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CURRENT POSITIONS:
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The CRM expired on Friday. Because of the hedge, the loss was 3.5% of the tracking portfolio.
Friday closed out the last week of June as well as the month of June.
I will review the monthly, weekly and daily timeframes today starting from the longest to shortest.
For the month, the S & P 500 closed 189.70 higher. This follows the month of May, in which the S & P closed 193.77 lower.
So in one month, the S & P 500 almost recouped the total loss from May.
And there were a few other factors in June that once again shows how bullish this market is. The first, and probably the most important is the fact that the S & P 500 managed to close back above the upper band on the monthly chart.
The upper band now reads 2,891.79. And the S & P 500 closed out the month at 2,941.76. So, after closing under the upper band, the S & P 500 has now closed back above it by about 51 points.
The other factor for the month is that the month closed out at 90.5% of the monthly price. This tells us that there is about a 90% chance the high will be violated before the low.
This certainly helps to confirm that our price objective of 2,968.80 should be exceeded. And actually, the high for June was only 4.65 points under it.
The final factor from June's monthly bar is that the range was 235. This actually exceeded the bear bar from May, which was 215. And the monthly average true range is 168.80.
So for June, the monthly range was 139% of the average. And this actually exceeded the May bearish bar, which was 131% of the average.
This all shows you how strong this market is.
This suggests that support from the June monthly price bar is in the 2,846 area.
Actually, this level should offer strong support.
With the June close about 100 points above this level, it shows you how much the market could pullback and not affect the bull market.
For the week, the S & P 500 actually closed 8.70 points lower. And it was an inside week. This tells us two things. The first is that the month closed out on a bearish week, which does suggest July could start out weak.
The other thing, the weekly bar tells us that we should expect an expansion. This is by virtue of the fact that the weekly bar was an inside bar and the range was about 50% of the weekly average true range.
The final fact about the weekly bar was that both the S & P 500 and the VIX diverged. They both closed to the downside. And this was after the previous week in which they both closed to the upside.
You have to go all the way back to September 14th and 21st of 2012 to have seen this identical consecutive weekly formation on the S & P 500 and the VIX on the weekly bars.
And after that happened back in 2012, the market drifted lower for about 8 weeks before recuperating and going on to make a new high.
I'm not saying this will happen this time. I just know that this scenario is extremely rare.
The support area from last week's weekly bar is in the 2,934 area.
Finally, the Friday daily price bar closed 16.84 points higher. Friday closed out at 2,941.76
The range for the day was only 14.93 points. This was a contraction of 58%, based on the daily average true range of 25.66.
Friday was the third consecutive contraction, so we know an expansion is coming. I suspect it will come before the July 4th Holiday here in the States.
And because of the Holiday, the markets will close early on Wednesday. They close at 1:00 EST on Wednesday and are closed all day Thursday for Independence Day.
Support from Friday's daily bar is in the 2,936 area.
And with the shortened week, earnings are slow this week.
Monday morning update:
I had completed this narrative on Sunday. And instead of rewriting the piece, I thought I would just add this update.
I had written about the fact that we expected an expansion in the markets and that it will most likely come before the July 4th Holiday.
This morning, I check the markets and the S & P 500 is trading about 31 points higher based on some progress with China in the trade negotiations.
So, the expansion will happen before the 4th and the major 2,968.80 level we be clearly violated.
I will update the levels tomorrow, but suffice it to say that I expect the markets to continue higher.
Here are the Key Levels for the Markets:
$VIX:
Major level: 21.88
Minor level: 21.10
Minor level: 19.53
Major level: 18.75
Minor level: 17.97
Minor level: 16.41 **
Major level: 15.63 <
Minor level: 14.85
Minor level: 13.28
Major level: 12.50
Minor level: 11.72
The VIX closed Friday at 15.08. The high came to 16.13, before breaking and closing under 15.63.
The VIX closed at the low, which does suggest it should follow through to the downside.
At this point, two closes under 14.85 and the VIX should revisit 12.50 again.
15.63 should offer string resistance.
