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’ bull trend has thus far weathered a late-September market whipsaw punctuated by healthy sector rotation.
In the process, the Nasdaq Composite has effectively nailed major support — the 6,342 breakout point — while the Russell 2000 Index has quietly registered consecutive record closes.
Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, +0.06% hourly chart highlights the past two weeks.
As illustrated, the S&P has staged a modest pullback from all-time highs.
Still, the S&P has thus far maintained the range bottom (2,492), an area followed by firmer suppot matching the 2,480 breakout point.
Meanwhile, the Dow industrials’ backdrop remains slightly stronger.
The blue-chip benchmark has maintained near-term support, rising toward an inflection point, circa 22,300, closely matching last week’s low.
Slightly more broadly, the Dow is holding the upper half of its near-term range.
Conversely, the Nasdaq Composite remains the weakest major benchmark.
In its case, the index has stalled at major resistance — the July peak of 6,460 — and subsequently sold off to three-week lows.
Still, the Nasdaq has initially maintained major support (6,342), an area better illustrated on the daily chart below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has stalled at the range top (6,460) and pulled in respectably from major resistance. Two downside inflection points stand out:
- The 50-day moving average, currently 6,363.
- Major support matching the 6,342 breakout point.
The Nasdaq bottomed Monday at 6,343.9 — just above the breakout point — and Tuesday’s early upturn punctuates a successful retest. Tactically, a sustained posture higher preserves a bullish intermediate-term bias.
Moving to the Dow, the blue-chip benchmark’s backdrop remains stronger.
Recall that the September breakout has encompassed five straight closes atop the 20-day volatility bands, detailed last week.
The ensuing pullback has been comparably flat. Though still near-term extended, and due to consolidate, the September rally has confirmed the Dow’s longer-term uptrend.
Meanwhile, the S&P 500 has staged a less aggressive, but still respectable, September breakout.
The rally is punctuated by a 10-session range effectively bisected by the 2,500 mark, better illustrated on the hourly chart. Constructive price action.
The bigger picture
Broadly speaking, modest, but familiar, technical cross currents have resurfaced as October approaches.
Namely, a FAANG-fueled downturn has pressured the Nasdaq — the acronym coined to describe Facebook, Amazon, Apple, Netflix and Alphabet (formerly Google) — while the S&P 500 Index remains comparably resilient.
Moving to the small-caps, the iShares Russell 2000 ETF IWM, +0.34% has quietly registered consecutive record closes. Recent strength has been fueled by a modest volume uptick.
More broadly, the small-cap benchmark’s persistence at the range top is constructive, positioning it for a potentially more decisive breakout.
Meanwhile, the SPDR S&P MidCap 400’s recovery attempt remains comparably sluggish.
Still, the mid-cap benchmark has sustained a slight break atop the 320 resistance. An eventual retest of all-time highs, matching the July peak, remains a prospect.
Against this backdrop, the SPDR Trust S&P 500 is acting well technically.
Consider that its breakout point matches the July peak, precisely 248.00. The SPY bottomed Monday eight cents higher, and has reversed, punctuating a successful retest.
Summing up the backdrop
True to 2017 form, the bigger-picture backdrop is not one-size-fits-all. In fact, pronounced divergences remain in play, exemplified by the mid-caps’ persistent sluggishness, and the Nasdaq’s respectable downturn from major resistance.
Still, the September price action remains constructive — see the Nasdaq’s successful retest of support — against a rotational U.S. sub-sector backdrop.
As it applies to the S&P 500, an intermediate-term S&P 500 target continues to project to the 2,550 area.
Conversely, the 2,480 breakout point marks notable support, and is followed by the 50-day moving average, currently 2,470, and a more important floor matching the marquee 2,450 area. The S&P’s intermediate- to longer-term bias remains firmly bullish barring a violation.
See also: Bull trend confirmed, S&P 500 reaches uncharted territory ahead of the Fed.
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 United States Oil Fund USO, -0.47% — most recently profiled Sept. 15 — has broken out. The fund tracks the price of West Texas Intermediate (WTI) light, sweet crude oil.
As illustrated, the shares have extended the break atop trendline resistance, clearing the 200-day moving average on increased volume.
