Charting a bull-trend pullback: S&P 500 retests the breakout point


U.S. stocks are lower early Friday — though off the session’s worst levels — pressured amid virus concerns, and a not well-received batch of influential earnings reports.

Against this backdrop, the S&P 500 and Nasdaq Composite continue to digest respectable mid-week rallies to record territory, against an otherwise bullish bigger-picture backdrop.

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

As illustrated, the S&P is digesting its latest break to record territory. Tactically, the breakout point (3,826) is closely followed by the top of the gap (3,816).

Friday’s early session low (3,830) has registered slightly above the breakout point.

Delving deeper, the prevailing upturn originates from the 20-day moving average and near-term support (3,764).

Meanwhile, the Dow Jones Industrial Average
US:DJIA
 has struggled to break out.

Though the index has narrowly tagged all-time highs — across consecutive sessions — the former range top (31,236) remains a sticking point.

A pulling-teeth breakout attempt technically remains underway.

Against this backdrop, the Nasdaq Composite
US:COMP
has staged this week’s most decisive breakout.

The prevailing upturn punctuates a flag-like pattern — the former eight-session range — underpinned by the breakout point (12,973).

Recall that last week’s price action was punctuated by consecutive successful tests of the breakout point (12,973).

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has extended a bull-flag breakout, knifing to all-time highs.

The two-session spike marks a 2.3% technical breakout, confirming the primary uptrend.

Separately, the prevailing upturn also marks a two standard deviation breakout, encompassing consecutive closes atop the 20-day volatility bands.

Though near-term extended — and a consolidation phase seems to be underway Friday — the statistically unusual bullish momentum improves the prospects of longer-term follow-through.

Also recall that the Nasdaq registered the least decisive early-January breakout of the major U.S. benchmarks. The prevailing catch-up trade, versus the other benchmarks, signals a still rotational market backdrop. Constructive price action.

Looking elsewhere, the Dow Jones Industrial Average has tagged nominal record highs this week — across consecutive sessions — though decisive follow-through remains elusive.

Nonetheless, recall that its early-January breakout marked the statistically strongest of the major U.S. benchmarks. (The Dow registered three straight closes atop its 20-day Bollinger bands to start the new year.)

So here again, the Dow’s comparably sluggish prevailing breakout attempt — versus that of the Nasdaq Composite — is consistent with a healthy rotational market backdrop.

Meanwhile, the S&P 500 has registered respectable follow-through this week.

The prevailing bull-flag breakout originates from near-term support (3,764) and the 20-day moving average.

The bigger picture

Broadly speaking, the major U.S. benchmarks continue to trend higher amid still largely constructive bigger-picture price action.

Each big three benchmark has notched at least one record close this week, though amid breakout attempts ranging from distinctly bullish (Nasdaq Composite) to comparably lackluster (Dow industrials).

Collectively, each benchmark’s intermediate-term bias remains comfortably bullish.

Moving to the small-caps, the iShares Russell 2000 ETF
US:IWM
 continues to consolidate in grinding-higher form.

The small-cap benchmark tagged a nominal record close, and absolute record peak Wednesday, before pulling in amid decreased volume. Selling pressure remains flat.

Similarly, the SPDR S&P MidCap 400 ETF
US:MDY
 is digesting recent slow-motion follow-through.

Combined, the persistent small- and mid-cap strength — and recent relative outperformance — is also consistent with rotational market price action.

Looking elsewhere, the SPDR Trust S&P 500
US:SPY
 has staged a bull-flag breakout, reaching a higher plateau.

Recall that the prevailing upturn originates from the 20-day moving average.

Placing a finer point on the S&P 500, the index is digesting a respectable break to all-time highs.

To reiterate, the breakout point (3,826) marks the S&P’s first notable floor.

Friday’s early session low (3,830) has registered nearby.

More broadly, the prevailing upturn punctuates a bull flag, the preceding tight eight-session range. A near-term S&P target continues to project to the 3,890-to-3,900 area.

Conversely, the breakout point (3,826) is followed by familiar near-term support (3,746).

Delving deeper, the ascending 50-day moving average, currently 3,694, is rising toward major support in the 3,723-to-3,726 area. Tactically, an eventual violation of these areas would likely raise a technical caution flag.

Beyond specific levels, the S&P 500’s intermediate-term bias remains bullish, based on today’s backdrop.

