The Technical Indicator: Bull trend strengthens, S&P 500 presses uncharted territory ahead of G-20

Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.

Technically speaking, the U.S. benchmarks’ June price action remains comfortably bullish ahead of key meetings at this week’s G-20 summit.

On a headline basis, the S&P 500 has sustained a modest break to record territory — Monday’s close (2,945.4) matched its former record close (2,945.8) — while the Dow Jones Industrial Average is digesting a June rally to eight-month highs.

Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, -0.41%  hourly chart highlights the past two weeks.

As illustrated, the S&P has rallied to record territory, and is holding the range top. The late-month selling pressure remains flat.

Tactically, near-term support (2,931) is followed by a firmer floor matching the August peak (2,916).

Meanwhile, the Dow Jones Industrial Average DJIA, -0.24%  has sustained a break to eight-month highs.

The blue-chip benchmark’s record close (26,828), established Oct. 3, remains a sticking point.

Conversely, notable support matches the April peak (26,696) — also illustrated on the daily chart — and is followed by a near-term floor around 26,570.

Against this backdrop, the Nasdaq Composite COMP, -0.70%  has also pulled in modestly from the June peak.

Tactically, the 8,000 mark remains an inflection point, and is followed by firmer support matching the breakout point (7,910).

Widening the view to six months adds perspective.

On this wider view, the Nasdaq’s June price action remains firmly bullish. The prevailing upturn punctuates a tight mid-month range pinned to the early-June rally.

To reiterate, gap support (7,910) is followed by a firmer floor matching the 50-day moving average (7,862) and the March peak (7,850). Delving deeper, the Nasdaq’s intermediate-term bias remains bullish barring a violation of the former range bottom (7,767).

Looking elsewhere, the Dow Jones Industrial Average is digesting a slight break to eight-month highs.

Recall that the 26,700 area pivots to support, levels closely matching the May and April peaks. (See the hourly chart.)

Conversely, the Dow’s record close (26,828.39) and absolute record peak (26,951.81) remain within striking distance.

Meanwhile, the S&P 500 is digesting a very slight break to record territory.

The late-month rally punctuates a flag-like pattern underpinned by the 2,873 support. Bullish price action.

The bigger picture

Collectively, the June price action remains firmly bullish even against a slightly uneven bigger-picture backdrop.

On a headline basis, the S&P 500 is digesting a modest break to record territory, while the Dow Jones Industrial Average has registered a slight break to eight-month highs. Each benchmark’s intermediate-term bias remains bullish based on today’s backdrop.

True to recent form, the iShares Russell 2000 ETF remains in divergence mode.

As illustrated, the small-cap benchmark has reversed from the June peak, closing under its 50- and 200-day moving averages amid increased volume. This remains the weakest widely-tracked U.S. benchmark.

Meanwhile, the SPDR S&P MidCap 400 remains incrementally stronger.

Still, the MDY has balked at next resistance (354.70) and pulled in modestly from the June peak.

Though market bears will point to a developing head-and-shoulders top, the June selling pressure has registered as flat. The mid-cap benchmark’s recovery attempt gets the benefit of the doubt barring a violation of near-term support (346.50) and the 200-day moving average.

Looking elsewhere, the SPDR Trust S&P 500 has edged to uncharted territory and is holding the range top.

The late-month upturn was fueled by increased volume, punctuating the mid-month flag pattern formed amid decreased volume. Bullish price action.

Placing a finer point on the S&P 500, its bigger-picture backdrop remains bullish and straightforward.

To reiterate, the late-June upturn punctuates a flag-like pattern underpinned by the 2,873 support. (The mid-month low (2,874) closely matched support.)

The S&P has subsequently maintained its breakout point — the 2,912-to-2,916 area — as well as a near-term floor at 2,931. Tuesday’s early session low (2,931.4) has matched support

Beyond specific levels, the prevailing sentiment backdrop remains constructive, as partly measured by the CBOE Volatility Index. The VIX has refused to break materially lower even as the S&P 500 tags record highs. Meanwhile, the U.S. sub-sector backdrop remains bullish, though it admittedly has room to improve as touched on Monday.

Collectively, the S&P 500’s intermediate-term technical bias remains firmly bullish. Its June price action lays the groundwork for potentially material follow-through from current levels, as detailed last week.

See also: Charting a bull-flag breakout, S&P 500 knifes toward record territory.

Tuesday’s Watch List

The charts below detail names that are technically well positioned. These are radar screen names — sectors or stocks poised to move in the near term. For the original comments on the stocks below, see The Technical Indicator Library.

Drilling down further, the SPDR Gold Shares ETF GLD, +0.82%  — profiled twice last week — continues to take flight.

Easing Treasury yields have contributed to the breakout, fueled partly by several dovish central bank policy signals, issued last week. A residual safe-haven trade has also offered a tailwind amid recent geopolitical tensions.

Technically, the shares have knifed from a multi-year base — illustrated on the 10-year chart — opening the path to potentially material longer-term follow-through. Though near-term extended, a pullback toward major support in the 129.50-to-130.20 area would offer an attractive entry.

More broadly, consider that gold and the S&P 500 are concurrently breaking out, a backdrop consistent with the view that the prevailing gold rally attempt may be consequential. In a related move, silver’s decisive trendline breakout — detailed last week — remains underway.

Looking elsewhere, the iShares China Large-Cap ETF FXI, -1.25%  has come to life ahead of this week’s G-20 summit and signs of potential U.S.-China trade progress. (Yield = 2.9%.)

Specifically, the shares have rallied atop the 50- and 200-day moving averages, an area closely matching the breakdown point (42.50).

As detailed previously, this area marks a bull-bear inflection point, with a sustained posture higher signaling a viable recovery attempt.

The FXI has registered consecutive session lows matching support — at 42.48 and 42.50, to be exact — though the shares have ventured lower early Tuesday. The response to this week’s G-20 summit will likely add color. (Also see the June 20 review.)

Moving to specific names, Dow 30 component Boeing Co. BA, -0.38%  has come to life technically. (Yield = 2.2%.)

Specifically, the shares have knifed atop trendline resistance as well as the 50- and 200-day moving averages. The breakout signals a trend shift.

More immediately, the prevailing flag-like pattern has formed amid decreased volume, positioning the shares to extend the uptrend. Tactically, the 50-day moving average has marked an inflection point — see the April peak — and the recovery attempt is intact barring a violation.

Oracle Corp. ORCL, -0.45%  is a well positioned large-cap software vendor. (Yield = 1.7%.)

As illustrated, the shares have recently gapped to record territory, rising after the company’s strong fourth-quarter results.

The ensuing pullback has been flat, fueled by decreased volume, positioning the shares for upside follow-through. Tactically, the top of the gap closely matches the breakout point (55.50) and a posture higher supports a bullish bias.

Williams-Sonoma, Inc. WSM, +1.27%  is a mid-cap retailer positioned to rise. (Yield = 3.1%.)

The shares initially spiked four weeks ago, gapping atop the 50-day moving average after the company’s quarterly results.

The ensuing pullback was underpinned by the top of the gap, and punctuated by the mid-June follow-through to seven-month highs.

Tactically, gap support (60.00) is followed by the converging major moving averages, circa 57.30. The prevailing rally attempt is intact barring a violation.

Finally, Sunrun, Inc. RUN, -1.34%  is a mid-cap manufacturer of residential solar energy systems.

Earlier this month, the shares knifed to record territory, gapping higher after an analyst upgrade.

Though still near-term extended, and due to consolidate, the sustained strong-volume rally is longer-term bullish. A pullback toward the breakout point, circa 17.50, would offer an attractive entry.

Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.

Still well positioned

The table below includes names recently profiled in The Technical Indicator that remain well positioned. For the original comments, see The Technical Indicator Library.

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