The S&P E-mini closed the session with a bullish engulfing candle yesterday and has broken to an intraday high in Asia, on the back of positive news on the US-China trade negotiations. According to President Trump, China has indicated trade talks are advancing, which raises hopes that a trade deal could be signed in Chile next month.
Still, the S&P 500 has reported YoY decline in earnings for a third quarter, which is currently -4.7%. Whilst revenues are higher at 2.6%, it points towards as squeeze on net profit margins for Q3. So it’s not all rosy at the highs.
From a technical standpoint, it trades just 19 points from record highs which has bulls on high alert for a fresh breakout. Yet there’s also the potential for this to morph into an ascending triangle, which leaves room for at least another cycle lower (with a higher low or two) before breaking out.
Assurant (NYSE:AIZ) CFD/DFT: Currently around 25% up for the year, this household insurance company has outperformed both the S&P500 and financial sector. Structurally, the daily trend is clearly bullish and is on the cusp of breaking to a new 52-week high. The 50-day eMA provided support and marks the potential swing low, and yesterday’s gap higher saw it gap out of compression. Given we’ve just seen over a month of consolidation at the highs, there are no clear signs of overextension despite it sitting near its record highs.
Starbuck Corp CFD/DFT: The price action on Starbucks Corporation (NASDAQ:SBUX) has caught our eye, as it’s at a technical juncture. From June ’18 to July this year, it traded in a very strong, almost parabolic bullish trend. Yet since peaking just below 100, a counter-trend move has unfolded with a series of lower lows and highs and its recent pullback has found resistance at the 100 and 20-day eMA’s. Furthermore, the 20-day eMA has crossed blow the 100 and the 50-day also points lower. Whilst this would be an appealing setup to bearish swing traders, prices have stalled at the September ’18 trendline.
Price Action Update:
Apple Inc (NASDAQ:AAPL) CFD/DFT: After finding support at the prior ATH’s around 233, its closed to fresh new highs and keeps the bullish channels very much alive and well. With no clear signs of a top, the trend points high and could be an equity for intraday momentum traders to also consider.
Applied Materials (NASDAQ:AMAT) CFD/DFT: The Cup and handle pattern could still be in play although, ideally, we should have seen a direct breakout. Instead, Thursday’s bearish hammer closed back just below the original breakout level to warn of a hesitancy to break higher, although the overall structure remains bullish. Support has been found at the 20-day eMA, so a break below 51.00 warns of a deeper correction against the dominant trend (and perhaps towards the December trendline). Whereas a break above 53.25 assumes bullish continuation.
Cisco Systems (NASDAQ:CSCO) CFD/DFT: A downside break remains the bias as part of a head and shoulders top, whilst prices remain beneath the 48.13 high. Whilst prices have made a half-hearted attempt to move higher, momentum lacks conviction. Ultimately, it remains in the watchlist for a larger downside move but we’re not on high alert of a sell signal just yet.