Technical Tuesday - November 20, 2018

publication date: Nov 20, 2018

Cerundolo Investment Research    

Technical Tuesday Update  

Volume 2, Issue 39
November 20, 2018

Download Full Report here


Highlights:

US Markets

  • Most U.S. indices we report on have reversed from the mid-point of their long-term regression trend channels with downside momentum accelerating.  We continue to look for declines ranging from –18% to –20% for the S&P 500, Nasdaq Composite, Russell 2000 and the MDY.  No surprise to see the Dow Utilities holding up very well as it held important support on the recent pullback.  After hitting an important MFU-4 target, the S&P Growth relative to Value ratio has formed a bearish weekly Money Flow Unit and we see further weakness ahead.  The Semiconductor ETF (SMH), which we highlighted months ago as being cautious on, has form a bearish money flow unit with another -13.8% downside.  The U.S. appears to be playing catch up with the European markets and we highlight the ratio chart of the S&P 500 to the iShares Europe ETF (IEV).  High Yield bonds remain very weak and we highlight the HYG ETF.

 

European Markets

  • The DAX, CAC and Spain’s IBEX look poised for another down leg to start and we would add to a short position.  No change with Italy’s FTSE MIB which remains very weak.

Asian Markets

  • The Nikkei remains below an area of resistance and we are monitoring the 20000 area to signal the start of another leg lower.  The Hang Seng is bouncing from its initial target area but the overall trend is weak.

Emerging Markets

  • China’s Shanghai Composite appears ready for a bounce from its initial target area.  Aggressive traders should consider a short-term long trade.  Intermediate-term outlook remains cautious.

Commodity Markets

  • WTI Crude Oil has pulled back to an area of support.  We are monitoring the mid $50’s for price stability.  Nat gas has achieved and reversed from a target area and we would be sellers.

Currency Markets

  • After coming into a resistance area last week, the DXY is now pulling back to support in the 95 area.  The GBP continues to hold support at the MFU-3 area and we like it long with a tight stop.