Multi asset class technical outlook and forecast 20180110

Copyright © 2018 | i10 Research
Page | 0
January 10, 2018
Multi-Asset Class
➢ Technical Outlook & Forecast
➢ Exposure Recommendations
i10 Research
(646) 535-0369
Aaron Uitenbroek
aaron@i10research.com
David Truffelman
dtruffelman@i10research.com

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Synopsis
This report provides:
• Asset class allocation/exposure recommendations
• Bullish/Neutral/Bearish technical bias
• Technical Market Outlook and Forecast
• Support and Resistance Zones
• Actionable and investable advisor/trader instructions
• Markets covered:
➢ SPX
➢ NDX
➢ RUT
➢ DJIA
➢ Breadth
➢ Volatility
➢ 10-yr Treasury Notes
➢ 10-yr Interest Rates
➢ Bloomberg Commodity Index
➢ Gold
➢ Crude Oil
➢ US Dollar Index
i10 Methodology
In our research, we use volume-at-price data and auction market principles
to generate alpha for our clients by correctly identifying market biases,
effective market timing, and locating asymmetric trading opportunities.
It is our data-driven, quantitative approach and adhering to processes that
are proven, consistent and robust that allow us to deliver analysis and
results that are accurate, reliable and that give our clients a trading edge far
superior to other research providers and approaches.
Our analysis focuses on volume-at-price data because in addition to price, it
is critical information that is 100% market-generated.
Volume-at-price data is key information that major institutions, trading
algorithms, and hedge funds use to accommodate their liquidity needs.
By analyzing the market-generated volume-at-price data, we make our clients
aware of key price locations before they are reached. We provide investable
trading guidance that others using strictly fundamental or price-based
information completely miss.

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Table of Contents
Page 1
• Synopsis; i10 Research Methodology
Page 2
• Table of Contents
Page 3
• Market Bias Summary and Exposure Recommendations
Page 4
• S&P Select Sector (GICS) Performance Summary
Page 5 - 7
• SPX – S&P 500 Index
Page 8
• NDX – Nasdaq 100 Index
Page 9
• RUT – Russell 2000 Index
Page 10 - 11
• DJX – Dow Jones Industrial Average
Page 12
• NYSE Breadth Average
Page 13 -14
• VIX - Volatility
Page 15 - 16
• ZN - 10-yr Treasury Notes
Page 17
• TNX - 10-yr Note Yield (Interest Rates)
Page 18 - 19
• BCOM - Bloomberg Commodity Index
Page 20
• GC - Gold
Page 21
• CL - Crude Oil
Page 22 - 23
• DX - US Dollar Index
Page 24
• Disclaimer

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Market Bias Summary and Exposure Recommendations
Bias High/Low/No/Inverse
Exposure
Recommendation
Market Near-term Long-term
S&P 500 Bullish Bullish High Exposure
Nasdaq 100 Bullish Bullish High Exposure
Russell 2000 Bullish Bullish High Exposure
Dow Jones
Industrial
Average
Bullish Bullish High Exposure
10-yr Treasury
Notes
Bearish Bearish No Exposure
Bloomberg
Commodity Index
Bullish Rotational No Exposure
US Dollar Index Bearish Bearish No Exposure
• When a change in Bias or Exposure Recommendation occurs, the change
will be highlighted in yellow for a week following the change.

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S&P Select Sector (GICS) Performance Summary
• Table is ranked by the most recent week’s performance.
• RSI above 50 indicates that relative strength is bullish, below 50 indicates
relative strength is bearish.
Ticker Company
Perf
Week
Perf
Month
Perf
Quart
Perf
Year
RSI Price
XLI Industrial Select Sector SPDR ETF
3.05% 5.47% 9.34% 25.20% 79.76 78.15
XLV Health Care Select Sector SPDR ETF
2.79% 4.69% 4.33% 20.62% 63.93 85.3
XLK Technology Select Sector SPDR ETF
2.53% 4.87% 10.45% 34.40% 63.67 66
XLE Energy Select Sector SPDR ETF
2.42% 9.58% 10.29% 0.59% 76.39 75.4
XLF Financial Select Sector SPDR ETF
2.40% 2.69% 8.91% 22.28% 72.26 28.68
XLB Materials Select Sector SPDR ETF
2.38% 5.75% 8.57% 24.18% 72.72 62.49
XLY Consumer Discret Sel Sect SPDR ETF
1.91% 5.49% 11.67% 22.64% 77.39 101.7
XLP Consumer Staples Select Sector SPDR ETF
0.80% 0.97% 6.21% 10.23% 51.14 56.45
XLU Utilities Select Sector SPDR ETF
-1.71% -7.88% -4.11% 6.45% 24.88 50.75
XLRE Real Estate Select Sector SPDR
-1.92% -3.02% -1.08% 2.95% 29.06 31.62
Clients interested in GICS sector analysis:
The S&P Select Sector SPDR Report is a complete GICS sector-focused analysis
report that includes:
• Sector exposure recommendations
• Bullish/Neutral/Bearish technical biases
• Technical Outlook and Forecast for each sector
• Support and Resistance Zones
• Actionable and investable advisor/trader instructions
Available for entitlement by emailing us at reports@i10research.com.

