Technical Analysis

In this briefing:

1. WTI 59.50 Top and Turn Target
2. Opportunities in U.S. Technology Sector
3. LG Corp Daily Cycle Pivot and Re Test of Base Line Support

1. WTI 59.50 Top and Turn Target

WTI’s bullish counter trend rally cycle from the touted low at 45 is maturing and we are hunting for a fresh high to turn from long to short WTI. A peak in oil would align with a softer economic cycle in the next quarter.

Price triangulation is touted as a tactical bullish breakout pattern that will induce a fresh high near targeted dual projection/retracement. This rise is viewed as a more exhaustive rally that will begin to run out of steam with risk of a fade near 58-59. This is a tradable upside move.

RSI dual tops have show high confidence in market peaks from early 2018 and a final push higher out of the triangle bull flag would get us back to the 70 top resistance to nail down a double top. It is this dual top and MACD resistance that worn of an intermediate peak for oil into strength.

Energy shares are underperform oil and a frequent cycle leader to an oil peak.

2. Opportunities in U.S. Technology Sector

Technology is our favorite Sector within the U.S. equity landscape, and remains leadership – 73% of our Tech Groups are in the top 33% in terms of our Relative Strength Rankings (RSRs). Internally, semis and semi-suppliers continue to outperform and many names have pulled back to offer attractive entry points. In this report we highlight our favorite setups within the U.S. Technology Sector. 

3. LG Corp Daily Cycle Pivot and Re Test of Base Line Support

LG Corp (003550 KS) is resting on critical daily cycle pivot support; if broken would see momentum spill over into the weekly cycle with a bias to re test base line support.

Daily RSI has already broken the wedge support equivalent in price and very often a good leading indicator. LGC is currently resting just above key pivot support, that once broken would induce a slide back to more attractive and a better risk to reward zone.

In this briefing:

1. Opportunities in U.S. Technology Sector
2. LG Corp Daily Cycle Pivot and Re Test of Base Line Support

1. Opportunities in U.S. Technology Sector

Technology is our favorite Sector within the U.S. equity landscape, and remains leadership – 73% of our Tech Groups are in the top 33% in terms of our Relative Strength Rankings (RSRs). Internally, semis and semi-suppliers continue to outperform and many names have pulled back to offer attractive entry points. In this report we highlight our favorite setups within the U.S. Technology Sector. 

2. LG Corp Daily Cycle Pivot and Re Test of Base Line Support

LG Corp (003550 KS) is resting on critical daily cycle pivot support; if broken would see momentum spill over into the weekly cycle with a bias to re test base line support.

Daily RSI has already broken the wedge support equivalent in price and very often a good leading indicator. LGC is currently resting just above key pivot support, that once broken would induce a slide back to more attractive and a better risk to reward zone.

In this briefing:

1. Opportunities in U.S. Technology Sector
2. LG Corp Daily Cycle Pivot and Re Test of Base Line Support
3. S&P 500 and S&P 600 Testing Resistance…Still

1. Opportunities in U.S. Technology Sector

Technology is our favorite Sector within the U.S. equity landscape, and remains leadership – 73% of our Tech Groups are in the top 33% in terms of our Relative Strength Rankings (RSRs). Internally, semis and semi-suppliers continue to outperform and many names have pulled back to offer attractive entry points. In this report we highlight our favorite setups within the U.S. Technology Sector. 

2. LG Corp Daily Cycle Pivot and Re Test of Base Line Support

LG Corp (003550 KS) is resting on critical daily cycle pivot support; if broken would see momentum spill over into the weekly cycle with a bias to re test base line support.

Daily RSI has already broken the wedge support equivalent in price and very often a good leading indicator. LGC is currently resting just above key pivot support, that once broken would induce a slide back to more attractive and a better risk to reward zone.

3. S&P 500 and S&P 600 Testing Resistance…Still

The S&P 500 is beginning to come off of short-term overbought extremes, consolidating near the confluence of key overhead resistance and the 200-day moving average. This level is roughly 2,817 on the S&P 500 and roughly 1,000 on the S&P 600 Small Cap index. Some consolidation or a mild pullback is possible in the near-term, which we believe would help alleviate current overbought readings and allow for a more orderly and meaningful move higher.  In today’s report we highlight attractive Groups and stocks within the Consumer Discretionary, Health Care, and Services Sectors.

