Technology, & market into early Feb

January 30, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2622-3, 2612-3, 2606

Resistance: 2672-5, 2685-7, 2700



Tuesday Technical Video- SPX, TNX and Gold

https://stme.in/rBEeWSFRfn





REPLAY LINK: Last ThursdayTechnical Webinar- 15 min

https://youtu.be/RIHXNWdJgDw





SPX - (3-5 Days)- Bullish- Still willing to bet higher for markets given Triangle pattern in S&P and AAPL post earnings 6% jump, which likely helps Technology on Wednesday into FOMC.



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls. Under 3094 necessary to change this trend.



HSCEI- Stallout looks likely up at 11000-11100 in next 3-5 days. Prices have moved a long way very quickly since early Jan, but this area has had significance since last July and has to be respected. For now, Trend won't be bearish unless 10550 is undercut but one should sell into 11100





Trading Longs: HCA, ROKU, DATA, EVBG, CCI, VTR, WELL, PLD, FOX, NOW, TECK, ARNA, MRK, LLY, REGN, RH, TWTR



Trading Shorts: ILMN, VOD, AMGN, PCAR, OLED, IWM, CE, ROP, GWW, SWK, AAL

Equities managed to largely shrug off early losses yesterday, still finishing within their Triangle patterns, and despite weakness in Technology, this very well could be recouped by bullish AAPL and AMD movement into today's trading. Near-term, it still looks right to bet on a bit higher prices. While breadth and momentum have stalled noticeably,, there still hasn't been any meaningful decline to jumpstart any real selloff in equities.



It's worthwhile to note that NONE of the bearish news events, be it a Govt Shutdown, China, nor the FOMC, have served to derail this recent bounce. Even bearish earnings news out of NVDA and CAT couldn't take down Stocks. Meanwhile good news last night out of AAPL and AMD looks to be helping these stocks and very well could help to lead Tech higher. Thus, it always pays to note when bad news doesn't work, while Good news does.



While the area at 2670-2715 overall is quite important for SPX, there hasn't been any real bearish reversals yet to suggest it's right to be short. Thus, bearish opinions might be served better by owning implied volatlity into the month of February. For sectors to favor, one can turn to the REITS, and to Gold stocks (though extended now, and better to wait for pullbacks (See below))







ACTION PLAN- 


Long SPY with stops 259.96, expecting possible rallies back to 268.50-270


Long Crude oil with movement up to $55-56 likely


Long VNQ for REIT exposure- near-term target $83.50, but over should drive to 90



Additional charts and thoughts below.

below.gif

S&P Triangle very much still intact and yesterday's early weakness held where it should have before attempting to push back higher. Near-term, we'll focus on 2671-2 as important on the upside (unchanged from yesterday) while support near 2622 is key and then 2612. It's thought that bullish earnings from both AAPL and AMD very well might help the ailing Tech sector at a time when this is sorely needed after recent Semiconductor weakness. Overall, patterns of these sorts (HOURLY CHART) typically do get resolved by a push higher and it's worthwhile not turning too bearish too quickly on the idea of stocks stalling out (even though momentum has definitely stalled) until prices confirm some type of reversal and turn back lower under 2612 at a minimum. Until then, it might pay to bet on a last ditch push up into 2710-5 before a more meaningful stallout occurs.


Gold stocks have proven to be one of the strongest groups in rallying off the lows from last September, just at a time that the broader equity market was peaking out. Rallies this week in the GDX, the VanEck Vectors Gold Miners ETF shows prices getting over prior lows from the last two years, which is a very encouraging development for the Mining stocks. Near-term, there doesn't look to be a lot of upside however, as prices are now well above the upper Bollinger and will register counter-trend Sells within the next 2-3 days potentially. However, dips should be used to buy, as structurally the miners have improved in recent weeks, and given the negative correlation with stocks from October to January, might be an area to consider for those wishing to diversify away from groups like Technology this year.


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AAPL was higher by 6% in the after market following earnings and forecast suggesting some much needed stabilization after the company's stock lost about 1/3 of its market value since October. The decline from October occurred at nearly an exact 1x1 Price/time aspect, falling 90 points in 90 days time to hit 142. While arithmetic charts showed this level not to be all that meaningful outside of a 61.8% Fibonacci level from 2016 (and meaningful trendline down near 120) the logarithmic charts on a monthly basis showed this to be quite important. Often viewing monthly charts on a log basis gives some much needed insight. In this case, the stock had fallen to exactly a key level intersected by the rising trendline from 2016. Now post close, AAPL has bounced to over 163 (if these gains hold ) Heading into the days and weeks ahead, it looks unlikely that the stock will get immediately up over 170, so this bounce might prove to be an initial level to sell for traders, with technical targets found above its 50-day moving average but just under 170 on this first rebound. Longer-term, momentum will need to stabilize a bit to suggest anything more than just a short-term bounce. However, providing this holds this trendline, a more meaningful rally could take place between now and September of this year before peaking.

Triangle, or Start of Breakdown? Next 2-3 days very important

January 29, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2622-3, 2612-3, 2606, 2590-2, 2574-5

Resistance: 2653-5, 2672-5, 2685-7, 2700



Monday Technical Video

https://stme.in/iyp7YQ6AIX



REPLAY LINK: Last ThursdayTechnical Webinar- 15 min

https://youtu.be/RIHXNWdJgDw





SPX - (3-5 Days)- Mildly Bullish- Despite Monday's weakness, prices rallied into the close, and even on post close declines, have not yet broken areas to turn bearish. Hourly charts still resemble a triangle pattern and we'll need to see movement under 2622 to have bearish leanings and then under 2612 would be more definitive.



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls. Under 3094 necessary to change this trend.



HSCEI- Stallout looks likely up at 11000-11100 in next 3-5 days. Prices have moved a long way very quickly since early Jan, but this area has had significance since last July and has to be respected. For now, Trend won't be bearish unless 10550 is undercut but one should sell into 11100





Trading Longs: DATA, EVBG, CCI, VTR, WELL, PLD, FOX, NOW, TECK, ARNA, MRK, LLY, REGN, RH, TWTR



Trading Shorts: ILMN, VOD, AMGN, PCAR, OLED, IWM, CE, ROP, GWW, SWK, AAL

Equities pulled back sharply Monday on earnings and guidance concerns of some very important companies like Caterpillar, and NVIDIA, with Semiconductors experiencing a vicious about-face from their recent strength last week. Overall, Technology sold off the most of any of the major 11 sectors, yet breadth remained somewhat tepid, and failed to register any type of levels of concern. Prices managed to hold last Friday's lows, failing to breakdown sufficiently to think a pullback is upon us. However, this triangle pattern has very well defined levels of risk, so any violation of 2612 would put a selloff back on the front burner and particularly under 2596 would be a negative.



Bottom line, more needs to be done to suggest a correction has arrived. While charts seem to paint a very poor risk/reward with prices up near critical resistance, and cycles suggesting the possibility of a decline into mid-February, structurally we haven't seen sufficient weakness. Financials have been acting very well lately and Technology as well, despite yesterday's pullback. Most of Europe and Asia remain in near-term uptrends, so more will need to happen to expect stocks are turning down. This week should help solve this dilemma.







ACTION PLAN- 



Long SPY with stops 259.96, expecting possible rallies back to 268.50-270



Long Crude oil with movement up to $55-56 likely



Treasury Shorts closed out Thursday on strength and yield decline





Additional charts and thoughts below.

below.gif

S&P looks to have formed a triangle pattern, which bodes well for buying into dips on Monday's close, with a very well defined area of risk at 2622 and under at 2612. Gains back above 2671 argue for a push up to the more important 2700-2715 area before stocks stall. For now, it's difficult to be all that bearish on trend, despite the many reasons for concern and ongoing uncertainty. Minor pullbacks have held where they need to thus far. While prices did in fact look to peak out near important one-year anniversaries, we'll need to see more weakness to argue for a larger pullback. The next 2-3 days should decide the course of action here. Stay tuned.




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2019 has started off showing some classic mean reversion, as the worst performing sectors for last year are currently leading the pack. This 12-month performance table shows Energy and Financials right at the bottom, both losing over 14% in the past 12 months. Since that time, however, we've seen both groups turn higher and lead performance this year, which is traditionally something to expect from lagging sectors heading into a new year. Financials now leads all sectors with three more days in the month of January and relatively speaking has broken out vs the SPX relatively. This should mean on pullbacks that this sector is one to consider buying for outperformance in the weeks ahead.


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XLI has rallied to very important resistance near-term, not unlike the same area that S&P, DJIA and NASDAQ are dealing with. In the short -run, the odds are that Industrials fails at current levels given the presence of four-month trendline resistance coupled with resistance near former trading lows which have been important in XLI since late 2017. This area lies near 71-71.50, and until/unless exceeded, it's right to consider this to be strong overhead resistance to gains. The act of getting back above 71.50, however, while an alternate scenario, would drive this higher to the mid-70's.

