The Technical Indicator: Bull trend strengthens, S&P 500 rattles cage on 200-day average

Banking


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 trend higher amid thus far lackluster 2019 selling pressure.

Against this backdrop, the S&P 500 is back early Tuesday for its second crack at the 200-day moving average, an area defining the headline bull-bear battleground.







Before detailing the U.S. markets’ wider view, the S&P 500’s

SPX, +1.32%

 hourly chart highlights the past two weeks.

As illustrated, the S&P has pulled in from major resistance (2,742) to an inflection point at 2,710.

Monday’s close (2,709.8) matched resistance, and the S&P is comfortably higher early Tuesday. To reiterate, major overhead matches the May peak (2,742) and the 200-day moving average, currently 2,743.




Similarly, the Dow Jones Industrial Average has pulled in amid technical price action.

Recall that last week’s low (24,883) registered slightly above major support matching the 2017 peak (24,876).

Conversely, Monday’s session high (25,196.75) closely matched near-term resistance (25,193).

Slightly more broadly, the Dow has registered nine straight closes atop the 200-day moving average, currently 25,014. Constructive price action.




Against this backdrop, the Nasdaq Composite

COMP, +1.40%

 has also pulled in to its range.

Tactically, gap resistance (7,347) is followed by firmer overhead matching the February peak (7,410).

Here again, Tuesday’s early session high (7,410) has matched resistance and retest remains underway.




Widening the view to six months adds perspective.

On this wider view, the Nasdaq has staged an orderly pullback from two-month highs, topping under the 200-day moving average, currently 7,460.

The index has thus far maintained the 7,274 support on a closing basis.

Separately, recall that the 50-day moving average (in blue) has ticked higher, consistent with an intermediate-term trend shift. (This signal obviously lags the initial trendline breakout.)




Looking elsewhere, the Dow Jones Industrial Average is also digesting a recent trendline breakout.

The index has thus far topped near the June peak (25,402), an area also illustrated on the hourly chart.

Conversely, recall that last week’s low (24,883) closely matched the 2017 peak (24,876) punctuating a successful retest. Price action within the prevailing range supports a bullish intermediate-term bias.




Meanwhile, the S&P 500 has more or less nailed major resistance (2,742) topping last week within three points.

The subsequent downturn has thus far inflicted limited damage. Recall that last week’s close (2,708) closely matched the 2,710 inflection point, also illustrated on the hourly chart.

The bigger picture

As detailed above, the big three U.S. benchmarks continue to act well technically. The February downturn from two-month highs has been relatively orderly, inflicting limited damage.

More immediately, the major benchmarks are pressing significant resistance early Tuesday, including Nasdaq 7,410 and the S&P 2,742 area.




Moving to the small-caps, the iShares Russell 2000 ETF has also staged an orderly pullback.

Tactically, the February peak (151.60) marks an overhead inflection point, and the small-cap benchmark has ventured higher early Tuesday. On further strength, additional overhead spans from about 153.60 to 154.50.




Similarly, the SPDR S&P MidCap 400 is digesting a recent breakout.

Here again, the February peak (340.04) marks an inflection point, and the mid-cap benchmark has ventured higher early Tuesday. A close firmly atop resistance would confirm the intermediate-term uptrend.




Looking elsewhere, the SPDR Trust S&P 500

SPY, +1.33%

 has reached its second test of major resistance. Consider two inflection points, detailed repeatedly:

  • Resistance matching the May peak of 274.25.
  • The 200-day moving average, currently 274.07.

Tuesday’s early session high (273.96) has registered fractionally under the 200-day moving average, and the retest remains underway.




Against this backdrop, the S&P 500 is also back for a second crack at major resistance. Two familiar hurdles stand out:

  • Major resistance matching the May peak of 2,742.24.
  • The 200-day moving average, currently 2,743.34.

Last week’s high (2,739) registered nominally under this area, and the S&P has topped early Tuesday at 2,741.

