The Technical Indicator: Bullish momentum persists, S&P 500 sustains break to uncharted territory
Technically speaking, the major U.S. benchmarks have sustained a break to record territory amid still conspicuously muted November selling pressure.
Against this backdrop, the big three benchmarks remain near-term extended — and are due a cooling-off period, if not a corrective pullback — though the more important longer-term market bias remains comfortably bullish.
Before detailing the U.S. markets’ wider view, the S&P 500’s
Still, the prevailing flag pattern is constructive amid pronounced strength elsewhere. The small-cap benchmark has thus far maintained major support (158.00) on a closing basis, positioning it to build on the steep October rally.
Meanwhile, the SPDR S&P MidCap 400 has also asserted a flag pattern, in its case digesting a break to 52-week highs.
Recall that notable support spans from 360.50 to 361.43, levels matching the post-breakout low and the November gap. A sustained posture atop this area signals a firmly bullish bias.
Looking elsewhere, the SPDR Trust S&P 500 has extended a decisive November breakout.
Tactically, near-term inflection points match the mid-month gap, at 309.64 and 310.26. Delving deeper, a firmer floor continues to span from about 307.00 to 307.40.
Placing a finer point on the S&P 500, the index has staged a striking November breakout.
To reiterate, Tuesday’s early session high (3,127.6) currently defines the S&P’s all-time high, and places its intermediate-term target (3,140) just overhead.
Against this backdrop, the S&P remains near-term extended, and is due at least a sideways chopping around phase, if not a corrective pullback. Tactically, the 3,100 area marks a near-term floor, closely matching the former range top.
Delving deeper, the S&P 500’s breakout point — the 3,022-to-3,028 area — defines more important support.
The 50-day moving average, currently 3,011, is rising toward major support, and the S&P 500’s intermediate- to longer-term bias remains bullish barring a violation.
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 Industrial Select Sector SPDR has broken out. (Yield = 1.9%.)
Specifically, the group has reached record territory, clearing resistance matching the September peak.
The breakout punctuates a massive head-and-shoulders bottom — illustrated on the three-year chart — opening the path to potentially material longer-term follow-through. As always, this is a high-reliability bullish reversal pattern.
Tactically, an intermediate-term target projects from the October range to the 85.50 area. Conversely, the neckline pivots to support (79.80) and the group’s intermediate-term bias remains bullish barring a violation.
has returned 12.1% and remains well positioned. (Yield = 2.1%.)
Late last month, the shares gapped sharply higher, rising amid a volume spike after the company’s quarterly results.
The subsequent follow-through places Intel’s 19-year high — a level matching the April peak (59.59) — slightly above current levels.
More broadly, the shares are well positioned on the three-year chart, rising from a massive double bottom defined by the October 2018 and May 2019 lows. A break atop the April peak would resolve the pattern, opening the path to much less-charted territory, and potentially material follow-through.
Tactically, gap support (56.85) closely matches the prevailing range bottom. A breakout attempt is in play barring a violation.
is a large-cap developer of cloud-based software solutions.
Technically, the shares have knifed atop trendline resistance, rising from a successful test of the 200-day moving average.
Underlying the upturn, its relative strength index (not illustrated) has registered three-month highs, improving the chances of a durable trend shift.
Tactically, trendline support closely tracks the 50-day moving average, currently 71.80, and the recovery attempt is intact barring a violation. (Also notice the pending golden cross, or bullish 50-day/200-day moving average crossover.)
is a mid-cap medical device manufacturer positioned to rise.
As illustrated, the shares have recently gapped sharply higher, briefly tagging all-time highs after the company’s quarter results.
The subsequent flag pattern signals still muted selling pressure, positioning the shares to build on the strong-volume spike. Tactically, a near-term floor (27.30) matches the post-breakout low, and a sustained posture higher supports a firmly bullish bias.
More broadly, the shares are well positioned on the three-year chart, consolidating atop an inflection point matching the 2017 peak.
is a well positioned large-cap grocery store operator. (Yield = 2.4%.)
Earlier this month, the shares staged a strong-volume breakout, tagging eight-month highs after the company revised its 2020 outlook and announced a $1 billion share buyback program.
The ensuing pullback has been underpinned by the breakout point (26.20) placing the shares at an attractive entry 4% under the November peak. Delving deeper, trendline support roughly tracks the 50-day moving average, currently 25.50, and the prevailing rally attempt is intact barring a violation.
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.