Technical Tuesday - August 17, 2018

publication date: Aug 17, 2018

Cerundolo Investment Research    

Technical Tuesday Update  

Volume 2, Issue 28
August 17, 2018

Download Full Report here


Highlights:

US Markets

  • The Nasdaq Composite has started to lose upside momentum and about to test important intermediat-term support.  The S&P and Dow Transports continue to hold above support while the MDY and Russell 2000 remain very firm in there uptrends.  With crude backing off in recent weeks, the S&P Exploration & Prod. ETF (XOP) has pulled back to an initial support zone that needs to hold.  Downside momentum in the SMH is accelerating and we remain cautious this group.  HealthCare remains our favored sector globally and our model scores continue to improve.  We are once again highlighting our equal weighted index of U.S. pharma, med tech and biotech which continues to look very bullish.

 

European Markets

  • We remain cautious the European markets.  The CAC, DAX and Italy’s FTSE MIB are gaining downside momentum and Spain looks poised to break a level which will trigger another leg lower.  Using the iShares Europe ETF (IEV), we have a clear break of support with bearish money flow units in place.

 

Asian Markets

  • Japan’s Nikkei continues to hold support and the Hang Seng remains on target for more weakness.

 

Emerging Markets

  • China’s Shanghai Composite is getting close to our MFU-2 target which typically gives a pause or slight rally.  The overall pattern is weak and a monthly close below 2600 opens the downside to another leg lower.  The Kospi 100 had its pause phase at the MFU-2 target and has now broken below it.  Another leg lower has started.  India’s Nifty 50 is at the upper end of its long-term channel and a spot to expect some profit taking.

     

Commodity Markets

  • WTI Crude Oil is now testing important support while gold broke below our tactical buy level of $1200.

     

Currency Markets

  • Both the U.S. Dollar and the EURO have broken out of their tight trading ranges and the GBP has achieved its MFU-3 target.  We would cover shorts in GBP.