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WEEKLY TREND REPORT
The S&P 500 (SPX) closed the week relatively unchanged at 3110, down .33% for the week, and the first down week in the last seven weeks.
The Nasdaq Composite (COMPQ) closed the week at 8519, down .25%, and the first down week in the last eight weeks.
The 10-year U.S. Treasury Yield closed the week at 1.774, down from 1.834 the prior week.
Gold closed at 1463, down . 33% on the week.
West Texas Intermediate Crude Oil closed the week relatively unchanged, at 57.77, up .09% on the week.
A week of notably low volatility and I do expect volatility to return to normal soon across the board.
The S&P 500, weekly close at 3110, touched a new intra-day all-time high last week and is in an uptrend above the rising 10-week and 40-week moving averages. It is buyable here and on pullbacks above the rising 40-week moving average, currently at 2928. Key weekly support levels below that are 2900 and 2850 on any deeper pullbacks. I am bullish technically over 2925.
The Nasdaq Composite, 8340, also touched a new all-time high last week. It is in an uptrend above the rising 10-week and 40-week moving averages and is buyable here and on pullbacks. Key weekly support levels are 8235, 7900 and 7650 -7750 on any deeper pullbacks. I am bullish technically over 7980.
10-year U.S. Treasury Yields, 1.774, are in a long-term downtrend below the declining 40-week moving average, but in the shorter-term, put in a low at 1.42 in September and have been moving higher. 1.50 is a key support level below and over 2.00 could signal a new leg higher in yields, and down for UST’s. I am currently neutral on UST’s with yields trading in the range between 1.50 and 2.00.
Gold, 1463, is in a longer-term uptrend above the rising 40 week moving average, but has been weak in the shorter term, having topped for now at 1566 in September. Gold has been making lower highs and lower lows for the last eleven weeks. A close over 1520 would negate the short-term downtrend. There is signifcant support in the 1400-1450 range on any further weakness. 1400 was a key resistance level that held for over 5 years, and now represents a major support level. The 40-week moving average is currently at 1402, which adds more relevance to this range. I am neutral currently on Gold shorter term, but favor the long side over 1400.
West Texas Intermediate Crude Oil, 57.77, has been trading in a wide range between 50 and 60 since May. Both the 10-week and 40-week moving averages are trending up, which is a bullish sign, and oil has made a higher low 6 of the last 7 weeks. For my time frame, there is no major trend here, but $50 is a key price level of support that favors the long side as long as price stays above it. I have no shorter-term technical view, but see it as a long over $50.
The Top 5 Core ETF Sectors that I track, ranked by Weekly Momentum, are Health Care (XLV), Financials (XLF), Technology (XLK), Industrials (XLI) and Semiconductors (SMH).
1. Health Care (XLV)
The #1 ranked ETF by weekly momentum on my screen. XLV broke out to a new all-time high last week. The strongest industry groups here are in the managed care and hospital groups. The strongest uptrends are ANTM, CI, CVS, HCA, HUM, UNH and WCG . Biotechnology is very strong with AMGN, SGEN and VRTX leading. In traditional pharma, ABBV, ABT, BMY and JNJ are key uptrends. Some of these names are technically overbought in the short-term, but pullbacks are buyable for my time-frame.
2. Financials (XLF)
The #2 Sector ETF on my screen. XLF made a new all-time high this month, which is a very bullish sign for the group and the market overall, as financials are a key component of the S&P. I am focused on the bigger names, JPM, BAC, GS, MA, MS, V and WFC. There is strength across the board in all groups here, not just the Money Center banks. Regional banks, asset managers, multi-line insurance, and brokers are all performing very well. One of the strongest groups is Japan Banks and NMR is leading. The entire sector is technically strong and buyable.
3. Technology (XLK)
Technology is ranked #3 on my weekly momentum screen. XLK touched a new all-time high last week. The strongest core names that I track are the mega caps, AAPL, FB, GOOG and MSFT. Application software and IT Services are both showing signs of strength with ADBE, ANSS, CDW, DOCU, INFO, NOW, PAYC, and SHOP ranked high. I will cover semiconductors shortly. I like technology on any consolidation.
4. Industrials (XLI)
Recent all-time high. Industrials is a very diverse category, which includes diversified machinery, aerospace and defense, commercial vehicles, heavy equipment, rails, heavy construction, and other traditionally cyclical groups. Key focus names here include BA, CAT, DE, GE, HON, JEC, LMT, KSU, PCAR and UTX. I like the group on any weakness.
5. Semiconductors (SMH)
Semis, one of my top groups this year, have been leading and had a much needed pullback last week after making new highs. This group continues to be buyable on pullbacks until they break down. Many key names registered very overbought on the daily charts and have been consolidating recently. AMAT, AMD, INTC, KLAC, LRCX, NVDA and TSM are the leaders for now.
TECHNICALLY IMPROVING GROUPS AND POTENTIAL TURNAROUNDS
The following four groups are of longer-term interest.
China Internet (KWEB)
The China Internet space is one of my core groups over the last few years. The ETF just tested the rising 40-week moving average and registered oversold on the daily chart. The 10-week MA has just crossed over the 40-week MA this week, a bullish signal. The ETF is interesting here and over $42.50, and the group is improving. BABA, EDU, JD, NTES, TAL and VIPS are top ranked names. This is a very volatile group and may be more sensitive to trade tariff news than other groups.
Europe Financials (EUFN)
One of the weakest groups in 2018. EUFN is now trading over both the rising 10-week and rising 40-week moving averages and the 10-week has also crossed above the 40-week, a bullish signal. This has been a volatile space, especially with the constant Brexit news. It is an interesting group over $17. Key names of interest longer-term are BCS, CS, DB, HSBC, SCGLY, and UBS. DB and SCGLY may offer significant longer-term upside if recent lows hold.
Metals & Mining (XME)
This is another of my core groups over the years, and one that has underperformed for the past 22 months. Comprised of industrial metals, aluminum, copper, steel and some gold names. This ETF is trading below the 40-week moving average. A close over the 40-week moving average and $28 would be constructive. The single stocks in this group are among the most volatile that I track. The group is showing signs of trying to put in a bottom, with some constructive bases, such as X and MT. If this group starts to turn up, I expect it to move quickly. ARNC is the strongest chart. On any potential turnaround AA, FCX, MT, SCCO and X are key names. Small cap AKS could outperform if it holds over $2.
This group is still below the 40-week (200 day) moving average and has not yet confirmed an uptrend. Recent lows need to hold and I run wider than average stops with smaller positions in this group. If it does turn up, I expect these names to outperform the broad market.
This ETF has been a major laggard and recently made new lows, although the $20 level has held 6 times. If this level holds, then the group is attractive and another favorite potential turnaround group. Refiners are the strongest with MPC, PSX, and VLO leading. XOM and CVX are trendless here. COP, EC, HES and MUR have been improving and are over the 200-day moving average. HAL and SLB are two watch list names currently under the 200-day MA. Key support levels that need to hold are $55 in $XLE and $20 in XOP. This group is the most speculative on my screen for now.
As always, these names are technical ideas only. Overall market direction has alot to do with stock performance. .
Have a great week.