In this briefing:

1. Opportunities in U.S. Technology Sector
2. LG Corp Daily Cycle Pivot and Re Test of Base Line Support
3. S&P 500 and S&P 600 Testing Resistance…Still
4. S&P Directional Break Points

1. Opportunities in U.S. Technology Sector

Technology is our favorite Sector within the U.S. equity landscape, and remains leadership – 73% of our Tech Groups are in the top 33% in terms of our Relative Strength Rankings (RSRs). Internally, semis and semi-suppliers continue to outperform and many names have pulled back to offer attractive entry points. In this report we highlight our favorite setups within the U.S. Technology Sector. 

2. LG Corp Daily Cycle Pivot and Re Test of Base Line Support

LG Corp (003550 KS) is resting on critical daily cycle pivot support; if broken would see momentum spill over into the weekly cycle with a bias to re test base line support.

Daily RSI has already broken the wedge support equivalent in price and very often a good leading indicator. LGC is currently resting just above key pivot support, that once broken would induce a slide back to more attractive and a better risk to reward zone.

3. S&P 500 and S&P 600 Testing Resistance…Still

The S&P 500 is beginning to come off of short-term overbought extremes, consolidating near the confluence of key overhead resistance and the 200-day moving average. This level is roughly 2,817 on the S&P 500 and roughly 1,000 on the S&P 600 Small Cap index. Some consolidation or a mild pullback is possible in the near-term, which we believe would help alleviate current overbought readings and allow for a more orderly and meaningful move higher.  In today’s report we highlight attractive Groups and stocks within the Consumer Discretionary, Health Care, and Services Sectors.

4. S&P Directional Break Points

S&P key outside day reversal sets the tone for a correction as the RSI is now breaking below trend support and a key downside trigger. This is the second reversal registered in the key 2,815-20 macro pivot zone.

Uptick resistance points below 2,820 are laid out as well as downsize pivot levels that once broken would induce a higher momentum decline.

Any break above SPX 2,820 would induce a short squeeze and we outlined a sector pair that would reward in such an event.

From now until the end of March it will be hard for bull momentum to remain intact given the bulk of good news is now priced in.

In this briefing:

1. Naver Faces Macro Downside Pressure
2. U.S. Equity Strategy: Be Long & Carry On
3. European Apparel, Accessory & Luxury Goods Stocks Are Heating Up — Add Exposure
4. Sony Trading Low Just Above Higher Conviction Intermediate Buy Support
5. Market Wrinkles Ahead of a US/China Deal Spike

1. Naver Faces Macro Downside Pressure

Naver Corp (035420 KS) is nearing tactical support for a trading buy but continues to face macro bear pressure stemming from key resistances note in the weekly RSI and MACD postures. This bear pressure is due to resume after a bounce sequence.

Naver has broken down out of triangulation after completing a corrective bounce cycle outlined in our recent update. Naver Bull Wedge to Trade Higher . We are now resuming the macro down cycle and view tactical rallies as selling opportunities as the major trend remains down.

A Kospi 200 rise above 290 will play a role in lifting Naver in the outlined tactical bounce cycle.

2. U.S. Equity Strategy: Be Long & Carry On

Both the cap- and equal-weighted S&P 500 are trading at highs not seen since early October 2018 – a positive indication in itself. Additionally, key risk-on areas we highlighted in last week’s Compass (small-caps, Financials/Banks, and Transports) have outperformed off the recent lows – a welcomed sight for risk sentiment, and confirms out positive outlook. In today’s report we highlight attractive bottom-fishing opportunities within the Financials Sector, and attractive Groups and stocks within Large- and Small-Cap Railroads, and Internet Software

3. European Apparel, Accessory & Luxury Goods Stocks Are Heating Up — Add Exposure

We continue to believe that equities in Europe and the UK are bottoming with the STOXX Europe 600 index breaking topside its 14-month downtrend. Helping lead the turnaround is the Personal & Household Goods supersector. We believe outperformance is set to continue and several stocks are actionable at current levels within our int’l Group CD-28 Apparel, Accessory & Luxury Goods, Europe: LVMH Moet Hennessy Louis Vuitton SE (MC-FR), Christian Dior SE (CDI-FR), Kering SA (KER-FR), Hermes International SCA (RMS-FR), adidas AG (ADS-DE), Moncler SpA (MONC-IT), PUMA SE (PUM-DE), and Bjorn Borg AB (BORG-SE). Add exposure.

4. Sony Trading Low Just Above Higher Conviction Intermediate Buy Support

Sony Corp (6758 JP) is forming a bullish descending wedge/channel that once mature will chisel out an intermediate low with scope to clear medium term breakout resistance. The tactical low near 4,400 lies just above more strategic support.

Clear pivot points will help manage positioning within the bull wedge that is in the final innings.

The tactical buy level is not that far from strategic support with a more bullish macro lean.