The breakout resolves a bullish cup-and-handle pattern, defined by the June and August lows. An intermediate-term target continues to project to the 11.20 area.
Conversely, the breakout point (10.25) pivots to a well-defined floor, and is followed by deeper trendline support. The USO’s rally attempt is intact barring a violation.
Initially profiled Dec. 9, and revisited last week, Apple, Inc. AAPL, +1.15% has returned 32.1% and remains tenuously positioned.
Technically, the shares have staged a steady September downturn, amid an otherwise strong market, reaching seven-week lows. Recent weakness has been fueled by a sustained volume increase, and punctuated by last week’s violation of the breakout point.
Meanwhile, Apple’s relative strength index (not illustrated) has registered three-month lows, leaving the shares vulnerable to incremental downside.
Still, the prevailing bull trend weathered a similarly shaky June downdraft. Moreover, Apple has thus far maintained last-ditch support, detailed previously.
The specific area matches the bottom of the August gap, technically 150.22, and Apple closed Monday fractionally higher, at 150.55. The shares have reversed from support early Tuesday, and the rally attempt’s quality is worth tracking. A sustained posture higher preserves a bullish intermediate- to longer-term technical bias.
Conversely, a violation would likely confirm an intermediate-term trend shift. More distant support matches the July low (142.41) and the 200-day moving average (not illustrated), currently 142.67.
Initially profiled Feb. 23, Facebook, Inc. FB, +0.51% has returned 19.7% and is also precariously positioned.
The shares dropped sharply Monday, pressured amid reports that the company is abandoning its plan to create a new class of nonvoting shares.
Technically, the downturn punctuates a violation of the 50-day moving average, amid a volume spike, placing the shares at a nominal two-month low.
Still, the slightly deeper 100-day moving average, currently 160.50, has underpinned the 2017 uptrend. The trending indicator has also marked a bull-bear inflection point going back as far as February 2016. Facebook’s intermediate- to longer-term technical bias is intact barring a violation.
Tactically, a nearly immediate reversal atop the range bottom (165.00) and the 50-day moving average, currently 169.20, would incrementally strengthen the bull case. The pending retest from underneath should be a useful bull-bear gauge.
More broadly, recall that the Nasdaq Composite has initially maintained major support (6,342), a constructive near-term backdrop amid the Apple and Facebook technical tests.
Charting the traditional U.S. sector leaders
Amid the prevailing cross currents, the U..S. sub-sector backdrop remains rotational, supporting the bull case. Consider the traditional sector leaders: the transports, financials and technology sector.
To start, the iShares Transportation Average ETF IYT, +0.50% is challenging all-time highs.
The prevailing upturn originates from trendline support, and has been punctuated by the mid-September rally atop the 2016 peak.
More immediately, Monday’s close fractionally missed an all-time closing peak amid increased volume. Bullish price action.
Similarly, the Financial Select Sector SPDR XLF, +0.30% is acting well technically.
Consider that it registered a nine-year closing peak last week, and is rattling the cage on a more decisive breakout.
The September upturn originates from a shaky, but successful, test of the 200-day moving average. (The group registered its first, and only, close fractionally under the 200-day since July 2016.)
Finally, the PowerShares QQQ Trust QQQ, +0.12% tracks the Nasdaq 100 offering a large-cap technology sector proxy.
Perhaps not surprisingly, its backdrop is slightly weaker.
Technically, the group has pulled in from the range top, violating the 50-day moving average amid increased volume. Still, well-defined support matches the range bottom, circa 141, and a posture higher supports a bullish bias.
Collectively, the sub-sector backdrop remains rotational, and bullish-leaning, as partly detailed above. Separately, the prevailing crude-oil price breakout, and corresponding energy sector resurgence, is also bull-case supportive.