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S&P 500 (SPX)
The S&P 500 index has continued to push steeply higher and the bias remains
bullish. There remains support established below at 2674 – 2693. The breadth
average is reaching levels where we are alert for a pause in the index (page 12).
The stock indices remain in synch to the upside with the SPX and NDX pushing to
new highs. If the RUT can join them in breaking to new highs, we would expect
continuation of this new leg higher in the ongoing uptrend.

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S&P 500 LONG-TERM
The S&P 500 index remains bullish at a large degree with support at 2674, 2577
and 2544. Only a drop below 2544 would shift the long-term bias away from
bullish.

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S&P 500 LONG-TERM ADDITIONAL COMMENT
The SPX continues its climb above the top of the multi-year rising trend
channel. This latest rally leg began from the late-2016 touch to high-volume
area support. From that touch to support, a strong buying response has
pushed the index higher, which is expected price action in an overall big
picture bullish scenario.
The SPX, DJIA, Nasdaq 100, and the Russell 2000 have all traded into new high
territory following this upside alignment in the indices.
In the larger context, the S&P 500’s break higher from the large
balance/rotation that lasted more than a year over the course of 2015 and
early 2016 (large blue rectangle) was where the big bullish shift occurred.
As the index trades at the top end of the ascending trend channel, it has
multiple zones of support built below on any pullback. The lower threshold
of the trend channel is more than 10% below current prices, which leaves
room for a substantial pullback, however the largest degree trend higher will
remain intact so long as the channel remains intact.

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NASDAQ-100 (NDX)
The Nasdaq-100 continues its steep rise and the bias remains bullish. Support
zones below are established at 6348 – 6424 and 6194 – 6258.

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RUSSELL 2000 (RUT)
The Russell 2000 has probed above the zone of resistance at its highs at 1551 -
1559. A push into new high territory would support further gains across the
stock indices. The key level of support is 1498 - 1511, a breach of which would
negate the bullish bias.

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DOW JONES INDUSTRIAL AVERAGE
The Dow Jones Industrial Average continues to rally into new all-time high
territory. The bias remains bullish and nearby support is established at
24,718 – 24,851 with lower support at 24,101 – 24,335.

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DOW JONES INDUSTRIAL AVERAGE LONG-TERM
The Dow Jones Industrial Average big picture uptrend continues with support
on any pullback at 24,708 and 23,243 – 23,545 and the bias remains bullish.
Only a breach of 23,243 would shift the bias away from bullish.

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NYSE BREADTH (ADVANCE-DECLINE) AVERAGE
The breadth average has continued to work higher and is approaching the blue
line where we are alert for a pause in the SPX uptrend. The uptrend remains
intact and this behavior is consistent with what we’ve seen over the balance of
the previous year.

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VOLATILITY (VIX)
The VIX remains at single-digit lows as the SPX pushes higher.
It remains our thesis that a ‘buy the dip’ environment is underway. In the prior
‘buy the dip’ period over 2013 - 2014, spikes in the VIX into the 21 – 24 range
marked good buying opportunities (blue circles below). We’ve seen one such
spike in late-2016 that marked the most recent large degree opportunity. Since
then, each touch to the 14.5 – 17 area (marked with green arrows) has been met
with buyers ready and eager to step in. We will continue to measure and
monitor this metric going forward to help discern any change in behavior of the
on-going uptrend.
In a ‘buy the dip’ environment like the previous, VIX spikes into the 21 – 24
range are markers of intermediate-term buying opportunities. Following any
VIX spike, it should take one week or less for the VIX to drop back below 14.50 as
the SPX rallies back and retraces the entire decline also in a week or less. If VIX
were to exceed 24 on any spike higher, that would negate for the time being the
similarities to the prior ‘buy the dip’ period and I would look to re-evaluate.

