/The Technical Indicator: Charting a rally to ‘clear skies’ territory: S&P 500, Nasdaq extend summer breakouts

The Technical Indicator: Charting a rally to ‘clear skies’ territory: S&P 500, Nasdaq extend summer breakouts


Technically speaking, the U.S. benchmarks continue to trend higher, rising in the wake of consequential August breakouts.

Against this backdrop, the S&P 500 and Nasdaq Composite have tagged their latest record highs to start September, extending breaks to previously uncharted territory.

Before detailing the U.S. markets’ wider view, the S&P 500’s
SPX,
+0.38%

hourly chart highlights the past two weeks.

As illustrated, the S&P has sustained a break to record highs. Tactically, an inflection point closely matches the 3,500 mark.

Conversely, near-term support is not well-defined, though the 3,468 and 3,444 areas mark potential inflection points.

Meanwhile, the Dow Jones Industrial Average
DJIA,
+0.26%

has pulled in from six-month highs.

Tactically, the 2019 close (28,538) marks an inflection point, a level defining positive year-to-date territory.

Delving slightly deeper, a notable floor matches the February gap (28,403).

Against this backdrop, the Nasdaq Composite
COMP,
+1.07%

continues to take flight.

Its persistent breakout has tracked atop the 20-hour moving average, the hallmark of a powerful trend.

Tactically, last week’s high (11,730) marks a near-term floor. Deeper inflection points match the late-August gap — 11,507 and 11,468.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has knifed decisively to record territory, rising within striking distance of the 12,000 mark.

The index first tagged the 11,000 mark on Aug. 5, less than one month ago.

More broadly, the prevailing leg higher has marked a two standard breakout, encompassing a lone close atop the 20-day Bollinger bands. As always, consecutive closes atop the bands are more definitively longer-term bullish.

Tactically, the Nasdaq remains near-term extended, and due a cooling-off period. (See the Nasdaq’s early-August breakout — encompassing four straight closes atop the 20-day volatility bands — and subsequent flat pullback.)

But more importantly, the Nasdaq’s primary uptrend has been confirmed with the nearly straightline August spike.

Looking elsewhere, the Dow Jones Industrial Average is digesting a rally to six-month highs.

The prevailing upturn punctuates a mid-August flag pattern, underpinned by the former breakout point (27,580).

On further strength, more distant overhead matches the top of the February gap (28,892).

Meanwhile, the S&P 500 has knifed to record highs, rising slightly atop the 3,500 mark.

Like the Nasdaq, the S&P’s decisive late-August spike marked a two standard deviation breakout, encompassing a lone close atop the 20-day volatility bands.

Separately, consider that the August close (3,500) matched a projected target from the June range (3,501), detailed previously.

The bigger picture

As detailed above, the major U.S. benchmarks have taken flight, staging technically significant summer breakouts.

In the process, the S&P 500 and Nasdaq Composite have just concluded their best August performance in 36 years.

Moving to the small-caps, the iShares Russell 2000 ETF remains in consolidation mode.

Still, the small-cap benchmark has maintained trendline support. The prevailing tight range is a bullish continuation pattern, hinged to the steep early-August rally. (See the tight late-July range, and upside follow-through.)

Meanwhile, the SPDR S&P MidCap 400 ETF continues to press its range top. A prolonged test of the June peak (355.23) remains underway.

Last week’s high (355.26) matched resistance.

Looking elsewhere, the SPDR Trust S&P 500 has knifed to all-time highs.

The prevailing upturn punctuates a tight mid-August range — a coiled spring — though it has been fueled by lukewarm volume.

Placing a finer point on the S&P 500, the index taken flight.

More directly, the S&P has staged a bullish 3.4% late-August breakout, confirming its primary uptrend.

When or if the index pulls in, near-term support is not well-defined. Tactically, the top of last week’s gap (3,413) is closely followed by the firmer breakout point — the 3,393-to-3,400 area.