As always, it’s the response to resistance that matters. The chances of follow-through improve to the extent the S&P holds tightly to the range top.

On further strength, gap resistance spans from 2,760 to 2,773, and is followed by firmer overhead matching the March peak (2,802).

Beyond technical levels, the S&P 500 seems to have absorbed the second notable 2019 downturn. Its intermediate-term market bias remains comfortably bullish pending more aggressive (damaging) selling pressure.

Tactically, the S&P’s prevailing retest of the 200-day moving average, potentially across the next several sessions, will likely add color.

See also: Bull trend strengthens, S&P 500 approaches 200-day average.

See also: S&P 500 reaches firmer technical ground, pulls in from major resistance.

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 China Large-Cap ETF

FXI, +0.33%

 has come to life as China-U.S. trade negotiations commence this week.

Specifically, the shares have recently rallied atop trendline resistance, rising to challenge the 200-day moving average, currently 42.54.

Monday’s close (42.54) matched the 200-day — a widely-tracked longer-term trending indicator — and the retest remains underway.

On further strength, notable overhead matches the December peak (43.06). A sustained break higher would resolve a double bottom — defined by the October and January lows — opening the path to potentially material follow-through.

(Note that China’s retest dovetails with the S&P 500’s corresponding test of the 200-day moving average.)




Initially profiled Dec. 10, the VanEck Vectors Gold Miners ETF

GDX, -0.18%

 has returned 9.3% and remains well positioned.

Late last month, the group gapped atop the 200-day moving average, knifing to seven-month highs.

The subsequent pullback has been comparably flat, placing the group at an attractive entry 2.8% under the January peak. Tactically, near-term support (21.95) is followed by the deeper breakout point (21.50).

More broadly, 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.




Moving to specific names, 3M Co.

MMM, +2.55%

 is a Dow 30 component showing signs of life. (Yield =2.9%.)

As illustrated, the shares have edged atop trendline resistance, rising to challenge the 200-day moving average, currently 200.70. This area is closely followed by a two-month range top, circa 203.10.

Underlying the upturn, 3M’s relative strength index (not illustrated) has registered nearly three-month highs, improving the chances of eventual follow-through. Tactically, the trendline pivots to support, circa 197, and a breakout attempt is in play barring a violation.




Infosys Ltd.

INFY, -0.42%

 is a large-cap provider of technology and consulting services positioned to rise. (Yield =3.0%.)

The shares initially spiked four weeks ago, gapping sharply higher after the company’s third-quarter results.

More immediately, the shares have established a tight February range, digesting a break to 18-year highs. The flag-like pattern positions the shares to build on the steep January rally.

Tactically, initial support matches the breakout point (10.68) and is followed by the former range bottom (10.40). A posture higher supports a bullish bias.




Finally, Splunk, Inc.

SPLK, +2.33%

 is a well positioned large-cap software vendor.

Technically, the shares have edged to record territory, clearing resistance matching the August peak. Meanwhile, the relative strength index (not illustrated) has notched five-month highs, improving the chances of more decisive follow-through.

Tactically, the former range top (130.00) is followed by a deeper floor, circa 126.50, 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.