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 |
| Target Corp. | TGT | Sept. 25 |
| Kohl’s Corp. | KSS | Sept. 25 |
| Brooks Automation, Inc. | BRKS | Sept. 25 |
| Qualcomm, Inc. | QCOM | Sept. 25 |
| Texas Instruments, Inc. | TXN | Sept. 20 |
| Packaging Corp. of America | PKG | Sept. 20 |
| Gap, Inc. | GPS | Sept. 20 |
| Green Plains, Inc. | GPRE | Sept. 20 |
| Palo Alto Networks, Inc. | PANW | Sept. 19 |
| Mazor Robotics, Ltd. | MZOR | Sept. 19 |
| Baozun, Inc. | BZUN | Sept. 19 |
| Bristol-Myers Squibb Co. | BMY | Sept. 18 |
| Continential Resources, Inc. | CLR | Sept. 18 |
| Silicon Laboratories, Inc. | SLAB | Sep. 15 |
| 2U, Inc. | TWOU | Sep. 15 |
| Devon Energy Corp. | DVN | Sep. 15 |
| Energy Select Sector SPDR | XLE | Sept. 14 |
| Cimarex Energy Co. | XEC | Sept. 14 |
| Urban Outfitters, Inc. | URBN | Sept. 14 |
| Juno Therapeutics, Inc. | JUNO | Sept. 14 |
| SPDR S&P Retail ETF | XRT | Sept. 13 |
| Lowe’s Companies, Inc. | LOW | Sept. 13 |
| Celanese Corp. | CE | Sept. 13 |
| Bluebird Bio, Inc. | BLUE | Sept. 13 |
| Cymabay Therapeutics, Inc. | CBAY | Sept. 13 |
| Analog Devices, Inc. | ADI | Sept. 12 |
| Impax Laboratories, Inc. | IPXL | Sept. 12 |
| Ebay, Inc. | EBAY | Sept. 11 |
| Valero Energy Corp. | VLO | Sept. 11 |
| Baidu, Inc. | BIDU | Sept. 7 |
| Home Depot, Inc. | HD | Sept. 7 |
| AutoNation, Inc. | AN | Sept. 7 |
| Ross Stores, Inc. | ROST | Sept. 7 |
| Wal-Mart Stores, Inc. | WMT | Sept. 6 |
| Cabot Oil & Gas Corp. | COG | Sept. 6 |
| iShares Silver Trust | SLV | Aug. 30 |
| American Eagle Outfitters, Inc. | AEO | Aug. 30 |
| Rio Tinto plc | RIO | Aug. 28 |
| FibroGen, Inc. | FGEN | Aug. 25 |
| Crocs, Inc. | CROX | Aug. 25 |
| BHP Billiton Ltd. | BHP | Aug. 25 |
| SPDR S&P Metals and Mining ETF | XME | Aug. 24 |
| Tower Semiconductor, Ltd. | TSEM | Aug. 24 |
| Prologis, Inc. | PLD | Aug. 24 |
| Vertex Pharmaceuticals, Inc. | VRTX | Aug. 23 |
| ASML Holding N.V. | ASML | Aug. 23 |
| Sempra Energy | SRE | Aug. 22 |
| Lumber Liquidators Holdings, Inc. | LL | Aug. 22 |
| VMware, Inc. | VMW | Aug. 21 |
| Hortonworks, Inc. | HDP | Aug. 21 |
| Control4 Corp. | CTRL | Aug. 21 |
| Iamgold Corp. | IAG | Aug. 17 |
| Southern Copper Corp. | SCCO | Aug. 17 |
| Perrigo Co. | PRGO | Aug. 17 |
| Atlas Air Worldwide Holdings, Inc. | AAWW | Aug. 16 |
| Las Vegas Sands Corp. | LVS | Aug. 16 |
| Boingo Wireless, Inc. | WIFI | Aug. 16 |
| PDL BioPharma, Inc. | PDLI | Aug. 14 |
| Newmont Mining Corp. | NEM | Aug. 14 |
| SPDR Gold Trust | GLD | Aug. 10 |
| Franco-Nevada Corp. | FNV | Aug. 10 |
| Xerox Corp. | XRX | Aug. 10 |
| Cognizant Technology Solutions | CTSH | Aug. 9 |
| LivePerson, Inc. | LPSN | Aug. 9 |
| Alexion Pharmaceuticals, Inc. | ALXN | Aug. 8 |
| Cognex Corp. | CGNX | Aug. 8 |
| HP, Inc. | HPQ | Aug. 7 |
