Here is the weekend look at the ES/SPY going into the trading week of Jan 18-21. Similar to the NAS last week the ES made a full round trip closing out the week where it began. Last Sunday the ES sold off and continued lower on Monday morning dipping all the way down to the top of the neutral (tan box) where it found support and then bounced sharply back up into EMA resistance only to reverse back down closing just below the 236 fib and 55 SMA on Friday.
Going into this week ES remains technically stronger that the NAS. The outperformance of large cap value names in the Financial, Energy, Staples and healthcare sectors has benefited the S&P. Many market watchers continue to call for a top in the indexes, however, with rising interest rates and fed tapering. So far price has not confirmed a market sell off yet. Until the ES breaks down below the neutral zone I will remain bullish on the S&P.
The key areas to watch going forward are price action around the 55 SMA and the top of the neutral zone. Above the neutral and the ascending trend line look for higher highs. If price confirms below the top of the neutral and the ascending trend line look for lower lows. Confirmation with a lower low below the 4572 pivot low would be bearish and put the 4559 level in play.
Given the relative outperformance of the S&P defensive sectors I have been focusing stocks in the XLE, XLP & XLV. Names like KO, PG, XOM, ABBV, SCHW & HSY are examples of strong names to watch. Earnings from more big banks and names like PG this week will likely set the tone for the coming months.
Weekly Events...
Bank earnings will drive the narrative
Tuesday... GS & SCHW earnings
Wednesday... Housing starts + BAC,MS,PG,UNH,AA, UAL earnings
Thursday.. Jobless claims & Oil inventories + AAL,UNP,CSX,NFLX,EDU earnings
Friday... SLB earnings
Bullish notes...
Earning season begins
NAS held range low last week
Poor retail number may soften rate hike fears.
Bearish notes...
Weak retail numbers
Disappointing bank earnings
Potential spike above 2% in 10y yields
Inflation fears
Tapering fears.
Russia/Ukraine tensions
Going into this week ES remains technically stronger that the NAS. The outperformance of large cap value names in the Financial, Energy, Staples and healthcare sectors has benefited the S&P. Many market watchers continue to call for a top in the indexes, however, with rising interest rates and fed tapering. So far price has not confirmed a market sell off yet. Until the ES breaks down below the neutral zone I will remain bullish on the S&P.
The key areas to watch going forward are price action around the 55 SMA and the top of the neutral zone. Above the neutral and the ascending trend line look for higher highs. If price confirms below the top of the neutral and the ascending trend line look for lower lows. Confirmation with a lower low below the 4572 pivot low would be bearish and put the 4559 level in play.
Given the relative outperformance of the S&P defensive sectors I have been focusing stocks in the XLE, XLP & XLV. Names like KO, PG, XOM, ABBV, SCHW & HSY are examples of strong names to watch. Earnings from more big banks and names like PG this week will likely set the tone for the coming months.
Weekly Events...
Bank earnings will drive the narrative
Tuesday... GS & SCHW earnings
Wednesday... Housing starts + BAC,MS,PG,UNH,AA, UAL earnings
Thursday.. Jobless claims & Oil inventories + AAL,UNP,CSX,NFLX,EDU earnings
Friday... SLB earnings
Bullish notes...
Earning season begins
NAS held range low last week
Poor retail number may soften rate hike fears.
Bearish notes...
Weak retail numbers
Disappointing bank earnings
Potential spike above 2% in 10y yields
Inflation fears
Tapering fears.
Russia/Ukraine tensions
Comment:
Price has dropped below the original trendline and below the top of the neutral. Next level is 4492 then the bottom of the neutral. Trip down to Oct lows looks possible now.