Company Symbol Date Profiled
Zendesk, Inc. ZEN Feb. 11
Fortive Corp. FTV Feb. 11
Mastercard, Inc. MA Feb. 11
Procter & Gamble Co. PG Feb. 8
Boston Scientific Corp. BSX Feb. 8
Deckers Outdoor Corp. DECK Feb. 8
Alphabet, Inc. GOOGL Feb. 6
LogMeIn, Inc. LOGM Feb. 6
Norfolk Southern Corp. NSC Feb. 6
Packaging Corp. of America PKG Feb. 6
Akamai Technologies, Inc. AKAM Feb. 5
Global Payments, Inc. GPN Feb. 5
Alibaba Group Holding Ltd. BABA Feb. 5
Baidu, Inc. BIDU Feb. 4
Ebay, Inc. EBAY Feb. 4
Visa, Inc. V Feb. 4
Adobe, Inc. ADBE Feb. 1
Baozun, Inc. BZUN Feb. 1
Intercept Pharmaceuticals, Inc. ICPT Feb. 1
Owens Corning OC Feb. 1
ON Semiconductor Corp ON Jan. 31
MKS Instruments, Inc. MKSI Jan. 31
iRobot Corp. IRBT Jan. 31
Salesforce.com, Inc. CRM Jan. 30
KLA-Tencor Corp. KLAC Jan. 30
Western Digital Corp. WDC Jan. 30
Whirlpool Corp. WHR 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
Schlumberger Limited SLB Jan. 28
Aptiv plc APTV Jan. 28
Teradyne, Inc. TER Jan. 28
VanEck Vectors Semiconductor ETF SMH Jan. 25
Applied Materials, Inc. AMAT Jan. 25
Micron Technology, Inc. MU Jan. 25
Roku, Inc. ROKU Jan. 25
iShares MSCI Emerging Markets ETF EEM Jan. 24
SBA Communications Corp. SBAC Jan. 24
Eastman Chemical Co. EMN Jan. 24
LGI Homes, Inc. LGIH Jan. 24
Paycom Software, Inc. PAYC Jan. 23
Delphi Technologies DLPH Jan. 23
Bed Bath & Beyond, Inc. BBBY Jan. 23
Eagle Materials, Inc. EXP Jan. 23
Advanced Micro Devices, Inc. AMD Jan. 22
Lennar Corp. LEN Jan. 22
Materials Select Sector SPDR XLB Jan. 18
Nike, Inc. NKE Jan. 18
VeriSign, Inc. VRSN Jan. 18
Dollar Tree, Inc. DLTR Jan. 18
Apple, Inc. AAPL Jan. 18
Nevro Corp. NVRO Jan. 17
Westlake Chemical Corp. WLK Jan. 17
Coupa Software, Inc. COUP Jan. 16
Veeva Systems, Inc. VEEV Jan. 16
Teledoc Health, Inc. TDOC Jan. 16
Incyte Corp INCY Jan. 16
Deere & Co. DE Jan. 11
CyberArk Software CYBR Jan. 11
Square, Inc. SQ Jan. 10
Facebook, Inc. FB Jan. 9
Okta, Inc. OKTA Jan. 9
Tandem Diabetes Care, Inc. TNDM Jan. 9
RingCentral, Inc RNG Jan. 8
Alteryx, Inc. AYX Jan. 8
Pioneer Natural Resources Co. PXD Jan. 8
Netflix, Inc. NFLX Jan. 7
iShares Brazil ETF EWZ Jan. 7
Ciena Corp. CIEN Jan. 7
Crox, Inc. CROX Jan. 7
IAC/InterActivecorp IAC Jan. 7
Five9, Inc. FIVN Dec. 13
Ambarella, Inc. AMBA Dec. 11
Tech Data Corp. TECD Dec. 11
SPDR Gold Shares ETF GLD Dec. 10
VanEck Vectors Gold Miners ETF GDX Dec. 10
Workday, Inc. WDAY Dec. 10
Atlassian Corp. TEAM Dec. 10
Ventas, Inc. VTR Nov. 26
Ubiquiti Networks, Inc. UBNT Nov. 13
TripAdvisor, Inc. TRIP Nov. 13
Welltower, Inc. WELL Nov. 12
Xilinx, Inc. XLNX Nov. 12
Fabrinet FN Nov. 12
Acacia Communications, Inc. ACIA Nov. 7
Starbucks Corp. SBUX Nov. 5
American Tower Corp. AMT Nov. 5
Coca-Cola Co. KO Oct. 31
Utilities Select Sector SPDR XLU Oct. 25
McDonald’s Corp. MCD Oct. 24
Spirit Airlines, Inc. SAVE Oct. 19
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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Michael Ashbaugh writes technical analysis for MarketWatch and is editor of MarketWatch’s “The Technical Indicator” newsletter.

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