MACD bull divergence is not only supportive into near term weakness but also points to a breakout above medium resistance. Risk lies with Sony not looking back after hitting our tactical low target.

5. Market Wrinkles Ahead of a US/China Deal Spike

Ftse China A50 Index (XIN9I INDEX) has been our top long bet in Asia from early January (10,800), outperforming both the HSCEI and HSI. 

Key chart points that suggest the A share rise will be getting ahead of itself after the next rally phase out of bullish triangulation. Once this breakout terminates we see evidence of a harder decline unfolding ahead of a trade deal. This window allows for a pullback ahead of a trade deal spike that will put in place a key cycle peak just under shanghai composite resistance that goes back to highs from 2009, 2016 and 2018.

Keep in mind that China’s cycle exhibits a series of rally and fade cycles that form a multi-year basing process. The Shanghai composite longer term chart outlined rally and basing cycle correlations.

In this briefing:

1. LG Corp Daily Cycle Pivot and Re Test of Base Line Support
2. S&P 500 and S&P 600 Testing Resistance…Still
3. S&P Directional Break Points

1. LG Corp Daily Cycle Pivot and Re Test of Base Line Support

LG Corp (003550 KS) is resting on critical daily cycle pivot support; if broken would see momentum spill over into the weekly cycle with a bias to re test base line support.

Daily RSI has already broken the wedge support equivalent in price and very often a good leading indicator. LGC is currently resting just above key pivot support, that once broken would induce a slide back to more attractive and a better risk to reward zone.

2. S&P 500 and S&P 600 Testing Resistance…Still

The S&P 500 is beginning to come off of short-term overbought extremes, consolidating near the confluence of key overhead resistance and the 200-day moving average. This level is roughly 2,817 on the S&P 500 and roughly 1,000 on the S&P 600 Small Cap index. Some consolidation or a mild pullback is possible in the near-term, which we believe would help alleviate current overbought readings and allow for a more orderly and meaningful move higher.  In today’s report we highlight attractive Groups and stocks within the Consumer Discretionary, Health Care, and Services Sectors.

3. S&P Directional Break Points

S&P key outside day reversal sets the tone for a correction as the RSI is now breaking below trend support and a key downside trigger. This is the second reversal registered in the key 2,815-20 macro pivot zone.

Uptick resistance points below 2,820 are laid out as well as downsize pivot levels that once broken would induce a higher momentum decline.

Any break above SPX 2,820 would induce a short squeeze and we outlined a sector pair that would reward in such an event.

From now until the end of March it will be hard for bull momentum to remain intact given the bulk of good news is now priced in.

In this briefing:

1. LG Corp Daily Cycle Pivot and Re Test of Base Line Support
2. S&P 500 and S&P 600 Testing Resistance…Still
3. S&P Directional Break Points
4. Bharti Airtel Buy on Short Lived Breach Below Support

1. LG Corp Daily Cycle Pivot and Re Test of Base Line Support

LG Corp (003550 KS) is resting on critical daily cycle pivot support; if broken would see momentum spill over into the weekly cycle with a bias to re test base line support.

Daily RSI has already broken the wedge support equivalent in price and very often a good leading indicator. LGC is currently resting just above key pivot support, that once broken would induce a slide back to more attractive and a better risk to reward zone.

2. S&P 500 and S&P 600 Testing Resistance…Still

The S&P 500 is beginning to come off of short-term overbought extremes, consolidating near the confluence of key overhead resistance and the 200-day moving average. This level is roughly 2,817 on the S&P 500 and roughly 1,000 on the S&P 600 Small Cap index. Some consolidation or a mild pullback is possible in the near-term, which we believe would help alleviate current overbought readings and allow for a more orderly and meaningful move higher.  In today’s report we highlight attractive Groups and stocks within the Consumer Discretionary, Health Care, and Services Sectors.

3. S&P Directional Break Points

S&P key outside day reversal sets the tone for a correction as the RSI is now breaking below trend support and a key downside trigger. This is the second reversal registered in the key 2,815-20 macro pivot zone.

Uptick resistance points below 2,820 are laid out as well as downsize pivot levels that once broken would induce a higher momentum decline.

Any break above SPX 2,820 would induce a short squeeze and we outlined a sector pair that would reward in such an event.

From now until the end of March it will be hard for bull momentum to remain intact given the bulk of good news is now priced in.

4. Bharti Airtel Buy on Short Lived Breach Below Support

Bharti Airtel (BHARTI IN) corrective cycle does not appear complete with risk of a final spike lower  below key pivot support. It is this crack lower that we want to take advantage of.

Sell volume spike implies the flat range will break lower. 