Semi strength helps Technology strengthen more, while Financials on verge of intermediate-term Breakout

January 25, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2612-3, 2606, 2590-2, 2574-5

Resistance: 2653-5, 2675, 2685-7, 2700



REPLAY LINK: Yesterday's Technical Webinar- 15 min

https://stme.in/5zNviOEfU4





SPX - (3-5 Days)- Bullish- Still no evidence of any real downturn at work, as multiple selloff attempts failed over last few days, and prices still within striking distance of pushing up to new weekly highs. Best risk/reward is to sell rallies at 2685-2700 into 1/26-8



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls



HSCEI- Mildly bullish- Rally to 10900 now possible. Stallout did not result in any meaningful weakness and could still push higher.



Trading Longs: DATA, FOX, YUM, EXC, PNW, MRK, ABT, LLY, REGN, RH, EVBG, RMD, TNDM, TWTR



Trading Shorts: VOD, MAR, H, STX, OLED, IWM, XRT, CE, ROP, GWW, SWK, AAL

Equities have stalled, but yet no real trend reversal and despite the Doubts of a Chinese deal which seem to be coinciding with constant reversals in stocks, only to see these reverse higher by days' end, the trend remains bullish near-term and an increasing likelihood of a final push into 2700 which would signify a better risk/reward to sell into.



Overall, two things give confidence near-term. Technology strength has improved measurably, as seen by the Equal-weight Technology index v SPX which has broken out above the trendline since last June. Yesterday's' SOX outperformance also helped this sector begin to trend higher and turn up vs the group (which was profiled yesterday as being at a key make-or-break. Second, Financials have rallied up to make-or-break levels given Financials strength, and relatively speaking, this group is challenging a longer-term area of serious resistance created last year when Financials peaked relatively. So both Tech and Financials have broken out and/or are on the verge.



A couple things give caution, however. Price structure remains weak and SPX has now rallied 12% into a serious area of resistance. Additionally, prices along with breadth and momentum have stalled out of late. Overall, until 2710 is exceeded in SPX, this remains a counter-trend rally and should be used to sell on any move into 2685-2710. However, in the short run, selling here still looks a bit premature given SPX price action alone. However, Treasury yields very well might have started the new trend on yesterday's breakdown, and this very well might have an effect on the Financials space as it deals with its own possible breakout. The next few days will be key in this regard. Stay tuned.





ACTION PLAN- 



Long SPY with stops 259.96, expecting possible rallies back to 268.50-270


Long Crude oil with movement up to $55-56 likely

Treasury Shorts closed out Thursday on strength and yield decline


Additional charts and thoughts below.

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NASDAQ will have to be watched carefully here as this did manage to exceed the downtrend from October, similar to NDX, CCMP and IWM. Given that technical patterns have improved, it's right to give this the benefit of the doubt until we see evidence of this failing.

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Technology has begun to turn sharply higher in recent days, as yesterday's Semiconductor strength helped this group makes some meaningful outperformance. The Equal-weighted Tech index vs SPX shows this recent surge, and should be respected as being important to the overall market given Tech's 20% representation in the SPX. Overall, it's tough turning bearish when Tech is surging higher and this will need to slow down to give any stalling out any real credibility.

credibility.gif

CCI index could be on the verge of trying to attempt its own breakout as the US Dollar rally looks to be nearing at least a temporary peak. Pound Sterling has been rallying sharply of late on signs BREXIT might have a second lifeline, while EURUSD looks to be near key support after dismal European data and Draghi warnings on growth had very little downward effect on the Euro. Overall, any signs of meaningful dollar downturn should cause CCI to breakout, giving investors their first buy signal for Commodities of the year. For now this is still premature, but the pieces are in place for a potential turn, so it makes sense to pay close attention.

Second straight day of selloff being recouped- Short-term Bullish trend intact

January 24, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2612-3, 2606, 2590-2, 2574-5

Resistance: 2653-5, 2675, 2685-7, 2700



SPX - (3-5 Days)- Bullish- Thought that it's right to buy into yesterday's weakness, as there wasn't sufficient weakness to expect immediate downside and better to sell rallies at 2685-2700 into 1/26-8



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls



HSCEI- Mildly bullish- Rally to 10900 now possible. Stallout did not result in any meaningful weakness and could still push higher.



Trading Longs: EXC, PNW, MRK, ABT, LLY, REGN, RH, DATA, EVBG, RMD, TNDM, TWTR



Trading Shorts: MAR, H, STX, OSTK, IWM, XRT, CE, ROP, VOD, LVS, GWW, SWK, AAL

No real change in thinking give the second straight day of closing well up off early lows. S&P's 3-4 About-faces in the last 24 hours gives some concern to many who wish to see this volatility die down, and it continues to be an environment where short-term news is certainly coinciding with many reversals, regardless if it turns out to be true or not.



Yesterday's ability to hold early losses and grind higher, yet again, for the second day in a row does give some optimism that this trend is still very much intact in the near-term. Gains look more likely than losses into end of week and early next week before resistance sets in. Semiconductor earnings post close seem to have helped prices extend in stocks like TXN, LRCX and XLNX, and while this sectors underperformed in Wednesday's trading and looks to be up near key resistance, Technology overall has been acting much better, and potentially today's trading could help provide the necessary strength that this sector needs.



One thing is for certain however: Small-caps have been turning down pretty rapidly in the last two weeks and yesterday, yet again, saw IWM down, while SML lower to the tune of 1.6%. Note that Small caps peaked out last June when Technology did and it was the late August peakout in NASDAQ composite that coincided with nearly a full month of negative breadth before the broader market peaked. This will be something to watch carefully in the days/weeks ahead. However, this negative has to be weighed vs a Financials and a Technology sector that both are acting better than would be expected in a volatile "down" tape like we've experienced.







ACTION PLAN- 



Short US 10Year Treasuries, expecting yields rally up to 2.81-3% for 10-Year Treasuries



Long SPY with stops 259.96, expecting possible rallies back to 268.50-270



Long Crude oil on Tuesday's weakness, with movement up to $55-56 likely in the week ahead





Additional charts and thoughts below.

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S&P severed several uptrends and downtrends before settling in at levels above yesterday's close by nearly 8 ticks and rose post close on good earnings by several Semi names. Gains look likely in the days ahead, barring a close under 2612, and the ability to clear 2653.75 would be an area to consider buying for gains up to at least 2685-6. For today, there is a bit more confidence given two straight days of reversals off early lows, and it looks right to expect a bit more strength into 1/28 before indices stall out.

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Semiconductor stocks appear to be at a critical crossroads vs Technology as a whole, and after the two month rally, this group stalled out over the last few days, and particularly has done so vs Hardware. However, post close earnings yesterday from TNX, XLNX, LRCX were good enough to lift futures post close, and as can be seen above, Semis look to be at resistance now of the entire downtrend from last Fall. Any ability of this to be broken would be a vote of confidence that could help this rally extend a bit more into end of week and into early next, helping the SPX achieve its target of 2700.

Don't look now, but Financials appear to be on the verge of a larger sector breakout relatively speaking. This group has taken the lead in recent weeks to now lead all other 10 sectors in performance for 2019. The ability to break out of the entire relative trend for XLF to SPX going back since early last year would be a good vote of technical confidence that this group might finally begin to start strengthening in a manner that would help the broader stock market, regardless of the poor technical structure, and is something to be watched carefully in the weeks ahead.

Pullback fails to violate uptrend, & S&P, TNX both remain near-term bullish with tight stops

January 23, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2606, 2590-2, 2574-5

Resistance: 2630-9, 2675, 2685-7, 2700



SPX - (3-5 Days)- Bullish- Thought that it's right to buy into yesterday's weakness, as there wasn't sufficient weakness to expect immediate downside and better to sell rallies at 2685-2700 into 1/26-8



EuroSTOXX 50- Bullish- Rallies up to 3200-50 look possible before this stalls



HSCEI- Mildly bullish- Rally to 10900 now possible. Stallout did not result in any meaningful weakness and could still push higher.



Trading Longs: MRK, ABT, LLY, REGN, RH, DATA, EVBG, RMD, TNDM, TWTR



Trading Shorts: MAR, H, STX, OSTK, IWM, XRT, CE, ROP, VOD, LVS, GWW, SWK, AAL

S&P's attempted pullback failed to break down under key support which needed to be violated to have any real concern on trend. Overall S&P, NASDAQ, DJIA remain in uptrends, and likely can still push up to test recent highs and get over these levels by a small amount before any real larger breakdown gets underway. However, the extent of yesterday's selling should cause momentum to begin to turn lower in the days ahead, and despite the minor recovery into the close, breadth still fell by 3/1. So it's likely that markets are starting to stall out after this big run we've experienced in the last four weeks. However, it's just difficult to think stocks go from high to low right away, and even in a topping process, things take time. A move back to highs would allow for counter-trend Sells to line up and provide a better risk/reward area to sell into as of end of week, vs thinking this happens right away. However, under 2596 on a close, it's likely that this IS beginning, and one should take defensive measures.



