/The Technical Indicator: Charting a bullish Q4 start: S&P 500 extends rally from major support

The Technical Indicator: Charting a bullish Q4 start: S&P 500 extends rally from major support

Broadly speaking, the major U.S. benchmarks are off to a constructive October start, reclaiming key technical levels.

Against this backdrop, the S&P 500 has asserted a bullish-leaning intermediate-term bias, rising to three-week highs from a successful test of major support (3,328).

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

 hourly chart highlights the past two weeks.

As illustrated, the S&P has extended its rally attempt, reaching three-week highs.

The prevailing upturn punctuates last week’s range, underpinned by major support (3,328).

From current levels, the breakout point (3,393) marks a near-term floor, a level matching the February peak.

Similarly, the Dow Jones Industrial Average

 has cleared its range top.

Here again, the breakout punctuates a successful test of major support (27,447) a level that underpinned last week’s price action on a closing basis.

More immediately, the 28,000 mark remains an inflection point.

Meanwhile, the Nasdaq Composite

is challenging its range top.

The prevailing upturn punctuates a jagged, but successful, test of the 50-day moving average, an area better illustrated on the daily chart below.

Tactically, a notable floor matches the mid-September range top (11,245).

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has extended its rally attempt, notching a “higher high” versus the mid-September peak (11,245).

The prevailing upturn punctuates a successful test of the 50-day moving average, currently 11,113, a recent bull-bear inflection point.

Tactically, the sustained break atop the 50-day moving average — combined with a “higher high” to start October — signals a bullish-leaning intermediate-term bias.

Looking elsewhere, the Dow Jones Industrial Average has extended a rally atop key resistance.

The specific area matches the breakdown point (27,580) and the 50-day moving average, currently 27,684.

The Dow’s sustained rally atop resistance signals a bullish-leaning intermediate-term bias. Recall that the 50-day moving average defined the May, June and late-July lows.

Meanwhile, the S&P 500 has also extended its rally attempt, edging atop next resistance (3,393).

In the process, the S&P has reclaimed its 50-day moving average, currently 3,369.

Slightly more broadly, the upturn punctuates a successful test of major support (3,328), a bull-bear inflection point detailed repeatedly.

The bigger picture

Collectively, the major U.S. benchmarks are acting well technically to start October, and the fourth quarter.

On a headline basis, the S&P 500 and Dow industrials have extended their rally attempts, rising from successful tests of major support — S&P 3,328 and Dow 27,447. (See the hourly charts.)

Moving to the small-caps, the iShares Russell 2000 ETF has extended a rally from the September low.

In the process, the small-cap benchmark has reclaimed its 50-day moving average and the breakdown point (153.39).

The breakout neutralizes the September downdraft. Tactically, additional overhead matches the August peak (159.82).

Meanwhile, the SPDR S&P MidCap 400 ETF has also reclaimed its 50-day moving average.

The prevailing follow-through punctuates an October upturn initially fueled by increased volume.

Looking elsewhere, the SPDR Trust S&P 500

 has also rallied atop major resistance.

The specific area matches its former breakout point (338.35) and the 50-day moving average, currently 336.35.

Recall that the prevailing upturn originates from major support matching the June peak.

Placing a finer point on the S&P 500, its near-term backdrop is increasingly straightforward.

To start, the S&P has rallied from major support (3,328), a bull-bear inflection point detailed repeatedly. This area effectively underpinned last week’s range.

Within the range, the 50-day moving average, currently 3,369, remains an inflection point.

Slightly more broadly, the S&P has edged atop the February peak (3,393), a level defining its former breakout point. This area pivots to near-term support.

On further strength, follow-through above the mid-September range top, circa 3,425, would mark a “higher high” incrementally strengthening the bull case.

Conversely, the S&P 500’s 50-day moving average — and major support (3,328) — remain useful bull-bear inflection points. A sustained posture higher signals a bullish-leaning intermediate-term bias.

