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The Technical Indicator: Charting the S&P 500’s slow-motion approach of record territory

Technically speaking, the S&P 500 has reached less-charted territory at six-month highs, rising within striking distance of its record close, writes Michael Ashbaugh. Read More...

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 major U.S. benchmarks continue to grind higher amid a bullish second-quarter start.

In the process, the S&P 500 has reached less-charted territory at six-month highs, rising within striking distance of its record close (2,930.75). The pending retest from underneath will likely add color.

Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, +0.10%  hourly chart highlights the past two weeks.

As illustrated, the S&P has sustained a break to six-month highs. Monday’s session low (2,896) matched the breakout point punctuating a successful retest.

Conversely, last week’s high (2,910.5) registered slightly under the S&P’s 2,912 target, detailed repeatedly.

Meanwhile, the Dow Jones Industrial Average DJIA, +0.13%  is traversing a jagged near-term range.

Still, the index has spiked from its range bottom, gapping atop major resistance. The specific area matches a six-month range top — spanning from 26,241 to 26,282 — better illustrated on the daily chart.

On further strength, the April closing peak (26,425) is closely followed by the absolute April peak (26,487).

True to recent form, the Nasdaq Composite COMP, +0.36%  remains the strongest major benchmark.

The index has tagged six month highs across four straight sessions amid still muted April selling pressure.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq is digesting its latest break to six-month highs. The April bull flag is a continuation pattern, improving the chances of incremental upside.

From current levels, the 8,000 mark is followed by the Nasdaq’s record close (8,109) and absolute record peak (8,133).

Looking elsewhere, the Dow Jones Industrial Average has reclaimed major resistance matching the February and November peaks — the 26,240-to-26,280 area.

On further strength, more distant inflection points match the January 2018 peak (26,616) and September peak (26,769).

More broadly, the Dow continues to lag slightly behind — it remains capped by the early-April peak — though this six-month backdrop supports a comfortably bullish bias.

Meanwhile, the S&P 500 has staged a bull-flag breakout, clearing the 2,900 mark.

The upturn originates from major support (2,873) a level matching last week’s low (2,873.3). Bullish price action.

The bigger picture

As detailed above, the major U.S. benchmarks are acting well technically. Broadly speaking, each benchmark’s near- to intermediate-term bias remains comfortably bullish.

Moving to the small-caps, the iShares Russell 2000 ETF continues to lag slightly behind.

Still, the small-cap benchmark’s grinding-higher April rally has placed the range top within striking distance. To reiterate, resistance broadly spans from about 158.80 to 159.50.

Meanwhile, the SPDR S&P MidCap 400 has broken out, reaching less-charted territory at six-month highs.

Tactically, the breakout point, circa 355, pivots to support. Conversely, recall that a projected target from the March low closely matches the MDY’s all-time high (374.10).

More broadly, the small- and mid-caps are rising from inverse head-and-shoulders patterns defined by the October, December and March lows. The mid-cap benchmark has resolved its pattern, while the Russell 2000’s remains in progress.

Looking elsewhere, the SPDR Trust S&P 500 SPY, +0.11% has staged a slow-motion break to six-month highs. Tactically, the SPY’s first notable support (288.90) closely matches the early-April peak.

Against this backdrop, the S&P 500 continues to grind higher amid muted April selling pressure.

The prevailing upturn punctuates a successful test of major support (2,873) a level precisely matching last week’s low. As always, technical price action within an uptrend is constructive

Conversely, recall that the 2,912-to-2,916 area marks an overhead inflection point, levels matching a projected target and the August peak. (See the March 13 review, introducing the 2,912 target.)

Last week’s high (2,910.5) registered slightly under the target.

On further strength, the S&P’s record close (2,930.75) and absolute record peak (2,940.91) remain just slightly more distant. An eventual retest looks increasingly likely.

Beyond specific levels, the S&P 500’s near- to intermediate-term path of least resistance continues to point firmly higher pending signs of a bearish pulse.