Beyond technical levels, the S&P 500 remains near-term extended, and due to consolidate at some point. Its more important bigger-picture backdrop has strengthened in recent weeks, and remains firmly-bullish.

Also see: Charting a bullish technical tilt, S&P 500 breaks to record territory.

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 Health Care Select Sector SPDR is acting well technically. (Yield = 2.3%.)

As illustrated, the group has tagged a nominal all-time high, edging atop well-defined resistance. The prevailing upturn punctuates a tight six-week range — a coiled spring — laying the groundwork for potentially more decisive follow-through.

Tactically, the 50-day moving average closely matches the former range bottom (104.60). A breakout attempt is in play barring a violation.

More broadly, the group is well positioned on the three-year chart, building on a massive early-2020 V-shaped reversal.

Looking elsewhere, the iShares U.S. Real Estate ETF has reached a key technical test. (Yield = 3.4%.)

Specifically, the group is pressing its 200-day moving average, currently 83.35, a widely-tracked longer-term trending indicator. The prevailing upturn punctuates a tight one-month range.

Conversely, the ascending 50-day moving average, currently 80.35, has underpinned the tepid summer price action. The group’s breakout attempt is intact barring a violation.

Initially profiled July 23, Advanced Micro Devices, Inc.
AMD,
+0.82%

has returned 47.0% and remains well positioned.

The shares concluded July with a gap to record territory, rising after the company’s quarterly results.

More immediately, the shares have extended the uptrend, rising amid optimism over the weekend launch of a new processor. Tactically, the breakout point (86.70) pivots to support.

Conversely, an intermediate-term target projects to the 97.00 area on follow-through.

Splunk, Inc.
SPLK,
+1.72%

is a well positioned large-cap software vendor.

Late last month, the shares knifed to record territory, rising amid a volume spike after the company’s quarterly results. An intermediate-term target projects to the 244 area.

Conversely, the breakout point (217.30) is followed by deeper gap support (209.15). A sustained posture higher signals a firmly-bullish bias.

Beyond Meat, Inc.
BYND,
-0.49%

is a large-cap name coming to life.

Technically, the shares have recently cleared trendline resistance, rising after an analyst upgrade. The strong-volume upturn has been punctuated consecutive closes atop the 50-day moving average.

On further strength, additional overhead matches the August peak (142.50). Follow-through higher would mark a “higher high” confirming the recent trend shift.

Conversely, the top of the gap (128.80) is closely followed by trendline support, circa 127.00. The prevailing recovery attempt is intact barring a violation.

Finally, Elastic N.V.
ESTC,
+1.13%

is a large-cap software and search name.

Late last month, the shares knifed to record highs, rising after the company’s quarterly results. The prevailing pullback places the shares 8.2% under the August peak.

Tactically, the post-breakout low (106.85) has closely matched the breakout point (106.98). A sustained posture higher signals a firmly-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

Yum Brands, Inc.

YUM

Aug. 31

TripAdvisor, Inc.

TRIP

Aug. 31

Coupa Software, Inc.

COUP

Aug. 28

Medtronic

MDT

Aug. 28

Celanese Corp.

CE

Aug. 26

Hilton Worldwide Holdings, Inc.

HLT

Aug. 26

Norfolk Southern Corp.

NSC

Aug. 25

Westlake Chemical Corp.

WLK

Aug. 25

Deere & Co.

DE

Aug. 24

PulteGroup, Inc.

PHM

Aug. 24

Werner Enterprises, Inc.

WERN

Aug. 24

Expedia Group, Inc.

EXPE

Aug. 24

Visa, Inc.

V

Aug. 21

Johnson Controls International

JCI

Aug. 21

DuPont de Nemours, Inc.

DD

Aug. 21

Adobe, Inc.

ADBE

Aug. 20

Canadian Solar, Inc.

CSIQ

Aug. 20

General Motors Co.

GM

Aug. 20

Starbucks Corp.

SBUX

Aug. 18

Emerson Electric Co.

EMR

Aug. 18

Builders FirstSource, Inc.

BLDR

Aug. 18

Universal Display Corp.

OLED

Aug. 17

Steel Dynamics, Inc.

STLD

Aug. 17

Elanco Animal Health, Inc.

ELAN

Aug. 17

Eaton Corp.

ETN

Aug. 14

Pioneer Natural Resources Co.

PXD

Aug. 14

Brinker International, Inc.

EAT

Aug. 13

Enphase Energy, Inc.

ENPH

Aug. 13

Avis Budget Group, Inc.

CAR

Aug. 12

U.S. Global Jets ETF

JETS

Aug. 11

Nike, Inc.

NKE

Aug. 11

Nucor Corp.

NUE

Aug. 11

Financial Select Sector SPDR

XLF

Aug. 10

Freeport McMoRan, Inc.

FCX

Aug. 10

Natera, Inc.

NTRA

Aug. 10

Lennar Corp.

LEN

Aug. 7

McDonald’s Corp.

MCD

Aug. 7

Mastercard, Inc.

MA

Aug. 6

United Health Group, Inc.

UNH

Aug. 6

Kansas City Southern

KSU

Aug. 6

Industrial Select Sector SPDR

XLI

Aug. 6

Verizon Communications, Inc.

VZ

Aug. 5

Sunrun, Inc.

RUN

Aug. 5

Coeur Mining, Inc.

CDE

Aug. 5

FireEye, Inc.

FEYE

Aug. 4

Jabil, Inc.

JBL

Aug. 3

Southern Copper Corp.

SCCO

Aug. 3

Agco Corp.

AGCO

July 31

Penn National Gaming, Inc.

PENN

July 30

At Home Group, Inc.

HOME

July 30

Procter & Gamble Co.

PG

July 29

SPDR S&P Metals & Mining ETF

XME

July 28

iShares MSCI South Korea ETF

EWY

July 28

HCA Healthcare, Inc.

HCA

July 28

Toll Brothers, Inc.

TOL

July 27

Landstar System, Inc.

LSTR

July 27

HP, Inc.

HPQ

July 24

Advanced Micro Devices, Inc.

AMD

July 23

AstraZeneca

AZN

July 23

Best Buy Co., Inc.

BBY

July 22

iShares Europe ETF

IEV

July 21

Fastenal Co.

FAST

July 21

Materials Select Sector SPDR

XLB

July 20

Caterpillar, Inc.

CAT

July 20

Monster Beverage Corp.

MNST

July 20

Palo Alto Networks, Inc.

PANW

July 20

iShares U.S. Home Construction ETF

ITB

July 17

Progressive Corp.

PGR

July 17

Livongo Health, Inc.

LVGO

July 17

Roku, Inc.

ROKU

July 16

Catalent, Inc.

CTLT

July 16

Cognizant Technology Solutions, Inc.

CTSH

July 16

Health Care Select Sector SPDR

XLV

July 16

Consumer Staples Select Sector SPDR

XLP

July 15

Home Depot, Inc.

HD

July 15

Costco Wholesale Corp.

COST

July 15

Kirkland Lake Gold, Ltd.

KL

July 15

Air Products & Chemicals, Inc.

APD

July 14

Consumer Discretionary Select Sector SPDR

XLY

July 13

Alphabet, Inc.

GOOGL

July 13

Sony Corp.

SNE

July 13

Eldorado Gold Corp.

EGO

July 13

SunPower Corp.

SPWR

July 13

D.R.Horton, Inc.

DHI

July 9

Taylor Morrison Home Corp.

TMHC

July 9

LGI Homes, Inc.

LGIH

July 8

Walmart, Inc.

WMT

July 8

J.B. Hunt Transport Services, Inc.

JBHT

July 8

Akamai Technologies, Inc.

AKAM

July 6

Verisk Analytics, Inc.

VRSK

July 6

Big Lots, Inc.

BIG

July 1

Tandem Diabetes Care, Inc.

TNDM

July 1

Dell Technologies, Inc.

DELL

June 30

Zebra Technologies Corp.

ZBRA

June 30

Yeti Holdings, Inc.

YETI

June 25

Danaher Corp.

DHR

June 24

RH

RH

June 24

First Solar, Inc.

FSLR

June 22

Lowe’s Companies

LOW

June 19

Fiverr International, Ltd.

FVRR

June 19

Chegg, Inc.

CHGG

June 18

Etsy, Inc.

ETSY

June 17

Skyworks Solutions, Inc.

SWKS

June 16

Lululemon Athletica, Inc.

LULU

June 16

Carvana Co.

CVNA

June 10

Williams-Sonoma, Inc.

WSM

June 9

HubSpot, Inc.

HUBS

June 8

Square, Inc.

SQ

June 8

United Parcel Service, Inc.

UPS

June 5

Xilinx, Inc.

XLNX

June 4

KLA Corp.

KLAC

June 4

FedEx Corp.

FDX

June 3

SPDR S&P Retail ETF

XRT

June 3

iShares MSCI Japan ETF

EWJ

May 29

SolarEdge Technologies, Inc.

SEDG

May 29

Synopsis, Inc.

SNPS

May 27

Twilio, Inc.

TWLO

May 26

Take-Two Interactive Software, Inc.

TTWO

May 26

Lam Research Corp.

LRCX

May 26

Applied Materials, Inc.

AMAT

May 19

iShares Silver Trust

SLV

May 15

Agnico Eagle Mines, Ltd.

AEM

May 15

Agilent Technologies, Inc.

A

May 15

Halozyme Therapeutics, Inc.

HALO

May 15

Wix.com, Ltd.

WIX

May 13

Qualcomm, Inc.

QCOM

May 12

Kinross Gold Corp.

KGC

May 11

Salesforce.com, Inc.

CRM

May 8

Facebook, Inc.

FB

May 7

Spotify Technology S.A.

SPOT

May 5

Qorvo, Inc.

QRVO

Apr. 29

Old Dominion Freight Line, Inc.

ODFL

Apr. 29

Dollar General Corp.

DG

Apr. 28

Cadence Design Systems, Inc.

CDNS

Apr. 27

ServiceNow, Inc.

NOW

Apr. 27

Five9, Inc.

FIVN

Apr. 24

Chewy, Inc.

CHWY

Apr. 24

Tesla, Inc.

TSLA

Apr. 23

Shopify, Inc.

SHOP

Apr. 23

Teradyne, Inc.

TER

Apr. 20

Electronic Arts, Inc.

EA

Apr. 20

VanEck Vectors Semiconductor ETF

SMH

Apr. 17

Coupa Software, Inc.

COUP

Apr. 17

Veeva Systems, Inc.

VEEV

Apr. 17

Okta, Inc.

OKTA

Apr. 16

Target Corp.

TGT

Apr. 16

Netflix, Inc.

NFLX

Apr. 14

VanEck Vectors Gold Miners ETF

GDX

Apr. 14

Invesco QQQ Trust

QQQ

Apr. 14

DocuSign, Inc.

DOCU

Apr. 3

Zscaler, Inc.

ZS

Apr. 3

RingCentral, Inc.

RNG

Mar. 30

Activision Blizzard, Inc.

ATVI

Mar. 30

Apple, Inc.

AAPL

Mar. 27

Nvidia Corp.

NVDA

Mar. 27

Dexcom, Inc.

DXCM

Mar. 27

Amazon.com, Inc.

AMZN

Mar. 26

Stamps.com, Inc.

STMP

Mar. 26

Domino’s Pizza, Inc.

DPZ

Mar. 20

Kroger Co.

KR

Mar. 19

Zoom Video Communications, Inc.

ZM

Mar. 19

iShares MSCI Emerging Markets ETF

EEM

Mar. 19

Newmont Corp.

NEM

Jan. 13

SPDR Gold Shares ETF

GLD

Jan. 2

Teledoc Health, Inc.

TDOC

Nov. 1

Microsoft Corp.

MSFT

Feb. 22

* Click each symbol for current chart.

Original Source