Daily cycle triangulation sides with a press below pivot support. An upside break of this triangle would trigger a tactical long but would lack needed gas for a sustainable drive.

Weekly MACD is seeking a bottoming/basing cycle that will turn the cycle higher once we see a final capitulation spike below pivot support as we did back in 2008, 2010 and 2012.

In this briefing:

1. U.S. Equity Strategy: Be Long & Carry On
2. European Apparel, Accessory & Luxury Goods Stocks Are Heating Up — Add Exposure
3. Sony Trading Low Just Above Higher Conviction Intermediate Buy Support
4. Market Wrinkles Ahead of a US/China Deal Spike
5. Global-Ex-U.S. Equity Strategy: Add Exposure To Technology, Communications

1. U.S. Equity Strategy: Be Long & Carry On

Both the cap- and equal-weighted S&P 500 are trading at highs not seen since early October 2018 – a positive indication in itself. Additionally, key risk-on areas we highlighted in last week’s Compass (small-caps, Financials/Banks, and Transports) have outperformed off the recent lows – a welcomed sight for risk sentiment, and confirms out positive outlook. In today’s report we highlight attractive bottom-fishing opportunities within the Financials Sector, and attractive Groups and stocks within Large- and Small-Cap Railroads, and Internet Software

2. European Apparel, Accessory & Luxury Goods Stocks Are Heating Up — Add Exposure

We continue to believe that equities in Europe and the UK are bottoming with the STOXX Europe 600 index breaking topside its 14-month downtrend. Helping lead the turnaround is the Personal & Household Goods supersector. We believe outperformance is set to continue and several stocks are actionable at current levels within our int’l Group CD-28 Apparel, Accessory & Luxury Goods, Europe: LVMH Moet Hennessy Louis Vuitton SE (MC-FR), Christian Dior SE (CDI-FR), Kering SA (KER-FR), Hermes International SCA (RMS-FR), adidas AG (ADS-DE), Moncler SpA (MONC-IT), PUMA SE (PUM-DE), and Bjorn Borg AB (BORG-SE). Add exposure.

3. Sony Trading Low Just Above Higher Conviction Intermediate Buy Support

Sony Corp (6758 JP) is forming a bullish descending wedge/channel that once mature will chisel out an intermediate low with scope to clear medium term breakout resistance. The tactical low near 4,400 lies just above more strategic support.

Clear pivot points will help manage positioning within the bull wedge that is in the final innings.

The tactical buy level is not that far from strategic support with a more bullish macro lean.

MACD bull divergence is not only supportive into near term weakness but also points to a breakout above medium resistance. Risk lies with Sony not looking back after hitting our tactical low target.

4. Market Wrinkles Ahead of a US/China Deal Spike

Ftse China A50 Index (XIN9I INDEX) has been our top long bet in Asia from early January (10,800), outperforming both the HSCEI and HSI. 

Key chart points that suggest the A share rise will be getting ahead of itself after the next rally phase out of bullish triangulation. Once this breakout terminates we see evidence of a harder decline unfolding ahead of a trade deal. This window allows for a pullback ahead of a trade deal spike that will put in place a key cycle peak just under shanghai composite resistance that goes back to highs from 2009, 2016 and 2018.

Keep in mind that China’s cycle exhibits a series of rally and fade cycles that form a multi-year basing process. The Shanghai composite longer term chart outlined rally and basing cycle correlations.

5. Global-Ex-U.S. Equity Strategy: Add Exposure To Technology, Communications

We view weakness in global equity markets over the past week as correcting a significant amount of the excess optimism. We recommend taking advantage of the pullback by adding exposure to our favorite areas – namely Technology. Our overall outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains positive and we continue to expect higher equity prices going forward.  In today’s report we provide a technical appraisal of all major markets and highlight actionable stocks throughout the int’l Technology and Communications sectors.

In this briefing:

1. S&P 500 and S&P 600 Testing Resistance…Still
2. S&P Directional Break Points
3. Bharti Airtel Buy on Short Lived Breach Below Support

1. S&P 500 and S&P 600 Testing Resistance…Still

The S&P 500 is beginning to come off of short-term overbought extremes, consolidating near the confluence of key overhead resistance and the 200-day moving average. This level is roughly 2,817 on the S&P 500 and roughly 1,000 on the S&P 600 Small Cap index. Some consolidation or a mild pullback is possible in the near-term, which we believe would help alleviate current overbought readings and allow for a more orderly and meaningful move higher.  In today’s report we highlight attractive Groups and stocks within the Consumer Discretionary, Health Care, and Services Sectors.