| Global Payments, Inc. | GPN | Aug. 7 |
| Cadence Design Systems, Inc. | CDNS | Aug. 4 |
| Sina Corp. | SINA | Aug. 4 |
| First Solar, Inc. | FSLR | Aug. 3 |
| Abbott Laboratories | ABT | Aug. 3 |
| Corcept Therapeutics, Inc. | CORT | Aug. 3 |
| International Game Technology | IGT | July 25 |
| Glu Mobile, Inc. | GLUU | July 25 |
| American Tower Corp. | AMT | July 21 |
| SBA Communications Corp. | SBAC | July 20 |
| D.R. Horton, Inc. | DHI | July 18 |
| Mastercard Inc. | MA | July 17 |
| iShares MSCI Brazil ETF | EWZ | July 14 |
| Bottomline Technologies, Inc. | EPAY | July 13 |
| Toyota Motor Corp. | TM | July 13 |
| PulteGroup, Inc. | PHM | July 11 |
| Delphi Automotive | DLPH | July 10 |
| Novartis AG | NVS | July 6 |
| Loxo Oncology, Inc. | LOXO | June 22 |
| Scientific Games Corp. | SGMS | June 7 |
| iShares China Large-Cap ETF | FXI | June 6 |
| Health Care Select Sector SPDR | XLV | June 5 |
| Sangamo Therapeutics, Inc. | SGMO | June 5 |
| Monster Beverage Corp. | MNST | May 24 |
| FMC Corp. | FMC | May 16 |
| iShares MSCI Japan ETF | EWJ | May 12 |
| Weibo Corp. | WB | May 12 |
| Myriad Genetics, Inc. | MYGN | May 10 |
| Tableau Software, Inc. | DATA | May 9 |
| GrubHub, Inc. | GRUB | May 4 |
| Caterpillar, Inc. | CAT | Apr. 28 |
| IAC/InterActiveCorp | IAC | Apr. 24 |
| Utilities Select Sector SPDR | XLU | Apr. 13 |
| Red Hat, Inc. | RHT | Apr. 7 |
| Coca-Cola Co. | KO | Apr. 5 |
| UnitedHealth Group, Inc. | UNH | Mar. 31 |
| iShares MSCI Hong Kong ETF | EWH | Mar. 24 |
| Universal Display Corp. | OLED | Mar. 21 |
| iShares MSCI All Country Asia ex Japan ETF | AAXJ | Mar. 21 |
| Activision Blizzard, Inc. | ATVI | Mar.7 |
| Square, Inc. | SQ | Mar. 3 |
| Paycom Software, Inc. | PAYC | Feb. 24 |
| Facebook, Inc. | FB | Feb. 23 |
| SPDR S&P Biotech ETF | XBI | Feb. 15 |
| Microchip Technology, Inc. | MCHP | Feb. 13 |
| CBOE Holdings, Inc. | CBOE | Feb. 8 |
| Boeing Co. | BA | Feb. 7 |
| McDonald’s Corp. | MCD | Feb. 3 |
| Exact Sciences Corp. | EXAS | Jan. 30 |
| iShares Europe ETF | IEV | Jan. 26 |
| Shopify, Inc. | SHOP | Jan. 20 |
| Amazon.com | AMZN | Jan. 13 |
| iShares MSCI Emerging Markets ETF | EEM | Jan. 11 |
| Alphabet, Inc. | GOOGL | Jan. 9 |
| Alibaba Group Holding Limited | BABA | Jan. 5 |
| AutoDesk, Inc. | ADSK | Dec. 20 |
| Take-Two Interactive Software, Inc. | TTWO | Dec. 14 |
| Apple, Inc. | AAPL | Dec. 9 |
| Technology Select Sector SPDR | XLK | Oct. 25 |
| Lam Research Corp. | LRCX | Oct. 20 |
| Netflix, Inc. | NFLX | Oct. 4 |
| Microsoft Corp. | MSFT | Aug. 5 |
| PowerShares QQQ ETF | QQQ | July 19 |
| Industrial Select Sector SPDR | XLI | July 15 |
| Materials Select Sector SPDR | XLB | July 15 |
| VanEck Vectors Semiconductor ETF | SMH | June 23 |
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