See also: Charting the S&P 500’s approach of the 2,900 mark.

See also: Charting a bullish second-quarter start, S&P 500 nails major resistance (2,873).

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 iShares Europe ETF IEV, +0.18%  is acting well technically.

The shares initially spiked four weeks ago, knifing atop the 200-day moving average. The subsequent pullback has been underpinned by the 200-day, an area closely matching the breakout point.

More immediately, the shares have edged from a tight April range, reaching a nominal six-month high.

The slight breakout dovetails with a golden cross, or bullish 50-day/200-day moving average crossover. Tactically, the ascending 50-day moving average (43.20) has tracked the recent trends — both bull and bear trends — and the prevailing uptrend is intact barring a violation.

Moving to U.S. sectors, the Consumer Staples Select Sector SPDR XLP, -0.19%  has come to life technically. (Yield = 2.7%.)

As illustrated, the group has rallied to challenge five-month highs, pressing resistance matching the December peak.

The prevailing upturn originates from a successful test of the breakout point (55.00) an area matching trendline support pinned to the December low. Put differently, the group is effectively rising from a year-to-date ascending triangle.

Tactically, near-term support (56.20) is followed by the April low (55.05) and a breakout attempt is in play barring a violation.

Initially profiled Oct. 24, Dow 30 component McDonald’s Corp. MCD, -0.02%  has returned 8.2% and remains well positioned. (Yield = 2.4%.)

Technically, the shares have edged to all-time highs, clearing resistance matching the November peak. The upturn comes from a tight two-week range, laying the groundwork for a potentially more decisive breakout.

More broadly, the chart illustrates a modified double bottom with platform, a pattern defined by the December and February lows. An intermediate-term target projects to the 204 area on follow-through.

Micron Technology, Inc. MU, +2.38%  is a large-cap semiconductor name showing signs of life.

As illustrated, major resistance broadly spans from about 42.40 to 44.00, levels matching the 200-day moving average and a six-month range top. A near-term target projects to the 49 area on follow-through.

Conversely, the April low (41.20) is closely followed by trendline support tracking the 50-day moving average, currently 40.95. A breakout attempt is in play barring a violation.

Initially profiled Jan. 16, Coupa Software, Inc. COUP, -0.95%  has returned 41.4% and remains well positioned.

Technically, the shares have rallied to the range top, rising to challenge record territory. (The March peak (100.00) defines the all-time high.)

More broadly, the chart illustrates a continuation pattern, an orderly 10-week range pinned to the steep January rally. An intermediate-term target projects to the 110 area on follow-through.

Tactically, near-term support points hold in the 95.60 and 93.60 areas, and a breakout attempt is intact barring a violation.

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.