Friday’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 Invesco Solar ETF
US:TAN
 is acting well technically.

Earlier this month, the shares gapped to record highs, rising amid a volume spike after the Georgia Senate runoff elections resulted in a potential pending policy tailwind.

The ensuing pullback has been orderly, underpinned by gap support (106.89). (The post-breakout low (106.88) registered within a penny of the bottom of the gap.)

More immediately, the prevailing upturn places the group’s record high (123.66) within view. A near- to intermediate-term target projects to the 140 area on follow-through.

Initially profiled March 27 — and revisited Dec. 23 — Apple, Inc.
US:AAPL
 has returned 111.8% and remains well positioned.

As illustrated, the shares have rallied to the range top, rising to challenge all-time highs. Thursday’s close (136.87) marked a record close, by a narrow 22-cent margin.

The prevailing upturn punctuates a successful test of the breakout point (125.40) amid a developing cup-and-handle, defined by the September and January lows.

Tactically, the response to the range top should be a useful bull-bear gauge. As always, the chances of a breakout improve to the extent the shares hold tightly to resistance. An intermediate-term target projects to the 260 area on follow-through.

Note that the company’s quarterly results are due out Wednesday, Jan. 27.

(More broadly, and on a granular note, recall that the December breakout punctuated a modified double bottom — the W formation — defined by the September and November lows. The prevailing January range has been underpinned by the breakout point. A target projected from the double bottom to the 142 area, and is firmly within view.)

Magna International, Inc.
US:MGA
 is a large-cap Canada-based auto parts and components manufacturer. (Yield = 2.1%.)

The shares initially spiked four weeks ago, gapping higher after the company announced a joint venture with LG Electronics to develop electric vehicle parts.

By comparison, the subsequent pullback has been orderly — effectively underpinned by the top of the gap — positioning the shares to build on the initial strong-volume spike.

More immediately, the prevailing upturn places record highs under siege. A near-term target projects to the 81 area on follow-through.

Initially profiled Aug. 24, Deere & Co.
US:DE
 has returned 48.7% and remains well positioned.

The shares started the year with a bull-flag breakout, knifing to all-time highs from a tight late-December range.

More immediately, the prevailing flag-like pattern signals still muted selling pressure at record territory.

Tactically, the post-breakout low (289.00) is followed by the ascending 50-day moving average. A sustained posture higher signals a bullish intermediate-term bias.

Finally, M.D.C. Holdings, Inc.
US:MDC
 is a mid-cap homebuilder coming to life. (Yield = 2.9%.)

As illustrated, the shares have knifed to record highs, clearing resistance matching the October and December peaks amid pronounced sector strength.

Though still near-term extended, the aggressive two standard deviation breakout is longer-term bullish. A sustained posture atop the breakout point (51.80) signals a comfortably bullish bias.

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* (Click symbol for chart.)

Date Profiled

Electronic Arts, Inc.

EA

Jan. 21

Bed Bath & Beyond, Inc.

BBBY

Jan. 21

PVH Corp.

PVH

Jan. 21

Schlumberger Limited

SLB

Jan. 20

Sunnova Energy International, Inc.

NOVA

Jan. 19

Reliance Steel & Aluminum Co.

RS

Jan. 19

Alaska Air Group, Inc.

ALK

Jan. 15

Chevron Corp.

CVX

Jan. 15

Zebra Technologies Corp.

ZBRA

Jan. 14

Juniper Networks, Inc.

JNPR

Jan. 14

Chegg, Inc.

CHGG

Jan. 11

Ambarella, Inc.

AMBA

Jan. 11

Macy’s, Inc.

M

Jan. 11

Nexstar Media Group, Inc.

NXST

Jan. 11

iShares Transportation Average ETF

IYT

Jan. 11

Energy Select Sector SPDR

XLE

Jan. 8

Teledoc Health, Inc.

TDOC

Jan. 8

Dollar Tree, Inc.

DLTR

Jan. 8

Skyworks Solutions, Inc.

SWKS

Jan. 7

Financial Select Sector SPDR

XLF

Jan. 7

FireEye, Inc.

FEYE

Jan. 5

Check Point Software Technologies

CHKP

Jan. 4

Synaptics, Inc.

SYNA

Jan. 4

Ceridian HCM Holding, Inc.

CDAY

Jan. 4

Sunrun, Inc.