Overall, the initial selloff had begun in Futures far before the story about US potentially pulling out of a meeting with China. Later White House Advisor Larry Kudlow made a public comment on CNBC about no meeting having ever been on the agenda for this week, so there was no "pullout" of a meeting, as there was no meeting in the first place. However, interestingly enough, the White House obviously had been watching the early decline in markets and felt the need for Kudlow to address the public to set the record straight. This indicates that the administration does watch markets more than many believe, and that they might use future market weakness as a way to time news events which they believe the public might view favorably. This also, from a sentiment perspective, suggests that POTUS likely goes out of his way to get a deal done, even if he has to spin it in a way that suggests he "won" when China hasn't agreed to all the details.





ACTION PLAN- 



Selling Treasuries, expecting Yields rally up to 2.81-3% for 10-Year Treasuries

Long SPY with stops 259.96, expecting possible rallies back to 268.50-270

Long Crude oil on Tuesday's weakness, with movement up to $55-56 likely in the week ahead



Additional charts and thoughts below.

S&P managed to close right near its first meaningful area of support- 2630-2. While this had been broken in trading, the late day recovery helped prices rebound, and at close, no meaningful trend damage had been done. A rally back to test last week's highs looks likely before this rally from late December rolls over, though a close under 2596 would be important and negative. For now, better risk/reward areas to sell lie up from 2685-2710, and movement to this area by end of week should be significant.

The relationship between Developed and Emerging markets remains trending lower, showing the severe breakdown last year when Stocks peaked last September/October. Thus, while many might suspect that Emerging markets should have weakened as global equities fell, we actually saw a fair amount of relative strength and it still looks right to overweight EM for outperformance. This should begin to accelerate once more meaningful weakness in the US Dollar occurs.

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Treasuries showed some early strength, yet similar to Equities, did not break the uptrend on the close from early January. Thus, it's expected that further strength is likely in yields and TNX should push back up above last week's highs. Momentum remains positively sloped and given the breakout of the downtrend from last year, Yields have begun to push back higher. Overall, yesterday's Treasury strength/yield decline looks insignificant, and should represent a chance to buy TBT/Sell TLT and/or expect yields to trend higher this week.

SPX, DJIA testing make-or-break areas as both Crude and TNX have firmed

January 18, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2590-2, 2574-5, 2560-2, 2552-3

Resistance: 2630-9



SPX - (3-5 Days)- Make or Break- Despite resilience, it still looks right to adopt defensive stance between today and Monday- Movement higher past Monday and/or above 2650 would drive prices higher into 1/26-8 and 2675-2700



EuroSTOXX 50- Bearish- Expecting rallies brief and do not exceed 3150- Turn back under 3000 should lead to retest and/or possible break to new lows



HSCEI- Mildly bullish- Rally to 10600 possible but upside limited this week



Trading Longs: RMD, TNDM, TWTR, LLL, HRS, BGNE, ROKU, RMD, CTB, CHD



Trading Shorts: OSTK, IWM, SMH, XBI, XRT, EMR, CE, ROP,VOD, LVS, GWW, SWK, CBOE, APA, STX, AAL

Overall, stocks are reaching the end of the first cyclical period and have not yet shown any signs of reversing course. The early week breakout has paved the way for a low volume, lackluster breadth type follow-through rally, which has resulted in breadth not following price back to new highs. Overall, there is a finite window which one can be defensive here and attempt to play for a reversal. The first period is 1/17-1/21 which ends on Monday. The second is 1/26-1/28 which lines up with the anniversary of last year's late January high. Interestingly enough both last January and this January have acted similar in many respects. We'll see if this year's 11% rally in 3 weeks ends in similar fashion. This year's technical situation is far worse than last year given the bearish momentum in weekly and monthly charts and prices are now rallying to test (and arguably break, as of Thursday) key technical resistance that had served to mark formidable lows during the Thanksgiving period.



One thing that's of minor concern for the Bears is that many investors seem to have a firm grip on where the key resistance to this bounce lies (this is rarely the case ) Thus most are arguing that this level needs to hold.. myself included. I rarely like to stand with the consensus as this often ends up to be wrong. Overall, if S&P does manage to break out above 2650, this would push out the potential peak until 1/26-8 and likely could occur near 2685-2700, which lines up with another trendline covering highs going back since last September. This would be truly the line in the sand for shorts. Near-term however, its right to be defensive until Monday is past and prices lie under 2650.



One interesting observation is that Crude oil, Treasury yields and Equities remain resilient in the short run and we've seen evidence of yields attempting to push higher in the wake of a possible lifting of tariffs. Note, at the time of this writing, there has been no agreement, yet stocks have moved up in anticipation. Any failure in this regard very well could serve as the catalyst for a decline at a time when breadth and momentum have slowed during this advance. For now, it's right to continue to be defensive until/unless S&P makes it past Monday and prices are over 2650. In this case, a rally into this latter timeframe would occur, up to 2685-2700.




ACTION PLAN- 



RUSSELL 2k FUTURES are a short at 1460 up to 1500. Targets lie near 1250



Long Treasuries, with stop on TNX close above 2.75



Additional charts and thoughts below.

Equities seem to be at very key make-or-break after this rally in recent weeks. The 11% rise in S&P has brought prices to very important make-or-break and S&P managed to exceed 2630 on yesterday's close. Thus, there remains a small window for shorts here, between here and 2650. Any ability to get over 2650 argues for a larger lift which might hit 2685-2700 before this move stalls and reverses. 240 minute charts have begun to show negative momentum divergence on this lift, which is a negative. Yet prices need to turn down under 2596 at a minimum to have concern. While the air might seem quite "thin" at these levels given the breadth slowdown, witnessing the price reversal in the next couple days will be importnat for the short-term bearish case.


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Treasury yields have begun to stabilize after their initial breakout attempt and movement above 2.75% would argue for a continued lift in yields at a time when most have given up on being short Treasuries. CFTC data shows this percentage to have been cut in half since October, so it's likely that any further drawdown in yields proves short-lived with a maximum downside to near 2.5% before starting to turn higher. Bottom line, given Treasury yields propensity to lead equities, i'd view any move above 2.75% as being bullish for the Risk-on trade, and even on minor pullbacks in Equities, it's likely this would prove buyable quickly while a chance to sell into Treasuries.


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I think it's important to watch the Financials sector closely during earnings, as prices have pushed up to near levels that should be important resistance. However, if XLF gets over $26 and relative charts break out above levels that have held since last Spring, it would be right to follow this move. For now, there is evidence of this group likely finding strong resistance given short-term overbought conditions, having retraced 50% of the prior decline. But relative charts tend to make their move prior to absolute and a breakout in this group is something which would likely cause intermediate-term strength in indices until the Spring/Summer, so it's worth paying attention to.

Financials carrying load, but 5 sectors down coupled with breadth divergences an issue

January 17, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2590-2, 2574-5, 2560-2, 2552-3

Resistance: 2623-5, 2630-9



SPX - (3-5 Days)- Selling longs, adopting hedges for trading purpose, Expect Stalling out & turn down by 1/21 at latest



EuroSTOXX 50- Bearish- Expecting rallies brief and do not exceed 3150- Turn back under 3000 should lead to retest and/or possible break to new lows



HSCEI- Mildly bullish- Rally to 10600 possible but upside limited this week



Trading Longs: RMD, TNDM, TWTR, LLL, HRS, BGNE, ROKU, RMD, CTB, CHD



Trading Shorts: OSTK, IWM, SMH, XBI, XRT, EMR, CE, ROP,VOD, LVS, GWW, SWK, CBOE, APA, STX, AAL

Bottom line- No change in the thesis based on Wednesday's move.

Upside should now prove limited for global indices, with S&P likely to start to weaken and pullback and any strength would face strong overhead resistance between 2630-40 between today and next Monday



Markets appear to have made good progress on Wednesday from a price perspective alone, yet most of the DJIA's 141 point move was made by Goldman Sachs which accounted for over 120 points. Stripping out that gain shows a very lackluster move in stocks, where breadth yet again signaled only about a 3/2 gain, and 5 sectors out of 11 finished down on the day. Only Financials was higher by 2.2%, yet XLF is now at resistance, having recouped 50% of the prior decline and no other sector was higher by more than 0.41%, led by Materials on the day. Energy, Discretionary, Healthcare, Staples and Telecom were all lower and Technology barely escaped with a positive day at +0.05%.



