The Technical Indicator: S&P 500 nails near-term target (2,995), sustains July break to record territory

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 are off to a bullish third-quarter start.

On a headline basis, the S&P 500 has nailed its near-term target (2,995) — a level currently defining its all-time high — while the prevailing pullback has been comparably flat, underpinned by well-defined support.

Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, -0.03%  hourly chart highlights the past two weeks.

As illustrated, the S&P is digesting a July break to record territory.

Recall that last week’s high (2,995.8) — currently the S&P’s all-time high — matched its near-term target (2,995) detailed last week.

Tactically, near-term support (2,973) is closely followed by the firmer breakout point (2,964).

Meanwhile, the Dow Jones Industrial Average DJIA, -0.27%  has pulled in from a less decisive July breakout.

Recall that last week’s high (26,966.00) narrowly surpassed the Dow’s former record peak (26,951.81) established Oct. 3.

The subsequent pullback to the range places the index under the 2018 closing peak (26,828) a level closely matching last week’s gap (26,831). This area remains a hurdle.

Against this backdrop, the Nasdaq Composite COMP, +0.40%  has sustained a breakout of sorts.

The index scratched out a record close last week (8,170) eclipsing its former record close by just six points.

Still, the July peak (8,172) has thus far registered just under the Nasdaq’s all-time record high (8,176) established April 29.

Put differently, the Nasdaq continues to challenge record territory, as better illustrated below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has rallied to challenge its record high, a level matching the April peak (8,176). The July peak has registered four points lower.

As detailed previously, near-term support broadly spans from 8,059 to 8,089, the latter matching the top of the gap. (See the hourly chart.) The Nasdaq’s breakout attempt is firmly intact barring a violation.

(Tuesday’s early session low (8,061) has punctuated a successful retest.)

Looking elsewhere, the Dow Jones Industrial Average is digesting a modest July breakout.

To reiterate, notable support matches the April peak (26,696) an area also detailed on the hourly chart.

Delving deeper, an inflection point matches the Dow’s former range bottom (26,465). The prevailing uptrend is firmly intact barring a violation.

Meanwhile, the S&P 500 has rallied more decisively to record territory, tagging its near-term target (2,995).

This marked a 1.2% breakout, registering respectably (though not overwhelmingly) atop the May and June peaks.

The bigger picture

Collectively, the major U.S. benchmarks are off to a constructive third-quarter start.

Each index has tagged an all-time closing high, and the prevailing selling pressure near record territory remains muted. Consider that the Nasdaq Composite and S&P 500 have thus far maintained well-defined support. (See the hourly charts.)

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

Still, the small-cap benchmark has sustained a modest break atop its 50- and 200-day moving averages. By comparison, the July pullback has been flat, fueled by decreased volume. Constructive price action.

Meanwhile, the SPDR S&P MidCap 400 has edged to a higher plateau, an area matching the late-April range.

The 2019 closing peak (361.02) and absolute 2019 peak (361.52) remain within view. Conversely, the former range top (354.70) pivots to support.

Looking elsewhere, the SPDR Trust S&P 500 has broken out modestly, reaching uncharted territory.

Tactically, support matching the June peak (296.31) is followed by the breakout point (294.95) and the top of the July gap (294.33).

Against this backdrop, the S&P 500’s mid-year price action remains firmly bullish.

To start, the July breakout builds on the steep June rally, and punctuates a successful test of familiar support (2,912). Bullish price action.

More immediately, the S&P’s first notable floor matches the June peak (2,964), a level that has underpinned each July close. Tuesday’s early session low (2,963.4) has punctuated a successful retest.

Slightly more broadly, consider that the July peak (2,995.8) has closely matched a near-term target (2,995) detailed last week.

(Using closing levels, start with the S&P’s June closing peak (2,954.2) and subtract the late-month closing low (2,913.8) matching support: 2,954.2 – 2,913.8 = 40.4 points. Then, add the result to the breakout point: 2,954.2 + 40.4 = 2,994.6.)

The prevailing pullback from the target has been flat, fueled by tame volume and breadth, signaling that bullish momentum is intact. All told, the S&P 500’s near- to intermediate-term bias remains comfortably bullish based on today’s backdrop.

See also: Charting a bullish Q3 start, S&P 500 approaches the 3,000 mark.

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, +0.54%  has whipsawed of late, vacillating amid China-U.S. trade tensions, or signs of trade progress, depending on the week.

Still, the group is off to a bullish July start, clearing major resistance on increased volume.

Consider that the 110 area matches a headline inflection point, better illustrated on the four-year chart. Delving slightly deeper, the 50-day moving average has marked a useful intermediate-term trending indicator. The group’s mid-year recovery attempt gets the benefit of the doubt barring a violation.

Meanwhile, the Financial Select Sector SPDR has also come to life, rising to challenge nine-month highs.

Selling pressure near the range top has been flat, fueled by decreased volume, improving the chances of eventual follow-through. As detailed last week, the group’s breakout attempt is intact barring a violation of support, circa 27.50.

Initially profiled June 18, Amazon.com, Inc. AMZN, +1.65%   has edged slightly higher and remains well positioned.

As illustrated, the shares reversed sharply from the June low, knifing atop trendline resistance, an area closely matching the breakdown point (1,823.75).

More immediately, the shares have rallied to challenge a nine-month range top (1,964.40) early Tuesday.

Tactically, the 50-day moving average (1,864) has marked a bull-bear inflection point, and Amazon’s rally attempt is intact barring a violation. (Also see the June 10 review.)

United Airlines Holdings, Inc. UAL, -1.30%  is a well positioned large-cap carrier.

As illustrated, the shares are rising from a massive double bottom, the “W” formation defined by the March and June lows. The July upturn has resolved the bullish pattern.

Tactically, a near-term target holds in the 94 area, while the pattern more broadly projects to about 102. Conversely, the breakout point (90.00) pivots to support and is followed by the deeper 200-day moving average, currently 85.90.

Keysight Technologies, Inc. KEYS, -0.04%  is a large-cap developer of electronic design and test systems, and a contributor to the 5G wireless buildout.

The shares started July with an upturn, briefly tagging record territory amid a volume spike.

By comparison, the ensuing pullback has been flat, fueled by decreased volume, laying the groundwork for potential follow-through. Tactically, the former range top (88.60) pivots to support, and the breakout attempt is intact barring a violation.

Finally, Stratasys, Ltd. SSYS, +4.82%  is a mid-cap developer of 3D printing technologies.

Earlier this month, the shares knifed to two-year highs, rising amid a volume spike on no apparent news.

The upturn comes from a prolonged base— illustrated on the five-year chart — meaning that a breakout opens the path to less-charted territory and potentially material follow-through. (The longer the base, the higher the space.)

Tactically, the July low (27.00) offers an area to work against, and a breakout attempt is in play 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.

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