Also see: Charting a corrective bounce: S&P 500 hesitates at 50-day average.

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 10-year Treasury note yield

 has knifed to its best levels since June, rising amid a risk-on trade. (Treasury yields and bond prices are inversely correlated. Lower bond prices signal increased investor risk appetite.)

The October upturn punctuates a tight seven-week range, underpinned by the 50-day moving average.

Tactically, the upturn places the yield’s range top (0.79) — a level closely matching the April peak — firmly under siege. Tuesday’s early session high (0.792) has matched resistance.

As detailed repeatedly, follow-through above the range top would open the path to a less-charted patch amid a developing double bottom. Such a move could be punctuated by swift upside follow-through. (See the mid-June spike.)

Conversely, a downside inflection point matches the yield’s former range top (0.75). The prevailing breakout attempt is intact barring a violation. (Also see the Aug. 28 review and Sept. 23 review.)

Moving to U.S. sectors, the iShares Transportation Average

 is acting well technically.

The group initially spiked two months ago, staging a steep early-August breakout. The upturn marked a two standard deviation breakout, encompassing four straight closes atop the 20-day Bollinger bands.

More immediately, the group has asserted an orderly six-week range — a bullish continuation pattern — positioning it to build on the steep August rally.

Tactically, trendline support closely tracks the 50-day moving average, and is followed by the former breakout point (190.00). A posture higher signals a bullish intermediate-term bias.

Moving to specific names, Motorola Solutions, Inc.

 is a well positioned large-cap name.

Technically, the shares are challenging seven-month highs, rising from a double bottom defined by the May and July lows.

The prevailing tight one-week range signals muted selling pressure near resistance, improving the chances of eventual follow-through. Tactically, a breakout attempt is in play barring a violation of the October low (153.70).

Also notice the pending golden cross — or bullish 50-day/200-day moving average crossover — signaling that the intermediate-term uptrend has overtaken the longer-term trend.

Gap, Inc.

 is a large-cap retailer coming to life.

As illustrated, the shares have knifed to 52-week highs, clearing resistance matching the September peak. The upturn originates from trendline support closely tracking the 50-day moving average.

Though near-term extended, and due to consolidate, a pullback toward the breakout point (18.40) would offer an attractive entry.

More broadly, the shares are well positioned on the three-year chart, edging atop major resistance matching the late-2019 range top.

Finally, Sunnova Energy International, Inc.

 — public since July 2019 — is a mid-cap developer of residential-solar and energy-storage solutions.

Late last month, the shares knifed to record highs, clearing the August peak amid a volume spike.

The subsequent pullback has been underpinned by the breakout point (28.60), placing the shares 14.9% under the October peak.