Overall, the reasons for skepticism here, despite a 3 week uptrend, are as follows: Indices have moved between 10-15% in the last 15 trading days since Christmas eve, and have finally reached the 50% retracement levels (or fractionally below) from the decline from September/October. Structurally this area remains difficult as several lows were made at this area and now offer resistance on this rally. Additionally, Demark based exhaustion has just arrived on SPX, DJIA , CCMP, NDX and many sectors after this bounce, and indices lie also just below a very important area of Ichimoku resistance. As stated in recent commentary, while the breadth initially on this advance was impressive, in recent days that has faded and our minor range breakout in recent days barely has registered positive breadth readings. Cycle wise, there are a plethora of various near-term cycles that converge between now and January 28th. Therefore, my feeling remains that into end of week, we're likely to stall out.



ACTION PLAN- 



RUSSELL 2k FUTURES are a short at 1460 up to 1500. Targets lie near 1250


Short XBI with stops above 85.50


Short XRT- Short with targets down near 41.60


Long Treasuries, expecting pullback under 2.60


Additional charts and thoughts below.

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Nasdaq Comp is now right at key trendline resistance as of Wednesday's Advance. As relayed yesterday the following area important and make this a high risk area: 1) Trendline resistance of the last few months 2) Demark exhaustion completion 3) Ichimoku Cloud directly above. Under 6877 on a close is a negative, and one should look to sell into 7085 up to 7150 as this area looks very strong on the upside.

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Financials have now retraced 50% of the move down from last year's peak. This area is important and likely causes a stallout in this group after a huge move on Thursday that many believe gives real reason for optimism.. Technically of course, we see that prices are now into this zone where a plethora of former lows were made for XLF. Given the tried and true technical principle that former lows now become resistance on retests, it's likely that XLF stalls here in the next 3-5 days and does not make it higher than 26 before turning back lower.

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The NYSE All-stocks Advance/Decline has now reached areas that have been important in causing peaks late last year, and Demark indicators are 2 days away from signaling similar exhaustion. It's thought that the next 1-2 days should bring about negative breadth even on rallies, or barely positive before markets turn lower next week.

Peak now possible between Wednesday - Friday this week

January 16, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2590-2, 2574-5, 2560-2, 2552-3

Resistance: 2623-5, 2630-9



SPX - (3-5 Days)- Mildly bullish up to 2630-40- Expecting Reversal Wed-Friday- Use early strength Wednesday to sell/flatten out and adopt hedges



EuroSTOXX 50- Bearish- Expecting rallies brief and do not exceed 3150- Turn back under 3000 should lead to retest and/or possible break to new lows



HSCEI- Mildly bullish- Rally to 10600 possible but upside limited this week



Trading Longs: TWTR, XRX, AVGO, LLL, HRS, BGNE, XXTM, ROKU, RMD, CTB, CHD



Trading Shorts: IWM, SMH, XBI, XRT, EMR, CE, ROP, OSTK, VOD, LVS, GWW, SWK, CBOE, APA, STX, AAL

Bottom line- Upside should now prove limited for global indices, with S&P likely to face strong overhead resistance between 2630-40 between Wednesday-Friday of this week. Reversals of trend look likely technically, and one should consider using strength Wednesday to flatten out and/or adopt hedges for an above-average chance of a drawdown into next week.



While markets had gotten near the vicinity of this resistance from a price standpoint, time had not yet lined up, but this seems increasingly likely given the presence of Demark -based exhaustion on daily and intra-day charts of various duration, while Global indices are approaching the one-year anniversary of last year's major peak. NASDAQ, Technology and Financials are all near key levels and this helps to add conviction to this idea of a stallout. Moreover, Crude oil, Treasury yields and SPX have all moved in unison in recent weeks and now all three have been showing some evidence of stalling, with Treasuries starting to show the greatest amount of strength. My Weekly Technical Perspective highlighted 10 stocks to consider as Technical shorts and the last couple days likely have allowed for an even better risk/reward entry.



Additional reasons for concern include the degree to which breadth and momentum have been to slow after an initial sharply positive Surge off the lows in late December. This last few days showed hardly any net change and breadth was flat. While this could be expected after such a big move like we'd seen, in excess of 10%, yesterday's minor range breakout occurring on such light breadth while momentum was lower was a potential near-term "nail in the coffin" for US indices. It's thought that Treasury strength occurs which in turn will lead indices back lower for a potential retest and minor break of lows (which then should be bought, technically) The reason to think indices retest has more to do with Structural concerns and wave pattern from November/December which would present an ideal buying opportunity on any break to new lows. While the improvement in Technology and positive breadth from December are reasons to expect pullbacks are buyable, at current levels markets look like poor risk/rewards for longs in the short run.



ACTION PLAN- 



RUSSELL 2k FUTURES are a short at 1475 up to 1500, but this area could be tested into next Monday/Tuesday before reversing. Any shorts from yesterday have to be given leeway up to 1500. Targets lie near 1250


Short XBI with stops above 85.50


Short XRT- Early break yesterday which rallied back- Short movement over 44 to 44.75 with targets down near 41.60


Long Treasuries, expecting pullback under 2.60



Additional charts and thoughts below.

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S&P minor range breakout was certainly constructive, but breadth nor momentum managed to follow price to new weekly highs, which might have been expected after the four-day stallout. Yet now we see prices up into this key range to sell, over 2600 and just under the area at Thanksgiving 2018 lows near 2630-1. For those proficient in Demark, Wednesday likely brings about the first TD SELL SETUP (9 consecutive days where the close is higher than the close from four prior) while being UNDER TDST. In plain English, this kind of setup often arrives at turning points and should allow for at least a minor stalling out. Given that we've seen a few volume and breadth warnings in recent days, this looks to be an attractive risk/reward technically to sell into on Wednesday on any strength, particularly up to 2630-40.

2630-40.gif

NASDAQ Composite shows with a bit more clarity why this area is very important in the days ahead, and this first move off the lows likely runs into strong resistance. We're seeing a combination of three important factors: 1) Trendline resistance of the last few months 2) Demark exhaustion completion 3) Ichimoku Cloud directly above. Thus, its thought that this rally stalls out this week, potentially as early as Wednesday, and turns down. Under 6877 on a close is a negative, and one should look to sell into 7085 up to 7150 as this area looks very strong on the upside.

upside.gif

Healthcare is one group that looks attractive to own after its recent weakness, though favoring the Pharmaceutical stocks vs buying Biotech, which might weaken a bit more in the next two weeks. Relative charts of XLV to SPX have pulled back to what's considered to be good support to buy dips for a bounce in this group which should help the sector continue its intermediate-term outperformance.

Range-bound trading offers no clues, yet Technology has begun to improve

January 15, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2560-2, 2552-3, 2524-6

Resistance: 2598-2601, 2608-10, 2623-5, 2630-9



SPX - (3-5 Days)- Bullish - Insufficient weakness Monday to turn bearish & prices unchanged over last 3 days. One final push higher looks possible to 2630-40



EuroSTOXX 50- Mildly bullish for 1-2 days for a final push above 3100- Area near 3150 important and trend reversal likely into next week



HSCEI- Mildly bullish- Rally to 10540-10600 possible but upside limited this week



Trading Longs: TWTR, XRX, AVGO, LLL, FITB, NOC, UPS, ROKU, RMD, CTB, CHD



Trading Shorts: ED, AES, NEE, GWW, SWK, XBI, XRT, STX, AAL


Bottom line- A tricky area for US indices. Technically upside should prove limited. However, we haven't seen sufficient weakness to think trends are turning down just yet. Prices closed at similar levels that were hit last Wednesday, so the last three days have been literally unchanged in net progress for either direction. Given that Financials have strengthened a bit in recent days, while Equal-weight Technology has begun to act better, I'm willing to lean long heading into Tuesday, but with close stops at 2560 on a daily close. Provided that S&P remains above this level, one should have a long bias for the next few days, expecting that this consolidation is resolved to the upside near-term before any greater stalling out and possible retest.

Key to mention is that Crude oil along with US Treasury yields and US stocks have all stalled recently, though with greater signs of pullbacks beginning in the former two, with Crude and TNX starting to turn lower. For equities, the pressure in stocks like AAPL has served to mask some of the strength being seen in this sector lately, and stocks like NVDA, ADI, SWKS, XRX, MCHP, AVGO are all higher by 4.50% or more in the last five days


Many Industrials stocks showed decent strength yesterday with favorable short-term patterns in NOC, UPS, LLL, while the Utilities fell to multi-day lows given PCG's bankruptcy filing, and other Utilities like ED, AES, NEE also showed real weakness on this news which might cause further underperformance in this sector over the next few days. Overall, the combination of strength out of Financials and broader Tech while Industrials are hanging in, and Healthcare has weakened down to key support all suggest that it still might be tough to fade the market on Tuesday heading into Wednesday. Yet any further push to new highs likely starts to bring about negative divergences that should make any further rally sellable into late week.



ACTION PLAN- 



RUSSELL 2k FUTURES are a short at 1475 up to 1500, but this area could be tested into next Monday/Tuesday before reversing. Any shorts from yesterday have to be given leeway up to 1500. Targets lie near 1250

Short XBI with stops above 85.50


Short XRT- Early break yesterday which rallied back- Short movement over 44 to 44.75 with targets down near 41.60


Long Treasuries, expecting pullback under 2.60




Additional charts and thoughts below.

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S&P has largely gone nowhere since last Wednesday with S&P closing within three points of levels hit back on 1/9/19 last week. The uptrend for S&P Futures, as shown above, remains intact with no discernible break. Additionally, upward pressure in the broader Tech space, Industrials and Financials were all positives for stocks Monday, despite the minor downdraft. Bottom line, until/unless stocks close under 2560 in SPX, it's still right to expect this neutral trend in recent days to be resolved higher. Above 2595 adds conviction, and drives prices to 2630-40.

Financials managed to push back higher to new multi-day highs yesterday, something which helps this group in the short run, given Citigroup strength and seeing some of the bounce in some of the Regional banks. Overall, this might serve to help provide a minor tailwind for Stocks over the next few days, though strong overhead resistance looks to be directly above at $25 for XLF. But this looks to be a factor which might prevent Stock indices from immediately falling just yet, and the next 1-2 days should be positive for Financials as earnings season has gotten underway.

underway.gif

Technology has shown some broad-based strength in recent weeks, despite the ongoing weakness in AAPL. We've seen stocks like NVDA, AVGO, SWKS, ADI, MCHP, PAYX, all move over 4.5% higher in the last week, and the Equal-weighted Technology index, SPXEWIN, in relative terms to SPX has broken out of a trend going back since June. This should be a positive for Technology for the weeks ahead and potentially into Spring/Summer. So while near-term upside might prove minimal for indices after this move, it's likely that this group's outperformance might keep any further drawdown to a minimum and provide buying opportunities for the market on any consolidation into late January/February.

Yesterday's close keeps trend bullish a bit longer; Expecting 1/15-17 peak

January 11, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2569-70, 2552-3, 2545-6, 2526-8

Resistance: 2600-2, 2608-10, 2623-5, 2630-9



SPX - (3-5 Days)- Bullish into next Tuesday- Yesterday's close postpones immediate drop- Upside limited, but expect 2630-40 is possible before peak



EuroSTOXX 50- Mildly bullish for 1-2 days for a final push above 3100- Area near 3150 important and trend reversal likely into next week



HSCEI- Mildly bullish- Close to a turn, but a bit more upside possible over 1-2 days- 10540 -10600 important


Trading Longs: RMD, CTB, CHD, CNP, EVTC, FE, TLK, YUM, LII, EW, AMT, CASY, DORM, FIVN

Trading Shorts: EMR, WY, ETN, MTW, RTN, BYD, WY, CE, FLR, XBI, XRT, MGM, WYNN,, STX, QRVO, AAL

US Benchmark indices made a respectable close yesterday with no meaningful reversal just yet. Closing up towards the highs of the prior day's range, with higher close than open and Demark counts premature by 3 days, it appears like a bit more strength can happen. Most are eyeing 2600 as important, but technically the November lows have more significance which are found near 2631 in SPX cash and 2639 Futures. So there could be some short covering by those who have stops set at 2600, as this isn't all that meaningful as the actual lows hit near Thanksgiving (now possible resistance HIGHS)


Breadth was lackluster in trading yesterday, roughly 3/2 positive and we saw both Crude and TY Yields stall out , not dissimilar from Equities. Financials still lagged performance, barely finishing positive, while Discretionary and REITS were negative on the session. Industirals and Utilities both got a boost, the latter which looks attractive for a 3-5 day long bet, and should be overweighted heading into 1/21.

Sector-wise, Retailing and Airlines took a breather, and both of these groups could stand to weaken further in the next 1-2 weeks after the recent upside they've seen. Industrials managed to turn in a positive session, yet much of this was the Aerospace/Defense names along with GE which is leading the entire Industrials group YTD. Industrials do look likely to extend gains another few days, but rapidly nearing resistance on this rise and structurally remain in poor shape.



ACTION PLAN- 


Long XLU with targets 55-56 into next week


RUSSELL 2k FUTURES are a short at 1475 up to 1500, but this area could be tested into next Monday/Tuesday before reversing. Any shorts from yesterday have to be given leeway up to 1500. Targets lie near 1250


Short XLF- Maximum upside for XLF should be near 25

Short XBI with stops above 85.50


Short XRT- Early break yesterday which rallied back- Short movement over 44 to 44.75 with targets down near 41.60

Long Treasuries, expecting pullback under 2.60




Additional charts and thoughts below.

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S&P managed to close up near the highs of the prior days range. Thus, no evidence of any reversal, and exhaustion counts remain premature until next week. Thus, dips likely are still buying opportunities for those that focus on very near-term trading patterns, and should lead to even further strength into early next week. Note, yesterday's strength doesn't cancel the likelihood of a selloff, which looks likely in the near future. Though some evidence of either counter-trend exhaustion, or actual price weakness is necessary before thinking that a pullback is imminent. For now, while prices seem close, this might be delayed for a few days more.

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Utilities showed decent outperformance yesterday, and when eyeing relative charts of the Utes vs SPX, this group has pulled back to levels that make sense to consider buying dips. Strength in the defensives during a stock rally typically can serve as a warning sign of an impending turn. Yesterday's sector performance seemed to be doing just that and relative charts of the Utes still look attractive after their recent breakout and pullback. On an absolute basis, movement over 54 is necessary to regain its seven-month uptrend, but this looks possible in the days ahead.

Pharmaceuticals vs Biotech, when looking at ratios of this sector spread, has now fallen to levels which makes sense to switch back to Pharma, which largely coincides with a more defensive stance. The break of the uptrend back in early January was something highlighted here early on, and has led to a decent bounce in the Biotech space. Now Biotech , based on XBI, is stretched and up near resistance, while Pharma has been weak for several days. Relatively speaking, the reason to switch back to Pharmaceutical names has to do with a combination of exhaustion signals on the relative charts, combined with the ratio hitting the lows of this Daily Bollinger. I expect Biotech to begin to pullback, and stocks like ISRG, REGN are up to good resistance near-term.

Trend bullish, but expecting reversals in Treasury yields, Equities and Crude in next 2-3 trading days

January 10, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com

SPX Cash Index

Support: 2552-3, 2526-8, 2502-4, 2458-60, 2420

Resistance: 2586-7, 2590-2, 2600-2


SPX - (3-5 Days)- Bearish, with stops at 2597 on an hourly close, expecting that Equities, Treasury yields and Crude all have a chance at peaking out in 2-3 days and upside is limited


EuroSTOXX 50- Bearish- Peak in price likely Thursday/Friday. Area near 3150 important and trend reversal likely into next week


HSCEI- Bearish- Exiting longs, expecting max upside near-term is 10540 and pullback likely into next week

Trading Longs: TLT, LII, EW, AMT, CASY, BHGE, NOV, HP, DORM, SAVE, MRK, CHD, FIVN

Trading Shorts: (No change- most of these are compelling technically- having bounced within poor patterns) BYD, WY, CE, OSTK, BGG, FLR, XBI, XRT, MGM, WYNN, OLED, STX, LITE, LL, QRVO, AAL, LKQ, MTD

Still no meaningful evidence of any real reversal yesterday in Equities, however, Treasury yields dropped throughout the session and were 3 bps lower into the close. Crude oil, which also spiked sharply in yesterday's trading, has reached near-term targets and might also stall out and reverse in the next few days. Bottom line, a reversal in all three is increasingly likely between now and 1/15 which could give back at least half of recent gains.


Looking back, following the Fed minutes, Equities spiked, but yet gave back some of that by end of day. However, we still saw higher highs and a higher close. There needs to be some evidence of a reversal and/or down day to think stocks are reversing. While this should be clear in the next 3-5 trading days, as of now, there remains inconclusive proof. The Dollar dropped sharply and arguably this is also at an area where this can change trend, along with Treasury yields , Crude oil and Equities, so all of these should be watched carefully in the days ahead.


The one key piece of the puzzle that looks important concerns the reversal in 10year yields, which looked to occur right on schedule after yields got up to 2.745 and by end of day, had pulled back to 2.71. The start of weakness here in yields would likely be a source of stress for the Financials at a time when many have begun to question the viability of Financials heading into next week's earnings. Sector-wise, Technology looks to be close to resistance where this might peak out, while the rollover n some FInancials from my perpective, is negative at a time when yields have begun to turn down

Bottom line, I expect upside could prove limited here and a peak in stock prices looks likely in the next few days along with Crude and Treasury yields, the latter which looks to have begun Wednesday.



ACTION PLAN- 


Sell RUSSELL 2k FUTURES current levels with stops at 1500 and targets 1250

Short XLF


Short XBI

Short XRT


Long Treasuries, expecting pullback under 2.60

Short VNQ, as Real Estate has turned lower in recent days, and looks to be one of the weaker parts of the Defensive trade. VNQ target is 70.50


Exiting long Crude oil trade

Exiting long precious metals- Gold, silver



Additional charts and thoughts below.

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Russell 2k has now gained roughly 15% in the last 9 trading days, a pretty incredible feat. However, at current levels, it's unattractive to buy here given the presence of this strong overhead resistance, and technically speaking, it's right to consider reigning in longs with prices at a key juncture both based on former lows as well as trendline resistance. See that prices now have moved back to test the area near former lows (which should now contain this advance. Both based on the trend down in recent months and also prior lows, there is limited upside here near-term, in my view. One can consider selling Russell futures with stops at 1500 and targets down near prior lows at 1250.

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Technology ETF, XLK has moved up to critical make-or-break levels right near the area of its prior breakout. This has importance given the former lows hit here in recent months from October/November that is now being tested on the upside. Structurally, this ETF shows the Elliott count to still be a counter-trend wave 4 bounce which might then lead lower starting in the next few days. While Tech has been strong in recent days, I think we're arrived at areas where this likely stalls and backtracks.

US 10-Year Treasury yields look to be reversing course, and one thing to watch carefully in the days ahead along with Crude and Equities given that all have pushed higher in the last two weeks. This area near 2.74 was important for Yields and TNX hit this and then immediately snapped back to 2.71. It's thought that the Yield curve and then Financials would weaken if Treasury yields start to pull back immediately. Overall, given the acceleration down led to stocks eventually following suit both in early December and then late December, this is a very important piece of the puzzle to monitor.

Financials weakness ahead of earnings as Market nears resistance

January 9, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2552-3, 2526-8, 2502-4, 2458-60, 2420

Resistance: 2586-7, 2590-2, 2600-2



SPX - (3-5 Days)- Trend bullish, but looking to sell into gains today into Thursday, flattening out ahead of a reversal. 2585-2600 key



EuroSTOXX 50- Bullish- Move up to 3150 likely before this stalls out



HSCEI- Bullish with targets 10364, and max of 10540



Trading Longs: EW, AMT, CASY, BHGE, NOV, HP, DORM, USO, SQ, SAVE, MRK, CHD, FIVN



Trading Shorts: BYD, WY, CE, OSTK, BGG, FLR, XBI, XRT, MGM, WYNN, OLED, STX, LITE, LL, QRVO, AAL, LKQ, MTD


The near-term trend has grown stretched on intra-day charts after successfully recouping more than 50% of recent drawdown from early December and should be now nearing areas of importance in price and time that produce a stalling out and reversal of trend in the days ahead. Note, this has been a very positive move from late December from a breadth perspective. We've seen several very high and positive readings, (which one of our charts below reinforces) However, now we're seeing momentum begin to wane on hourly charts on this rally (note the brief but violent early selloff yesterday that was 100% recouped, but left momentum lacking) and structurally, markets are nearing the area of their former breakdown (support that was violated, which now represents serious overhead resistance to gains) For SPX, no need to have to get to 2630, but any move above 2585 puts price into this zone, while it's been 16 calendar days since the bottom on Christmas Eve.



Overall, it's important to watch for evidence of Crude oil, Treasury Yields, or Stocks reversing in the next few days. All have shown above-average positive correlation of late, particularly Crude, which fell from October and bottomed on the same day as the SPX. Near-term, Demark counts point to exhaustion in WTI in 2-3 days and near $51-52 which should be important. The next major cycle area is from 1/15 into 1/20, and my thoughts are that a "back and fill" is quite likely which should prove to be lacking in "new Lows" and negative breadth, and produce January's bottom from where a decent rally can get underway into the Spring. I'm skeptical that a major decline lie ahead of us just yet given the extent that stock have gotten depressed, while sentiment remains subdued. We're nearing a time when stocks should bottom and begin a larger counter-trend rally then we've seen thus far. However, structurally, patterns remain bearish and can produce resistance and selling pressure in the next 1-2 weeks, which I think should be buyable. For now, it's right to consider using this recent huge rally to pair down risk and buy implied volatility after VIX has been nearly cut in half.


ACTION PLAN- 



Sell XLF between 24.40-25 in the next 1-2 days, expecting continued underperformance and a stallout in Financials that backtracks ahead of earnings

Sell XBI at 80.50-82 in the next 1-2 days, expecting a stalling out in Biotech and pullback

Sell XRT at 44 or higher, thinking a stallout and pullback happens over the next 1-2 weeks

Long Gold and Silver into Wed-Friday with targets on Gold near 1315-25 and Silver 16.05-16.25 before reversal

Long Treasuries, buying at 2.72 up to 2.75% in yield, expecting pullback in yields into mid-to-late January.

Short VNQ, as Real Estate has turned lower in recent days, and looks to be one of the weaker parts of the Defensive trade. VNQ target is 70.50

Long Crude oil, with near-term targets raised to 51.50-52, expecting WTI's move yesterday likely continues.




Additional charts and thoughts below.

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S&P has risen to levels which should be important between Wednesday and Friday of this week as resistance, and one should consider 2585 up to 2630 as important to sell into. This remains a counter-trend rally as part of a downtrend as of now. While breadth on the recent rise is important and bullish to think this continues higher eventually, in the short run, it looks to have nearly run its course. Many sectors like XRT, XBI, and others are up near resistance while Semis are fading and Financials have been weakening. Bottom line, the near-term trend is positive, but extreme selectivity is needed in the days ahead, with a watch out for signs of reversal of trend.

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Financials have begun to rollover, something that's interesting and negative to observe pre-earnings for this sector. XLF/SPX in ratio form has broken the minor trendline from late December and remains trending down from the last year. Until this can stabilize (which might come about in late January) it pays to avoid Financials near-term, expecting a bit more underperformance, despite earnings on deck.

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A rare phenomenon has happened in recent days, as the McClellan Oscillator which measures breadth went from very extreme oversold territory to overbought levels very quickly. Such an extreme move occurred in 2009 near the lows and only a few other times in the last 50 years and on each occasion it was bullish for stocks to the tune of 15% + in the year ahead. While patterns remain poor, this is worth paying attention to, and any drawdowns in the next few weeks (which I expect) should be buyable for a more meaningful rally.

Rally getting close to upside targets- Selectivity is key over next few days; Favor Energy

January 8, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2526-8, 2502-4, 2458-60, 2420

Resistance: 2570-2, 2575, 2590, 2600-2



SPX - (3-5 Days)- Bullish, but nearing targets between Wed-Friday from 2585-2600- Look to sell into further gains into end of week, paring down risk and adding implied volatility, expecting reversal of trend



EuroSTOXX 50- Bullish- Move up to 3150 likely before this stalls out



HSCEI- Bullish with targets 10364, and max of 10540



Trading Longs: BHGE, NOV, HP, CRC, DORM, USO, SQ, SAVE, MRK, CHD, FIVN



Trading Shorts: XBI, XRT, MGM, WYNN, OLED, STX, LITE, LL, QRVO, AAL, LKQ, MTD

The near-term trend remains bullish, but nearing areas of resistance that should be right to sell into this within the next 1-2 days. Overall, quite the bounce in recent days, and breadth has been there to back it up. In the last days, the NASDAQ 100 has been up 500 points while SPX has risen by more than 200. Energy has been the top performing sector of the year thus far, with Crude having broken out and Discretionary and communication services just fractionally behind. Only Utilities is down on a 5-day basis. Technology, however, has lagged and something to point out for those expecting that markets can continue up uninterrupted. AAPL, AVGO, SWKS, ADI have all fallen by more than 2% in the last week, with AAPL down more than 5%.



Bottom line, this remains a counter-trend bounce, and one that appears like a fourth-wave rally which likely ends in the next few days and gives way to a larger than average reversal. After all, momentum remains solidly bearish on most time frames and nearing overbought levels on an intra-day basis while Technology has not solidly participated, while bearish on weekly and monthly time frames while solidly within a downtrend. While hopes of a China deal or an end to the Government shutdown standoff are very much present and could materialize in the days ahead, it looks more likely that market stall, pullback into January 15-20th to form a low before a larger bounce. Given the breadth in recent days, the selloff should be studied for evidence of lower breadth and "less bad" participation, and will be a buying opportunity likely into mid-month.



One thing to note. the Dollar weakness very well might conclude by end of week and allow for a larger than normal bounce into mid-to-late January. This might coincide with Gold weakening along with China and EM for a final pullback to new lows before a bounce into Spring. The trend meanwhile in Treasury yields continues to suggest lower rates, near-term, so it's right to utilize strength to 2.70-5% to buy Treasuries, expecting weakness in yields into mid-month.







ACTION PLAN- 



Sell XBI at 80.50-82 in the next 1-2 days, expecting a stalling out in Biotech and pullback



Sell XRT at 44 or higher, thinking a stallout and pullback happens over the next 1-2 weeks



Long Gold and Silver into Wed-Friday with targets on Gold near 1315-25 and Silver 16.05-16.25 before reversal



Long Treasuries into next week with targets on TNX at 2.45-2.50 to Sell Treasuries next week



Short VNQ, as Real Estate has turned lower in recent days, and looks to be one of the weaker parts of the Defensive trade. VNQ target is 70.50



Long Crude oil, with near-term targets raised to 51.50-52, expecting WTI's move yesterday likely continues.




