Technical Tuesday - November 27, 2018

Cerundolo Investment Research    

Technical Tuesday Update  

Volume 2, Issue 40
November 27, 2018

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US Markets

  • Not much has changed for the U.S. markets when viewed on an intermediate-term basis.  We did highlight a short-term buy in the S&P last week based on the daily timeframe and looking for a run into the 200-day avg.  The Nasdaq Composite has extremely weak momentum and would continue to use any strength to lighten up Tech.  The Russell 2000 is hovering at an important support area that looks likely to break.  Utilities are holding up very well and recently pulled back to a rising 40-wk. avg.  The S&P Growth relative to Value ratio came close to an initial target, but thus far looks similar to what occurred in mid-2016 where a failing rally lead to more weakness.  We are highlighting the REIT sector as its improving relative performance triggered a buy in our model, and we would continue to avoid semis.

European Markets

  • European markets, as measured by the iShares ETF (IEV), look poised for another leg lower.  We remain cautious the DAX, CAC, Spain’s IBEX, and Italy’s FTSE MIB.  Their long-term charts look vulnerable to more weakness.

 Asian Markets

  • The Nikkei appears boxed between support at 20800 and 22600.  We continue to believe the MFU-4 target at 24500 has capped this bull run for now.  The Hang Seng has bounced from its initial target but remains negative on a longer-term view.

Emerging Markets

  • China’s Shanghai Composite and the Kospi 100 appear ready to start another leg lower.  We remain very cautious these market.

Commodity Markets

  • WTI Crude Oil sliced through any form of support and we see potential to the $45 area.  For aggressive short-term traders, Nat Gas triggered a buy with a 6% upside target.

Currency Markets

  • The DXY, EURO and GPB are at critical levels while the $YEN remains favorable.