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10-YEAR TREASURY NOTES
Notes continue to decline toward the next downside target / support at 122’145
and the bias remains bearish. Resistance on any rally attempt is 123’135 –
123’200 and 124’060 – 124’135.

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10-YEAR TREASURY NOTES LONG-TERM
Notes have declined into the zone of support that surrounds 122’145 and
the bias remains bearish. Resistance remains at 123’245 and 124’160 –
125’045 on any rally attempt.

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TEN-YEAR NOTE YIELD (INTEREST RATES)
Rates have pushed above zone of resistance at 2.375 – 2.520 which shifts the
bias to bullish. There is additional resistance at 2.579 – 2.748 that turned
rates lower in early 2017 and we expect resistance in this area again. On any
pause or pullback there is support at 2.375 - 2.520.

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BLOOMBERG COMMODITY INDEX
The Bloomberg Commodity Index continues to bump against resistance at
88.73. The bias remains bullish as the index presses into the longer-term
resistance at 86.8 – 90.3 (next page). The zone at 85.81 – 86.84 is nearby
support on any pullback.

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BLOOMBERG COMMODITY INDEX LONG-TERM
The Bloomberg Commodity Index is challenging resistance at 86.82 – 90.30.
While between this big picture resistance and support at 79.34 – 81.67 the
long-term bias remains rotational. A move over 90.30 would shift the long-
term bias to bullish.

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GOLD
Gold has held nearby support at 1308.7 and again bumping up against
resistance at 1326.7 – 1338.2. The bias remains bullish and support on any
pullback is at 1308.7 and 1295 – 1301.9.

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CRUDE OIL
Crude oil has continued to rally and the bias remains bullish. The next target
/ resistance is at 66.09 – 69.31. On any pullback, look for support at 60.68.

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US DOLLAR INDEX
The US Dollar index has paused upon reaching the bottom of the support
zone at 91.575. The bias remains bearish and only a recovery back above
92.520, which now becomes resistance, would put the bearish bias on hold.
Lower support remains at 90.990 and any break below 90.990 would likely
result in an acceleration of the decline.

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US DOLLAR INDEX LONG-TERM
The US Dollar index remains bearish as it tests the zone of support at 90.990
– 92.520. A breach of 90.990 would likely usher in an acceleration of the
decline.

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DISCLAIMER:
The views expressed in this research report accurately reflect the personal views of the research
analysts responsible for the content of this report Aaron Uitenbroek and/or David Truffelman.
The research analyst further certifies that he receives no compensation that is directly or
indirectly related to the specific recommendations or views contained within this report.
This publication does not constitute and should not be construed as an offer or the solicitation of
any transaction to buy or sell any securities or any instruments or any derivatives of the
securities mentioned herein or to participate in any particular trading strategies. Although the
information contained herein has been obtained from recognized services, and sources believed
to be reliable, its accuracy or completeness cannot be guaranteed. Opinions, estimates or
projections expressed in this report may make assumptions regarding economic, industry and
political considerations and constitute current opinions, at the time of issuance, which are
subject to change without notice.
The products or securities mentioned in this report may not be eligible for sale in some states or
countries. Their value and any income which they may produce may fluctuate and / or be
adversely affected by interest rates, exchange rates and other factors.
This information is being furnished to you for informational purposes only, and on the condition
that it will not form a primary basis for any investment decision. Any recommendation
contained in this report is not intended to be, nor should it be construed or inferred to be,
investment advice, as such investments may not be suitable for all investors. When preparing
this report, no consideration to one’s investment objectives, risk tolerance or other individual
factors was given; as such, as with all investments, purchase or sale of any securities mentioned
herein may not be suitable for all investors. By virtue of this publication, neither the Firm nor
any of its employees shall be responsible for any investment decisions.
Before committing funds to ANY investment, an investor should seek professional advice. Any
information relating to the tax status of financial instruments discussed herein is not intended to
provide tax advice, or to be used by anyone to provide tax advice. Investors are urged to consult
an independent tax professional for advice concerning their particular circumstances. Past
performance should not be taken as an indication or guarantee of future performance, and no
representation or warranty, either expressed or implied, is made regarding future performance.
The authors of this report may, from time to time, have long or short positions in, and buy or sell
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available upon request.

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