RUN

Dec. 23

ShockWave Medical, Inc.

SWAV

Dec. 23

JPMorgan Chase & Co.

JPM

Dec. 22

Coupa Software, Inc.

COUP

Dec. 22

PagSeguro Digital Ltd.

PAGS

Dec. 22

Ballard Power Systems, Inc.

BLDP

Dec. 21

LivePerson, Inc.

LPSN

Dec. 21

United Therapeutics Corp.

UTHR

Dec. 21

Shopify, Inc.

SHOP

Dec. 18

CyberArk Software Ltd.

CYBR

Dec. 18

Calix, Inc.

CALX

Dec. 17

Elastic N.V.

ESTC

Dec. 17

Cerner Corp.

CERN

Dec. 17

Tenet Healthcare Corp.

THC

Dec. 16

Sunnova Energy International, Inc.

NOVA

Dec. 16

Toyota Motor Co.

TM

Dec. 15

Williams-Sonoma, Inc.

WSM

Dec. 15

iShares Nasdaq Biotechnology ETF

IBB

Dec. 15

SDPR S&P Regional Banking ETF

KRE

Dec. 14

Etsy, Inc.

ETSY

Dec. 14

Surface Oncology, Inc.

SURF

Dec. 14

Autodesk, Inc.

ADSK

Dec. 9

Monster Beverage Corp.

MNST

Dec. 9

Plug Power, Inc.

PLUG

Dec. 9

F5 Networks, Inc.

FFIV

Dec. 8

Emerson Electric Co.

EMR

Dec. 8

Zscaler, Inc.

ZS

Dec. 7

Fortinet, Inc.

FTNT

Dec. 7

Kulicke and Soffa Industries, Inc.

KLIC

Dec. 7

Honeywell International, Inc.

HON

Dec. 7

Dillard’s, Inc.

DDS

Dec. 4

Caleres, Inc.

CAL

Dec. 4

Spotify Technology S.A.

SPOT

Dec. 3

Align Technology, Inc.

ALGN

Dec. 3

Valero Energy Corp.

VLO

Dec. 3

Analog Devices, Inc.

ADI

Dec. 2

Cirrus Logic, Inc.

CRUS

Dec. 1

Sonos, Inc.

SONO

Dec. 1

Dollar Tree, Inc.

DLTR

Dec. 1

Nuance Communications, Inc.

NUAN

Nov. 30

Northern Trust Corp.

NTRS

Nov. 30

American Airlines Group, Inc.

AAL

Nov. 30

Microchip Technology, Inc.

MCHP

Nov. 24

Zillow Group, Inc.

ZG

Nov. 23

Yeti Holdings, Inc.

YETI

Nov. 23

Palo Alto Networks, Inc.

PANW

Nov. 20

Bank of America Corp.

BAC

Nov. 20

Eaton Corp.

ETN

Nov. 20

SPDR S&P Oil & Gas Exploration and Production ETF

XOP

Nov. 20

MetLife, Inc.

MET

Nov. 19

Hilton Worldwide Holdings, Inc.

HLT

Nov. 19

American Express Co.

AXP

Nov. 18

Kohl’s Corp.

KSS

Nov. 18

FleetCor Technologies

FLT

Nov. 18

Applied Materials, Inc.

AMAT

Nov. 17

Delta Air Lines, Inc.

DAL

Nov. 17

Consumer Staples Select Sector SPDR

XLP

Nov. 17

Ross Stores, Inc.

ROST

Nov. 16

RingCentral, Inc.

RNG

Nov. 13

Regions Financial Corp.

RF

Nov. 13

iShares Europe ETF

IEV

Nov. 13

Flex, Inc.

FLEX

Nov. 9

Snap, Inc.

SNAP

Nov. 9

Norfolk Southern Corp.

NSC

Nov. 9

Communications Services Select Sector SPDR

XLC

Nov. 5

Health Care Select Sector SPDR

XLV

Nov. 5

Alphabet, Inc.

GOOGL

Nov. 5

Uber Technologies, Inc.

UBER

Nov. 5

Keysight Technologies, Inc.

KEYS

Nov. 4

Harley-Davidson, Inc.

HOG

Nov. 4

Garmin, Ltd.

GRMN

Nov. 4

Pinterest, Inc.

PINS

Nov. 3

Sony Corp.

SNE

Nov. 3

8×8, Inc.