Tactically, deeper support matches the August and September gaps, circa 27.20. A sustained posture higher signals a 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
Ross Stores, Inc. ROST Oct. 5
SBA Communications Corp. SBAC Oct. 5
Marvell Technology Group,Ltd. MRVL Oct. 5
Qorvo, Inc. QRVO Oct. 2
NCR Corp. NCR Oct. 2
LGI Homes, Inc. LGIH Oct. 2
Amgen, Inc. AMGN Oct. 1
SailPoint Technology Holdings, Inc. SAIL Oct. 1
Dell Technologies, Inc. DELL Sept. 30
Martin Marietta Materials, Inc. MLM Sept. 30
Whirlpool Corp. WHR Sept. 29
Abercrombie & Fitch Co. ANF Sept. 29
American Eagle Outfitters AEO Sept. 28
Twitter, Inc. TWTR Sept. 28
Blueprint Medicines Co. BPMC Sept. 28
Zendesk, Inc. ZEN Sept. 23
Datadog, Inc. DDOG Sept. 23
Scientific Games Corp. SGMS Sept. 23
Maxar Technologies, Inc. MAXR Sept. 18
V.F. Corp. VFC Sept. 14
Crocs, Inc. CROX Sept. 14
Toyota Motor Co. TM Sept. 14
Five Below, Inc. FIVE Sept. 10
Dow Inc. DOW Sept. 10
Eastman Chemical Co. EMN Sept. 10
CrowdStrike Holdings, Inc. CRWD Sept. 9
Workhorse Group, Inc. WKHS Sept. 9
International Paper Co. IP Sept. 3
Anaplan, Inc. PLAN Sept. 2
Beyond Meat, Inc. BYND Sept. 1
Elastic N.V. ESTC Sept. 1
Medtronic MDT Aug. 28
Celanese Corp. CE Aug. 26
Norfolk Southern Corp. NSC Aug. 25
Westlake Chemical Corp. WLK Aug. 25
Deere & Co. DE Aug. 24
PulteGroup, Inc. PHM Aug. 24
Expedia Group, Inc. EXPE Aug. 24
Johnson Controls International JCI Aug. 21
Adobe, Inc. ADBE Aug. 20
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
Elanco Animal Health, Inc. ELAN Aug. 17
Brinker International, Inc. EAT Aug. 13
Enphase Energy, Inc. ENPH Aug. 13
Nike, Inc. NKE Aug. 11
Nucor Corp. NUE Aug. 11
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
Kansas City Southern KSU Aug. 6
Industrial Select Sector SPDR XLI Aug. 6
Verizon Communications, Inc. VZ Aug. 5
Sunrun, Inc. RUN Aug. 5
Penn National Gaming, Inc. PENN 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
Toll Brothers, Inc. TOL July 27
Advanced Micro Devices, Inc. AMD July 23
Best Buy Co., Inc. BBY July 22
Materials Select Sector SPDR XLB July 20
Caterpillar, Inc. CAT 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
Cognizant Technology Solutions, Inc. CTSH July 16
Consumer Staples Select Sector SPDR XLP July 15
Home Depot, Inc. HD July 15
Costco Wholesale Corp. COST July 15
Air Products & Chemicals, Inc. APD July 14
Consumer Discretionary Select Sector SPDR XLY July 13
SunPower Corp. SPWR July 13
Walmart, Inc. WMT July 8
Big Lots, Inc. BIG July 1
Tandem Diabetes Care, Inc. TNDM July 1
Dell Technologies, Inc. DELL June 30
Danaher Corp. DHR June 24
RH RH June 24
Lowe’s Companies LOW June 19
Fiverr International, Ltd. FVRR June 19
Etsy, Inc. ETSY June 17
HubSpot, Inc. HUBS June 8
Square, Inc. SQ June 8
United Parcel Service, Inc. UPS June 5
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
Agilent Technologies, Inc. A May 15
Qualcomm, Inc. QCOM May 12
Salesforce.com, Inc. CRM May 8
Facebook, Inc. FB May 7
Spotify Technology S.A. SPOT May 5
Dollar General Corp. DG Apr. 28
ServiceNow, Inc. NOW Apr. 27
Five9, Inc. FIVN Apr. 24
Chewy, Inc. CHWY Apr. 24
Tesla, Inc. TSLA Apr. 23
VanEck Vectors Semiconductor ETF SMH Apr. 17
Veeva Systems, Inc. VEEV Apr. 17
Okta, Inc. OKTA Apr. 16
Target Corp. TGT Apr. 16
Invesco QQQ Trust QQQ Apr. 14
DocuSign, Inc. DOCU Apr. 3
Zscaler, Inc. ZS Apr. 3
Apple, Inc. AAPL Mar. 27
Nvidia Corp. NVDA Mar. 27
Zoom Video Communications, Inc. ZM Mar. 19
iShares MSCI Emerging Markets ETF EEM Mar. 19
SPDR Gold Shares ETF GLD Jan. 2
Microsoft Corp. MSFT Feb. 22
* Click each symbol for current chart.
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