Additional charts and thoughts below.

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Interestingly enough, despite the negative market trend, NASDAQ has slowly but surely begun to strengthen in the last couple weeks. This has largely gone unnoticed, but something on relative charts which is considered a positive and likely means markets are preparing for a larger rally. On pullbacks in the next few weeks, one should watch this ratio for any evidence of this moving back to new lows, or holding firm.

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XBI shows Biotech having moved up to very important near-term resistance. This area likely should put a near-term peak in Biotech with XBI up at 80.50-82 in the next 1-2 days. One should consider selling into this move and favoring Pharmaceuticals within Healthcare on a 2-3 week basis. However, given the extent of the move off the lows, dips are likely to be buyable for Biotech.

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Retailing has been lauded by the Media as having made a big comeback in recent days. Potentially. Yet daily charts still show the XRT to be under a ton of pressure here and unlikely to get over 45 anytime soon. Not dissimilar from the biotech space, many Retailing stocks have rallied sharply, but right into key resistance near the larger downtrend. One should look to sell into this move, with thoughts of buying weakness over the next few weeks for a continued advance in the months head with targets up near 46.50-47.

S&P rolls over as Tech plunges 5%; Lows still look premature & retest looks possible

January 4, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2420, 2407-8, 2385-7, 2363-5

Resistance: 2479, 2510-2, 2519-23, 2547-9



SPX - (3-5 Days)- Bearish with initial targets near 2420 and under leading to a retest and mild undercut of December lows



EuroSTOXX 50- Bearish- Move lower to 2800-25 possible before SX5E can bottom.



HSCEI- Bearish given the break under 9922- Movement down to 9660-5 possible with rallies back over 10250 needed to turn trend bullish.



Trading Longs: USO, TLT, GLD, IAU, SLV



Trading Shorts: OLED, STX, LITE, LL, QRVO, AAL, LKQ, MTD, FXI, EEM, VNQ, XLU, KMX, JCI, OSTK, WY, SGMS, MGM, RCL, LB, QRVO, CAR

Quite the rollercoaster yesterday to say the least with a 50 + point S&P decline to kick off trading down to 2439 before reversing to rally 50 points to 2489 and then a subsequent decline to take out those lows and finish at the lows of the session. Breadth was far heavier early on and in the last couple hours actually was fairly mild with not eeven a 3/2 ratio of declines to Advancing issues though volume finished more than double on the Downside, producing a TRIN reading of 1.51. Nine of 11 sectors finished down more than 1% with Utilities being the sole gainer on the day. Technology bore the brunt of the decline, falling nearly 5% and the top 10 largest underperformers were all down between 6-11% within the S&P Information Technology index. The move in most of Europe and Asia was far milder than US, though the Japanese NIKKEI has played catchup to kick off its Friday trading, and lower by more than 3%. (Interestingly enough, we saw several "Flash-crashes" in Yen related pairs throughout the day on Thursday)



Overall, it was right to keep a bullish stance up until Thursday's reversal. None of the previous five trading sessions had shown much sign of peaking until yesterday, but helped S&P rally nearly 200 points off the Christmas lows before finally rolling over. In prior reports, i had made the case for a 3-5 day bounce into early in the year into 1/2-3 before a reversal of trend (this report is on the website for those who missed) but it's right to respect the price action and think that a retest could be underway. (Movement back up above 2520 needed to cancel this thinking)



Bottom line, until Technology shows some evidence of stabilization, it's tough to try to pick the bottom in AAPL and expect a big bounce out of Technology. Most outside of the quickest of traders would do well just to wait for this pullback to play out, and await more evidence of bottoming.



There are some encouraging signs despite how negative the trend is currently

1) Sentiment is getting quite negative, which happened in the traditional sentiment polls but is now playing out all over the media, with many throwing in the towel



2) Entering Thursday's trading, there were just 6.7% of all stocks above their 50-day moving average, a very low number which historically has coincided with market bottoms



3) Financials have begun to show much better strength this past week, despite rates moving lower and this is interesting and something to keep watch of



4) Seasonality still remains very positive for this next six months, so its thought that indices could be completing the first leg of this drawdown into mid-January but should result in a larger than average bounce.



5) Breadth yesterday was far lower than might have been expected given the hugely negative news, with barely 3/2 decliners over advancers. Just one piece of the puzzle, but worth noting.





ACTION PLAN- 



Exiting long Industrials and Financials and going short Industrials with targets back at former lows



Long Gold and Silver into next week with targets on Gold near 1315-25 and Silver 16.05-16.25 before reversal



Long Treasuries into next week with targets on TNX at 2.45-2.50 to Sell Treasuries next week



Short VNQ, as Real Estate has turned lower in recent days, and looks to be one of the weaker parts of the Defensive trade. VNQ target is 70.50



Long Crude oil, with near-term targets $48.50-$49 , expecting WTI's move yesterday likely continues. Over 50 would be quite positive for Crude




Additional charts and thoughts below.

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Yesterday's rollover looked negative, and while breadth was fairly mild on the decline, it appears technically like a retest can occur, in absence of an immediate bottoming out in Technology which still looks early. One possible view of the Elliott wave pattern looks like a fourth wave just completed from the November highs and now a final pullback to new lows should occur, which would get investors unanimously bearish. However, in my view, this would be a time to pay close attention for a reversal. Overall, one should play defensively until 2520 can be recouped, and expect a move down to at least 2420.

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The monthly AAPL chart puts this huge decline into perspective as the stock had gotten very overdone into last October compared to its larger trend, something which historically also led to peaks in price back in 2012 and 2015. This time around, prices have now declined 90 points in 90 days time to 142, an area which could have some importance. Under 142 however, one should look at 133, or the area near former highs (which now can act as support on a retest) or then 120 which lies 16% further down. This latter might be unlikely the first go-around, but does stand out as a very attractive risk/reward area to buy the stock whenever it does get down there. For now, I am looking for lows to develop soon, but we'll need to see some evidence of this trying to stabilize in the near future.

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Gold and silver have still been trending higher, and should be able to push into next week without much trouble before minor stalling out occurs. This move largely has accelerated from mid-November of last year, a time when both the US Dollar and Treasury yields have been pulling back. Technically speaking an upcoming turn for both Dollar and Yields looks to be approaching by mid-month and if both turn higher in unison, this would be bearish for Gold. However, daily exhaustion counts right now are 4-5 days early for a turn, and given the stock market volatlity , one should still favor Gold for a move to 1315-25 into next week and then reevaluate.





AAPL announcement roils Futures after hours- Holding 2452 important for bullish case

January 3, 2019

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2452-3, 2429-30, 2407-8, 2385-7

Resistance: 2519-23, 2547-9, 2565-75, 2584-7

Happy New Year !! The Annual Review will be published on Jan 7,



SPX - (3-5 Days)- Mildly bullish but will turn negative under 2452- For now, Wednesday managed to rally back up towards 2520 which was constructive, but after-hours selling caused a retreat back to 2477. Upside target 2548, and a maximum of 2600-30 before stalling and pulling back. Look to buy any early weakness.



EuroSTOXX 50- Mildly bullish-Rally likely into 3050-3100 before stalling. Downtrend from December broken here similar to what happened with SPX and TD Sequential 13 buys were confirmed prior to the New Year.



HSCEI- Bearish given the break under 9922- Movement down to 9660-5 possible with rallies back over 10250 needed to turn trend bullish.



Trading Longs: TEAM, SQ, I, IIN, DORM, TRHC, AYX, NKTR, STOR, CIEN, PFE, MRK, LLY, VAR



Trading Shorts: FXI, EEM, VNQ, XLU, KMX, JCI, OSTK, WY, SGMS, MGM, RCL, LB, QRVO, CAR

A very uneasy market to say the least with no signs that any of last year's volatility has run its course, despite being a new year. The first trading day of the new year brought about sharp spikes in both directions, and while the move up into the close yesterday seemed constructive, AAPL's after-market announcement coincided with weakness in Futures right back down again to just above Wednesday's earlier lows. Overall, not very confidence inspiring and it's imperative to be on the lookout for a reversal back lower in the days ahead. Based on the constructive close, but yet after market weakness, this creates (yet again) a very difficult tape heading into Thursday morning. Any weakness under 2452 would warrant being on the sidelines yet again, expecting that the failure of Technology to follow through has resulted in a turn back lower for stocks to potentially test late December lows before bottoming. However, it's thought that the relatively low level of stocks currently trading above their 50-day moving average as it is (12% as per Wednesday) combined with signs of fear escalating, should result in a January bottom and rally. For now, important to be on guard for any violation into end of week. Until this happens, it certainly can't be ruled out again that weakness proves short-lived and results in yet another rally attempt.


