Technical Tuesday - November 6, 2018

publication date: Nov 6, 2018

Cerundolo Investment Research    

Technical Tuesday Update  

Volume 2, Issue 38
November 6, 2018

Download Full Report here


Highlights:

US Markets

  • The U.S. indices had a good bounce last week, but not enough to change the short-term trend structure.  The S&P 500 had a strong 5% move off the daily MFU-4 target and is now into an “Ellipse turning point” zone and close to the 200-day average which would be resistance.  The Nasdaq Composite also had a strong move up and into a resistance zone, a good spot to expect a reversal.  The Russell 2000 is approaching a resistance as well, and momentum remains very weak.  No change with our view that the Dow Transports have more downside from here.  The S&P 500 Growth relative to Value continues to favor value and we have identified some downside targets on this ratio.

European Markets

  • There is no change in our cautious view of the European markets, and on a relative basis, the U.S. continues to outperform.  Both the DAX, CAC and Italy’s FTSE MIB  have rallied into resistance zones and we expect reversals lower.  Spain’s IBEX remains the leader in its downtrend and there is more to go.

Asian Markets

  • The Nikkei held support one more time but does have overhead resistance.  We do believe our long-term target of 24500 has capped this market for now, and we are monitoring it carefully for a signal on the next directional move.  The Hang Seng is pausing at its initial target area which we believe will not hold and give way to another significant leg lower.

Emerging Markets

  • China’s Shanghai Composite is pausing at our initial target generated off the January high.  Given the overall weak structure and momentum based on the monthly timeframe, we believe another strong move lower will develop.  Singapore’s Straits Times Index looks like a sale on the recent move up, and we expect more weakness to develop very soon.

Commodity Markets

  • After capping the high at the MFU-4 target, Crude appears likely to break support.

Currency Markets

  • We see more upside in the GBP.  The CAD, as well as AUD, are in a good spot to buy.