2. S&P Directional Break Points

S&P key outside day reversal sets the tone for a correction as the RSI is now breaking below trend support and a key downside trigger. This is the second reversal registered in the key 2,815-20 macro pivot zone.

Uptick resistance points below 2,820 are laid out as well as downsize pivot levels that once broken would induce a higher momentum decline.

Any break above SPX 2,820 would induce a short squeeze and we outlined a sector pair that would reward in such an event.

From now until the end of March it will be hard for bull momentum to remain intact given the bulk of good news is now priced in.

3. Bharti Airtel Buy on Short Lived Breach Below Support

Bharti Airtel (BHARTI IN) corrective cycle does not appear complete with risk of a final spike lower  below key pivot support. It is this crack lower that we want to take advantage of.

Sell volume spike implies the flat range will break lower. 

Daily cycle triangulation sides with a press below pivot support. An upside break of this triangle would trigger a tactical long but would lack needed gas for a sustainable drive.

Weekly MACD is seeking a bottoming/basing cycle that will turn the cycle higher once we see a final capitulation spike below pivot support as we did back in 2008, 2010 and 2012.

In this briefing:

1. European Apparel, Accessory & Luxury Goods Stocks Are Heating Up — Add Exposure
2. Sony Trading Low Just Above Higher Conviction Intermediate Buy Support
3. Market Wrinkles Ahead of a US/China Deal Spike
4. Global-Ex-U.S. Equity Strategy: Add Exposure To Technology, Communications
5. U.S. Equity Strategy: Bullish Outlook Intact

1. European Apparel, Accessory & Luxury Goods Stocks Are Heating Up — Add Exposure

We continue to believe that equities in Europe and the UK are bottoming with the STOXX Europe 600 index breaking topside its 14-month downtrend. Helping lead the turnaround is the Personal & Household Goods supersector. We believe outperformance is set to continue and several stocks are actionable at current levels within our int’l Group CD-28 Apparel, Accessory & Luxury Goods, Europe: LVMH Moet Hennessy Louis Vuitton SE (MC-FR), Christian Dior SE (CDI-FR), Kering SA (KER-FR), Hermes International SCA (RMS-FR), adidas AG (ADS-DE), Moncler SpA (MONC-IT), PUMA SE (PUM-DE), and Bjorn Borg AB (BORG-SE). Add exposure.

2. Sony Trading Low Just Above Higher Conviction Intermediate Buy Support

Sony Corp (6758 JP) is forming a bullish descending wedge/channel that once mature will chisel out an intermediate low with scope to clear medium term breakout resistance. The tactical low near 4,400 lies just above more strategic support.

Clear pivot points will help manage positioning within the bull wedge that is in the final innings.

The tactical buy level is not that far from strategic support with a more bullish macro lean.

MACD bull divergence is not only supportive into near term weakness but also points to a breakout above medium resistance. Risk lies with Sony not looking back after hitting our tactical low target.

3. Market Wrinkles Ahead of a US/China Deal Spike

Ftse China A50 Index (XIN9I INDEX) has been our top long bet in Asia from early January (10,800), outperforming both the HSCEI and HSI. 

Key chart points that suggest the A share rise will be getting ahead of itself after the next rally phase out of bullish triangulation. Once this breakout terminates we see evidence of a harder decline unfolding ahead of a trade deal. This window allows for a pullback ahead of a trade deal spike that will put in place a key cycle peak just under shanghai composite resistance that goes back to highs from 2009, 2016 and 2018.

Keep in mind that China’s cycle exhibits a series of rally and fade cycles that form a multi-year basing process. The Shanghai composite longer term chart outlined rally and basing cycle correlations.

4. Global-Ex-U.S. Equity Strategy: Add Exposure To Technology, Communications

We view weakness in global equity markets over the past week as correcting a significant amount of the excess optimism. We recommend taking advantage of the pullback by adding exposure to our favorite areas – namely Technology. Our overall outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains positive and we continue to expect higher equity prices going forward.  In today’s report we provide a technical appraisal of all major markets and highlight actionable stocks throughout the int’l Technology and Communications sectors.

5. U.S. Equity Strategy: Bullish Outlook Intact

Market activity, both bonds and stocks, has been all about realigning expectations. Wednesday’s Fed announcement was more dovish than expected, and the market is now pricing in roughly 25bps of cuts by the end of 2019. Stocks reacted positively on Thursday, but then reversed (and then some) on Friday as global growth concerns became a little more serious. We continue to maintain our positive outlook. In today’s report we recap our bullish investment thesis and highlight attractive Groups and stocks within Consumer Staples, Materials, and Services.