Heading into Thursday, three key themes seem worth mentioning: 1) The US Dollar surge yesterday looked important and positive and is likely to result in pressure on commodities in the short run 2) EM /China weakness looks likely given this USD move, and HSCEI broke down under key support Wednesday 3) Defensives have moved out of favor yet again, which has less to do with interest rates and more of just early year positioning.



ACTION PLAN- 



Long Financials- XLF with targets near-term at 24.50-.75


Long Industrials- XLI with targets at 65.50 minimum and possibly 67 before stalling


Short VNQ, as Real Estate has turned lower in recent days, and looks to be one of the weaker parts of the Defensive trade. VNQ target is 70.50



Long Crude oil, with near-term targets $48.50-$49 , expecting WTI's move yesterday likely continues. Over 50 would be quite positive for Crude


Additional charts and thoughts below.

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The S&P rally back to 2520 proved short-lived before after market selling caused a pullback down to 2476 in S&P at the time of writing. Importantly, given the positive close in many sectors and indices, it's still early to abandon a bullish stance even with AAPL's post close jitters, which has taken a toll on US equity futures. However, a move down under 2452 would warrant a defensive stance, and this should be watched out for as a stop for longs, and sign that a move back down to test late December lows can occur.

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HSCEI has broken down to the lowest levels since mid-2017 as per Wednesday's close, which acts as a liquid way to view China as opposed to viewing the A-share heavy Shanghai Composite. Given the Dollar strength, and EM weakness, additional selling here looks likely which could bring HSCEI down to 9600 in the short run.

REITS have begun to turn down sharply in recent days, in a move that's been strange given the pullback in yields during a time of relative market volatlity which many expected might help this sector offer some safe-haven like protection. Near-term, VNQ vs SPX as a ratio chart depicting REIT relative strength, has begun to wane sharply, and can allow for additional weakness in the days ahead. REITS should be underperformers compared to the Utility space, which despite also being weak, is a relative outperformer.

No meaningful damage on yesterday's churning- A closer look at Energy as a Mean Reversion play

December 31, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2440-5, 2429-30, 2407-8, 2385-7

Resistance: 2519-23, 2547-9, 2565-75, 2584-7

Note: The Annual Review will be published later this week either on Jan 4, or Jan 7, and as such, no Weekly will be published today/Monday but rather information will be utilized for the Annual which should be forthcoming. Happy New Year to all !!!



SPX - (3-5 Days)- No change- Bullish the first few days of this week on a 3-5 day basis into early January with possible first target 2548, and a maximum of 2600-30 before stalling and pulling back. Look to buy any early weakness. Under 2397 would postpone the rally



EuroSTOXX 50- Rally likely into end of year with 3050-3100 likely as resistance



HSCEIMovement over 3452 needed to turn trend bullish. For now premature but if markets rally into year-end globally, this very well might follow suit.



Trading Longs: TEAM, SQ, I, IIN, TWTR, ETSY, ELY, CQQQ, NKTR, ALGN, STOR, CIEN, PFE, MRK, LLY, VAR



Trading Shorts: VGK, FEZ, WY, SGMS, MGM, RCL, LB, QRVO, CAR


Largely no change on the thesis- Continued gains are likely for the next 3-5 days into early January- Friday managed to churn both higher and lower but finished marginally unchanged with much lower volatlity than in recent days.


Overall, as written in the mid-day report, S&P looks to have exceeded the downtrend from early December and is "stair-stepping" its way higher in the short run. While I do believe this trend is in jeopardy of reversing, there is insufficient proof to think we're there just yet. My opinion continues to be technically that S&P can work up to 2550-85 area and likely stalls there. If S&P gets under 2397, this would certainly change that thesis to more near-term bearish into 1/2-3. For now, its right to stay the course on this bounce.



ACTION PLAN- 



Long Financials- XLF with targets near-term at 24.50-.75

Long Industrials- XLI with targets at 65.50 minimum and possibly 67 before stalling

Short Treasuries looking to add on a yield move above 2.81, and then more above 2.85 which would be an official breakout of the two-month downtrend

Long Crude oil, with near-term targets $48.50-$49 , expecting WTI's move yesterday likely continues. Over 50 would be quite positive for Crude



Additional charts and thoughts below.

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SPX on 4 hour charts shows the minor break of this downtrend, which is thought to be bullish technically speaking. One should consider still being long into year end until/unless 2397 is broken. Movement up to the 50% retracement of this downleg since early December would put S&P up near 2584 and would be a better risk/reward area to consider lightening up considering hourly overbought conditions while weekly and monthly momentum remain sharply negative.

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Energy SPDR ETF, or XLE, has sold off dramatically in recent months and has hit a key level of intermediate-term trendline support. Given the mean reversion tendencies of sectors to snap back after severe underperformance from end of year into February, this should be given a special look as a sector which might show some bounce as 2019 begins. Additionally, this sector looks less vulnerable given Crude's recent ability to stabilize and could "decline less" going forward given that this sector has already born the brunt of some substantial selling this year. While not a solid technical buy signal on a short-term basis it's thought that this sector could hold given XLE's pullback to this area of support. Furthermore, the "big-cap" names that dominate this index like XOM and CVX are thought to be potentially more defensive names to own after this severe pullback in Crude , and might offer some relative stability.

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Energy in relative terms also looks interesting after this severe pullback now that ratio charts of XLE/SPX have reached a level of trendline support undercutting lows in the last year. Given that Energy has been the worst performing sector and now entering a possible time of seasonal strength, this looks interesting to consider buying dips on this weakness. Overall, selectivity here is a must given the sharp downward trend, but it's thought that as Crude starts to turn higher, this group likely stabilizes.





Further gains likely over 3-5 days before stalling out

December 28, 2018

Mark Newton CMT, Newton Advisors, LLC

Contact: info@newtonadvisor.com



SPX Cash Index

Support: 2429-30, 2407-8, 2385-7

Resistance: 2498-2500, 2519-23, 2547-9, 2565-75, 2600





SPX - (3-5 Days)- Bullish on a 3-5 day basis into early January with possible first target 2548, and a maximum of 2600-30 before stalling and pulling back. Look to buy any early weakness



EuroSTOXX 50- Downside limited and expect some support near 2900 before a turn back higher.



HSCEI- Mildly Bearish- A test of 9900 and slight break is possible, but expect HSCEI is close to holding and turning back higher.



Trading Longs: TEAM, SQ, I, IIN, TWTR, ETSY, ELY, CQQQ, NKTR, ALGN, STOR, CIEN, PFE, MRK, LLY, VAR



Trading Shorts: VGK, FEZ, WY, SGMS, MGM, RCL, LB, QRVO, CAR


Continued gains are likely for the next 3-5 days into early January, as yesterday's reversal helped prices engineer one of the largest intra-day reversals seen since 2010. S&P prices at one point were down to 2397 as of 2pm EST, and now are trading 2495, nearly 100 points, or 4% higher, just since 2pm yesterday. Breadth went from -4/1 negative to flat on the day, and the early high TRIN reading of 2+ was reversed. While the news was certainly helpful as a catalyst to the gains, most cycles suggest prices should be trending up into early January before a reversal.



Sectors like XLV, XLI, XLF, XLK all jumped to multi-day highs, and seem poised to continue up into year-end. Counter-trend exhaustion, meanwhile remains premature for S&P futures on most time-frames and will require a move over 2525 before starting to show any evidence of resistance being near, despite the huge price move which has just occurred. Overall, Treasury yields look poised to move higher, and should serve as a positive catalyst for Financials to begin to firm after several rough months.

Overall, Wednesday's gains look temporary, yet still premature to sell. Therefore a long bias makes sense into end of year.



ACTION PLAN- 


Long Financials- XLF with targets near-term at 24.50-.75

Long Industrials- XLI with targets at 65.50 minimum and possibly 67 before stalling

Short Treasuries looking to add on a yield move above 2.81, and then more above 2.85 which would be an official breakout of the two-month downtrend

Long Crude oil, with near-term targets $48.50-$49 , expecting WTI's move yesterday likely continues. Over 50 would be quite positive for Crude




Additional charts and thoughts below.

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SPX managed to close right up at its highs in a very sharp reversal higher in the last two hours of the session. This is quite bullish for the days ahead most likely, given the lack of any counter-trend exhaustion signals, and should allow for a push up to 2548 -2576 without much trouble over the next few days. Minor weakness should be bought Friday, but it's thought that prices extend.

Industrials, via XLI, sold off right to key intermediate-term trendline support on the trend since 2009 and reversed sharply by the close. At $63.94, further gains look likely up to $67 before stalling. While the intermediate-term momentum is negative, for now, over the next week, a long bias looks prudent.

prudent.gif

Equal-weighted Technology vs SPX in ratio terms is on the verge of potentially breaking out of the entire downtrend which has been in place since June, over six months ago. While this has not happened yet, it's important to watch carefully, for when this occurs, it should be a very positive influence for this sector, in my view.