EGHT

Nov. 3

Exact Sciences Corp.

EXAS

Nov. 2

Universal Display Corp.

OLED

Nov. 2

Dentsply Sirona, Inc.

XRAY

Oct. 27

Maxim Integrated Products, Inc.

MXIM

Oct. 21

The Travelers Companies, Inc.

TRV

Oct. 21

Micron Technology, Inc.

MU

Oct. 20

Vulcan Materials Co.

VMC

Oct. 19

ON Semiconductor Corp.

ON

Oct. 16

Ford Motor Co.

F

Oct. 15

Texas Instruments, Inc.

TXN

Oct. 15

First Solar, Inc.

FSLR

Oct. 13

Nevro Corp.

NVRO

Oct. 12

Teradyne, Inc.

TER

Oct. 12

SPDR S&P Homebuilders ETF

XHB

Oct. 9

Shake Shack, Inc.

SHAK

Oct. 9

SPDR S&P Biotech ETF

XBI

Oct. 8

Twilio, Inc.

TWLO

Oct. 8

Cloudflare, Inc.

NET

Oct. 7

Ceridian HCM Holding, Inc.

CDAY

Oct. 7

RSailPoint Technology Holdings, Inc.

SAIL

Oct. 1

Martin Marietta Materials, Inc.

MLM

Sept. 30

Abercrombie & Fitch Co.

ANF

Sept. 29

Zendesk, Inc.

ZEN

Sept. 23

Scientific Games Corp.

SGMS

Sept. 23

Crocs, Inc.

CROX

Sept. 14

Five Below, Inc.

FIVE

Sept. 10

Eastman Chemical Co.

EMN

Sept. 10

International Paper Co.

IP

Sept. 3

Anaplan, Inc.

PLAN

Sept. 2

Celanese Corp.

CE

Aug. 26

Westlake Chemical Corp.

WLK

Aug. 25

Deere & Co.

DE

Aug. 24

Expedia Group, Inc.

EXPE

Aug. 24

Johnson Controls International

JCI

Aug. 21

Canadian Solar, Inc.

CSIQ

Aug. 20

General Motors Co.

GM

Aug. 20

Starbucks Corp.

SBUX

Aug. 18

Builders FirstSource, Inc.

BLDR

Aug. 18

Steel Dynamics, Inc.

STLD

Aug. 17

Brinker International, Inc.

EAT

Aug. 13

Enphase Energy, Inc.

ENPH

Aug. 13

Nucor Corp.

NUE

Aug. 11

Freeport McMoRan, Inc.

FCX

Aug. 10

Natera, Inc.

NTRA

Aug. 10

Industrial Select Sector SPDR

XLI

Aug. 6

Penn National Gaming, Inc.

PENN

July 30

SPDR S&P Metals & Mining ETF

XME

July 28

iShares MSCI South Korea ETF

EWY

July 28

Advanced Micro Devices, Inc.

AMD

July 23

Materials Select Sector SPDR

XLB

July 20

Caterpillar, Inc.

CAT

July 20

Roku, Inc.

ROKU

July 16

Cognizant Technology Solutions, Inc.

CTSH

July 16

Consumer Discretionary Select Sector SPDR

XLY

July 13

SunPower Corp.

SPWR

July 13

Walmart, Inc.

WMT

July 8

Danaher Corp.

DHR

June 24

Fiverr International, Ltd.

FVRR

June 19

HubSpot, Inc.

HUBS

June 8

Square, Inc.

SQ

June 8

SPDR S&P Retail ETF

XRT

June 3

iShares MSCI Japan ETF

EWJ

May 29

Synopsis, Inc.

SNPS

May 27

Agilent Technologies, Inc.

A

May 15

Qualcomm, Inc.

QCOM

May 12

Five9, Inc.

FIVN

Apr. 24

Chewy, Inc.

CHWY

Apr. 24

Tesla, Inc.

TSLA

Apr. 23

VanEck Vectors Semiconductor ETF

SMH

Apr. 17

Okta, Inc.

OKTA

Apr. 16

Target Corp.

TGT

Apr. 16

Invesco QQQ Trust

QQQ

Apr. 14

Apple, Inc.

AAPL

Mar. 27

iShares MSCI Emerging Markets ETF

EEM

Mar. 19

Microsoft Corp.

MSFT

Feb. 22

* Click each symbol for current chart.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *