The Technical Indicator: Charting a (bullish) holding pattern, S&P 500 digests break to 5-month highs

Nonetheless, range-bound is bullish, against the prevailing backdrop, and the S&P 500’s intermediate-term path of least resistance continues to point higher.

Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, -0.08% hourly chart highlights the past two weeks.

As illustrated, the S&P has staged an orderly pullback from five-month highs.

The downturn punctuates a successful test of support matching the 3,200 mark.

Conversely, a familiar overhead inflection point matches the June peak (3,233) and the 2019 close (3,230).

Similarly, the Dow Jones Industrial Average DJIA, -0.39% remains range-bound.

Still, the sideways price action punctuates a decisive mid-July breakout, better illustrated on the daily chart. The prevailing range marks a bullish continuation pattern.

True to recent form, the Nasdaq Composite‘s COMP, -0.28% near-term backdrop is comparably jagged.

Nonetheless, the index has weathered a respectable pullback from last week’s record high (10,840).

Consider that last week’s low (10,217) closely matched support at the June peak (10,221).

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has whipsawed of late near record highs.

Recall that last week’s close marked just the second close under the 20-day moving average, currently 10,462, since April 3.

Still, the index has maintained the more important breakout point (10,131), an area followed by the ascending 50-day moving average.

Delving deeper, likely last-ditch support matches the February peak (9,838). The Nasdaq’s intermediate-term bias remains bullish barring a violation.

Looking elsewhere, the Dow Jones Industrial Average continues to digest its decisive mid-July breakout. The late-month range is a bullish continuation pattern, positioning it to build on the initial spike.

To reiterate, major support broadly spans from 26,236 to 26,294, levels matching the 200-day moving average and the June gap.

Conversely, resistance broadly spans from 27,071 to 27,102, levels matching the July and March peaks.

Separately, notice the pending golden cross — or bullish 50-day/200-day moving average crossover — an event that will likely signal next week.

Meanwhile, the S&P 500 has pulled in modestly from the July peak.

The downturn has been underpinned by the 3,200 mark, a level better illustrated on the hourly chart.

The bigger picture

Collectively, the bigger-picture technicals remain constructive, though the prevailing backdrop is not one-size-fits all.

On a headline basis, the S&P 500 and Dow industrials are digesting early-July breakouts, while the Nasdaq Composite continues to whipsaw near record territory.

Amid the cross currents, each benchmark’s intermediate-term bias remains bullish.

Moving to the small-caps, the iShares Russell 2000 ETF remains in flatlining mode, digesting a decisive break atop the 200-day moving average.

The initial strong-volume spike marked a two standard deviation breakout, and has been punctuated by a tight range amid decreased volume. Bullish price action.

Meanwhile, the SPDR S&P MidCap 400 ETF has also sustained a modest break atop the 200-day moving average.

Combined, the small- and mid-cap benchmarks are rising from support closely matching the 50-day moving average.

Looking elsewhere, the SPDR Trust S&P 500 has pulled in from five-month highs.

The downturn places it under the breakout point — the 323.20-to-323.40 area — detailed repeatedly.

Tuesday’s early session high (323.20) matched resistance to the decimal. A retest remains underway.

Placing a finer point on the S&P 500, the index continues to act well in the broad sweep.

The prevailing downturn from five-month highs has been orderly, underpinned by the 3,200 mark. Friday’s session low (3,200.05) matched the round number, an area that has offered support across nine straight sessions.

More broadly, the 50-day moving average, currently 3,119, closely matches gap support (3,123), an area also detailed on the hourly chart.

This is followed by the late-June low (2,999.7) matching the 3,000 mark. An eventual close under this area would mark a “lower low” — combined with a violation of the 50-day — raising a caution flag.

Delving deeper, the late-2019 breakout point (2,954) and June low (2,965) continue to mark likely last-ditch support.

Collectively, the S&P 500’s intermediate-term bias remains bullish barring a violation of the areas detailed. An orderly late-July consolidation phase remains underway.

Also see: Charting a bull-flag breakout, S&P 500 extends rally as volatility recedes.

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 VanEck Vectors Semiconductor ETF SMH, -2.09% continues to trend higher, rising to tag a nominal all-time high.

The prevailing upturn punctuates a successful test of trendline support.

Delving deeper, a firmer floor matches the breakout point (153.50), an area closely followed by the ascending 50-day moving average. The prevailing rally attempt is intact barring a violation.

Separately, consider that the group has already slightly surpassed its intermediate-term target, circa 164, detailed previously. (See the July 7 review.)

Looking elsewhere, the SPDR S&P Mining and Metals ETF is showing signs of life technically. (Yield = 1.9%.)

As illustrated, the group has edged atop the 200-day moving average, a level that capped the February and June peaks. The slight breakout raises the flag to a potential primary trend shift.

Still, a retest of the June peak (23.87) remains underway. An eventual close higher would mark a “higher high” — combined with the break atop the 200-day — more firmly signaling a trend shift.

Conversely, the prevailing upturn originates from trendline support closely tracking the 50-day moving average. A sustained posture atop the trendline signals a bullish bias.

Beyond the U.S., the iShares MSCI South Korea ETF is pressing five-month highs. (Yield = 2.3%.)

The prevailing upturn comes from a tight July range — a coiled spring — laying the groundwork for a potentially decisive breakout.

Separately, notice the recent golden cross — or bullish 50-day/200-day moving average crossover — signaling that the intermediate-term uptrend has overtaken the longer-term trend. A near-term target projects to the 62.50 area on follow-through.

Initially profiled April 14, Netflix, Inc. NFLX, -0.25% has returned 19.8% and remains well positioned.

As illustrated, the shares have pulled in from record highs, pressured after the company’s quarterly results, released two weeks ago.

The downturn places the shares at an attractive entry near the breakout point, circa 468.00, and 16.0% under the July peak.

Tactically, the ascending 50-day moving average has marked an inflection point, and is followed by the former range top, circa 450. A sustained posture higher signals a bullish bias.

More broadly, Netflix is also well positioned on the three-year chart, digesting a decisive early-2020 breakout.

Finally, HCA Healthcare, Inc. HCA, -0.42% is a large-cap healthcare services provider.

Technically, the shares have recently knifed atop trendline resistance, rising after the company’s second-quarter results. The strong-volume spike places the shares at four-month highs, and atop the 200-day moving average.

Underlying the upturn, its relative strength index (not illustrated) has registered two-year highs, improving the chances of upside follow-through.

Tactically, the 200-day is closely followed by the breakout point, circa 118.00. The prevailing rally attempt is intact barring a violation.

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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.