Company Symbol Date Profiled
Financial Select Sector SPDR XLF Apr. 15
Check Point Software Technologies CHKP Apr. 15
Caterpillar, Inc. CAT Apr. 15
PVH Corp. PVH Apr. 15
Fortinet, Inc. FTNT Apr. 12
Valero Corp. VLO Apr. 12
United Technologies Corp. UTX Apr. 12
Symantec Corp. SYMC Apr. 11
Baozun, Inc. BZUN Apr. 11
U.S. Silica Holdings, Inc. SLCA Apr. 11
Audentes Therapeutics, Inc. BOLD Apr. 11
United Parcel Service, Inc. UPS Apr. 10
Schlumberger Limited SLB Apr. 10
Momo, Inc. MOMO Apr. 10
Verizon Communications, Inc. VZ Apr. 9
Maxim Integrated Products, Inc. MXIM Apr. 9
Melco Resorts and Entertainment Ltd. MLCO Apr. 9
SPDR S&P Oil & Gas Production and Exploration ETF XOP Apr. 8
Pioneer Natural Resources Co. PXD Apr. 8
Advanced Energy Industries, Inc. AEIS Apr. 8
Zumiez, Inc. ZUMZ Apr. 8
Facebook, Inc. FB Apr. 5
American Eagle Outfitters, Inc. AEO Apr. 5
Kohl’s Corp. KSS Apr. 5
iShares MSCI South Korea ETF EWY Apr. 4
Micron Technology, Inc. MU Apr. 4
TE Connectivity, Ltd. TEL Apr. 4
FedEx Corp. FDX Apr. 3
Las Vegas Sands Corp. LVS Apr. 3
Glu Mobile, Inc. GLUU Apr. 3
iShares Transportation Average ETF IYT Apr. 2
Packaging Corp. of America PKG Apr. 2
Baidu, Inc. BIDU Apr. 2
Ctrip.com International CTRP Apr. 1
CSX Corp. CSX Apr. 1
MKS Instruments, Inc. MKSI Apr. 1
VMware, Inc. VMW Mar. 29
Cree, Inc. CREE Mar. 29
Omeros Corp. OMER Mar. 29
Church & Dwight Co., Inc. CHD Mar. 29
Consumer Staples Select Sector SPDR XLP Mar. 28
Travelers Companies, Inc. TRV Mar. 28
Shake Shack, Inc. SHAK Mar. 28
Noble Energy, Inc. NBL Mar. 28
iShares MSCI Japan ETF EWJ Mar. 27
Pepsico, Inc. PEP Mar. 27
Autodesk, Inc. ADSK Mar. 27
Shopify, Inc. SHOP Mar. 27
Broadcom, Inc. AVGO Mar. 26
YY, Inc. YY Mar. 26
NetApp, Inc. NTAP Mar. 22
eHealth, Inc. EHTH Mar. 22
Amazon.com, Inc. AMZN Mar. 21
Advanced Micro Devices AMD Mar. 20
Dentsply Sirona, Inc. XRAY Mar. 20
Jazz Pharmaceuticals plc JAZZ Mar. 20
Seagate Technology STX Mar. 19
Abercrombie & Fitch Co. ANF Mar. 19
International Business Machines Corp. IBM Mar. 18
Skyworks Solutions, Inc. SWKS Mar. 18
ASML Holding N.V. ASML Mar. 18
Live Nation Entertainment, Inc. LYV Mar. 18
Best Buy Co., Inc. BBY Mar. 15
Kimberly-Clark Corp. KMB Mar. 15
Nvidia Corp. NVDA Mar. 14
LivePerson, Inc. LPSN Mar. 14
iShares U.S. Real Estate ETF IYR Mar. 13
NRG Energy, Inc. NRG Mar. 13
Palo Alto Networks, Inc. PANW Mar. 13
Dillard’s Inc. DDS Mar. 13
Synopsis, Inc. SNPS Mar. 12
Air Products & Chemicals, Inc. APD Mar. 11
Amicus Therapeutics, Inc. FOLD Mar. 11
Target Corp. TGT Mar. 7
Dril-Quip, Inc. DRQ Mar. 6
Hilton Worldwide Holdings, Inc. HLT Mar. 6
Costco Wholesale Corp. COST Mar. 6
Eaton Corp. ETN Mar. 5
Nabors Industries, Ltd. NBR Mar. 5
iShares Europe ETF IEV Mar. 4
Reliance Steel & Aluminum Co. RS Mar. 4