SPX:
Major level: 2,968.80 <
Minor level: 2,949.25
Minor level: 2,910.15 **
Major level: 2,890.60 <
Minor level: 2,871.08
Minor level: 2,832.03
Major level: 2,812.50
Minor level: 2,792.98
Minor level: 2,753.93
Major level: 2,734.40
Minor level: 2,714.88
Minor level: 2,675.83
Major level: 2,656.30
Looking for the active objective of 2,968.80 level to be hit. And based on the pre open activity, it will be exceeded.
Based on the market trading about 31 points higher, the major 2,968.80 level should be taken out at the open by around 4 points.
This would indicate that this level should be support. And if the market pulls back more, then the minor 2,949.25 level will offer support.
I will update the higher levels tomorrow, but this does clear the way for a move up to 3,095.
QQQ:
Major level: 193.75
Minor level: 192.19
Minor level: 189.06 **
Major level: 187.50 < Hit
Minor level: 185.94 **
Minor level: 182.81
Major level: 181.25 <
Minor level: 179.69
Minor level: 176.56
Major level: 175.00
The QQQ closed at 186.74. 186.72 is a minor support level and if the QQQ can clear 187.50, it should be support.
Like the S & P 500, the QQQ is set to open higher this morning. It is trading about 3.20 points to the upside.
Watch the minor 189.06 level. Two closes above this level and the QQQ should move up to 193.75.
188.28 should offer minor support.
IWM:
Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25 <
Minor level: 154.69
Minor level: 151.56 **
Major level: 150.00 <
Minor level: 148.44
Minor level: 145.31
Major level: 143.75
The IWM closed at 155.50. The IWM closed to the upside 1.87 points. It was a move of 1.22%.
It has now closed above the midband, which is 154.56.
The IWM is also trading higher before the open and should open above the 156.25 objective we have been looking for.
Look for support at 156.25.
TLT:
Major level: 134.38
Minor level: 133.60
Minor level: 132.03 **
Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13
Minor level: 127.74
Minor level: 126.95
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00
The TLT closed out at 132.81. It was down .09 on the day. It continues to test the upper band on the daily chart, which is now 133.54.
This morning it should open lower.
The good news is that we should know in a day or two if it can close above the upper band or it fails.
133.20 is minor resistance and 131.64 is minor support.
Starting to look like an uneven straddle or strangle would make sense. You would buy 2 puts for every 1 call in case the TLT makes a sudden reversal.
GLD:
Major level: 134.48
Minor level: 133.60 **
Minor level: 132.03
Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13
Minor level: 127.74
Minor level: 126.95
Major level: 126.56
Minor level: 126.17
Minor level: 125.39
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
The GLD closed at 133.20. The GLD sold off, but is still above the upper band on the daily chart. The upper band is now 131.49.
Based on the pre open trading, look for the 131.25 to be hit. A break under this level and it should be resistance.
XLE:
Major level: 65.63
Minor level: 64.85
Minor level: 63.28 **
Major level: 62.50 <
Minor level: 61.72
Minor level: 60.16
Major level: 59.38
Minor level: 58.60
Minor level: 57.03
Major level: 56.25
The XLE closed at 63.71. The XLE should open above 63.28. And if it closes above this level today, it should test 65.63.
The 63.62 resistance level should now be support.
64.06 is a minor resistance level.
AAPL:
Minor level: 203.13
Major level: 200.00
Minor level: 196.88
Minor level: 190.63 **
Major level: 187.50 <
Minor level: 184.38
Minor level: 178.13 **
Major level: 175.00
Minor level: 171.88
Minor level: 165.63
Major level: 162.50
Apple closed at 197.92. Apple is set to open about 3.50 above the major 200 line.
Watch for support at 200 on a pullback.
And if Apple can close above 200 for two days, I would expect a move up to 250.
WATCH LIST:
Bullish Stocks: AVGO, FLT, ZBRA, MCD, FB, OLED, DECK, CBRL, CASY, BABA, KLAC, XLNX, KEYS, OMC, KMX
Bearish Stocks: DPZ, ALGN, KEX, GDDY, KFY, CAG, CARS, SBH, CXW, TUP, GEO
Be sure to check earnings release dates.