Tower Semiconductor Ltd. TSEM Mar. 4
Marvell Technology Group Ltd. MRVL Mar. 1
Universal Display Corp. OLED Mar. 1
Vulcan Materials Co. VMC Mar. 1
Acadia Pharmaceuticals, Inc. ACAD Mar. 1
TJX Companies, Inc. TJX Feb. 28
Garmin Ltd. GRMN Feb. 28
Energy Select Sector SPDR XLE Feb. 27
iShares China Large-Cap ETF FXI Feb. 26
SS&C Technologies Holdings, Inc. SSNC Feb. 26
Devon Energy Corp. DVN Feb. 26
HubSpot, Inc. HUBS Feb. 25
Zebra Technologies Corp. ZBRA Feb. 22
Walmart, Inc. WMT Feb. 22
Invesco QQQ Trust QQQ Feb. 22
Microsoft Corp. MSFT Feb. 22
Cisco Systems, Inc. CSCO Feb. 21
Cummins, Inc. CMI Feb. 21
Intel Corp. INTC Feb. 19
Motorola Solutions, Inc. MSI Feb. 15
First Solar, Inc. FSLR Feb. 15
Lowe’s Companies, Inc. LOW Feb. 14
Marriott International, Inc. MAR Feb. 14
Emerson Electric Co. EMR Feb. 13
3M Co. MMM Feb. 12
Zendesk, Inc. ZEN Feb. 11
Fortive Corp. FTV Feb. 11
Mastercard, Inc. MA Feb. 11
Procter & Gamble Co. PG Feb. 8
Deckers Outdoor Corp. DECK Feb. 8
Alphabet, Inc. GOOGL Feb. 6
Norfolk Southern Corp. NSC Feb. 6
Global Payments, Inc. GPN Feb. 5
Alibaba Group Holding Ltd. BABA Feb. 5
Visa, Inc. V Feb. 4
Adobe, Inc. ADBE Feb. 1
iRobot Corp. IRBT Jan. 31
Salesforce.com, Inc. CRM Jan. 30
KLA-Tencor Corp. KLAC Jan. 30
Western Digital Corp. WDC Jan. 30
SPDR S&P Homebuilders ETF XHB Jan. 30
Texas Instruments, Inc. TXN Jan. 29
Keysight Technologies, Inc. KEYS Jan. 29
Check Point Software Technologies CHKP Jan. 29
Exact Sciences Corp. EXAS Jan. 28
Teradyne, Inc. TER Jan. 28
VanEck Vectors Semiconductor ETF SMH Jan. 25
Applied Materials, Inc. AMAT Jan. 25
iShares MSCI Emerging Markets ETF EEM Jan. 24
SBA Communications Corp. SBAC Jan. 24
Paycom Software, Inc. PAYC Jan. 23
Advanced Micro Devices, Inc. AMD Jan. 22
Materials Select Sector SPDR XLB Jan. 18
VeriSign, Inc. VRSN Jan. 18
Dollar Tree, Inc. DLTR Jan. 18
Apple, Inc. AAPL Jan. 18
Coupa Software, Inc. COUP Jan. 16
Veeva Systems, Inc. VEEV Jan. 16
CyberArk Software CYBR Jan. 11
Square, Inc. SQ Jan. 10
Okta, Inc. OKTA Jan. 9
Tandem Diabetes Care, Inc. TNDM Jan. 9
RingCentral, Inc RNG Jan. 8
Alteryx, Inc. AYX Jan. 8
Netflix, Inc. NFLX Jan. 7
IAC/InterActivecorp IAC Jan. 7
Five9, Inc. FIVN Dec. 13
Ambarella, Inc. AMBA Dec. 11
VanEck Vectors Gold Miners ETF GDX Dec. 10
Workday, Inc. WDAY Dec. 10
Atlassian Corp. TEAM Dec. 10
Ubiquiti Networks, Inc. UBNT Nov. 13
Welltower, Inc. WELL Nov. 12
Xilinx, Inc. XLNX Nov. 12
Acacia Communications, Inc. ACIA Nov. 7
Starbucks Corp. SBUX Nov. 5
American Tower Corp. AMT Nov. 5
Utilities Select Sector SPDR XLU Oct. 25
McDonald’s Corp. MCD Oct. 24
Yum! Brands, Inc. YUM Oct. 18
Eli Lilly & Co. LLY Oct. 17
Merck & Co., Inc. MRK June 21
Twilio, Inc. TWLO May 21

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