Though U.S. stocks are starting the third quarter amid recently increased volatility, the S&P 500’s summer price action remains firmly technical.
On a headline basis, the S&P is traversing a well-defined range, capped by resistance matching the breakdown point (2,742), and underpinned by familiar support at the 2017 peak (2,695).
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 reached a lower plateau, and is traversing the range. Resistance matches the breakdown point (2,742), a level that capped the index last week.
Conversely, the June low (2,692), established last week, closely matched significant support at the 2017 peak (2,695).
True to recent form, the Dow industrials’ backdrop remains comparably weaker.
In fact, the blue-chip benchmark has notched six straight closes under the 200-day moving average, currently 24,345.
Also recall that the June low, established Thursday, registered nominally under the 24,000 mark.
Meanwhile, the Nasdaq Composite remains the strongest big three U.S. benchmark.
Still, the index violated major support (7,637) to start last week, and is digesting the downturn.
Conversely, the Nasdaq has established support closely matching the 50-day moving average.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has pulled in from record territory, and is traversing a lower plateau.
Notable support spans from about 7,450 to 7,474, levels matching the 50-day moving average and the March gap. The Nasdaq’s intermediate- to longer-term bias remains bullish barring a violation.
Looking elsewhere, the Dow industrials’ backdrop is strikingly softer.
To reiterate, the index has registered six straight closes under the 200-day moving average, currently 24.345, a widely-tracked longer-term trending indicator. This marks the first consecutive closes under the 200-day since March 2016.
Moreover, the Dow has notched a “lower low” versus the late-May low (24,247) also consistent with a trend shift.
Tactically, the 50-day moving average, currently 24,615, is followed by firmer overhead matching the 2017 close. An eventual close higher would place the index on firmer technical ground.
Meanwhile, the S&P 500 remains comparably resilient amid technical price action.
To reiterate, the prevailing range bottom (2,692) has closely matched support at the 2017 peak (2,695).
Conversely, the S&P’s breakdown point (2,742) defines the prevailing range top. Within the range, the 50-day moving average, currently 2,719.7, remains an inflection point, a level also matching the June close (2,718).
The bigger picture
Collectively, the U.S. benchmarks’ bigger-picture backdrop is not one-size-fits-all.
For instance, the Dow industrials have violated the 200-day moving average — notching six straight closes lower — while the Nasdaq Composite has staged a closer to garden-variety pullback from all-time highs.
Moving to the small-caps, the iShares Russell 2000 ETF
remains the strongest widely-tracked U.S. benchmark.
The late-June downturn registered as orderly, and has been underpinned by the 50-day moving average, currently 162.20.
Meanwhile, the S&P MidCap 400 has pulled in to its former range from record territory.
Tactically, the 50-day moving average, currently 354.55, is followed by major support (349.75) matching the April closing peak and the post-breakout low.
Looking elsewhere, the SPDR Trust S&P 500 is also digesting the late-June downturn.
Tactically, support spans from about 268.50 to 268.90, levels matching the June low, established last week, and the March gap.
Conversely, notable resistance spans from 273.87 to 274.25, levels matching last week’s high and the breakdown point.
Amid the cross currents, the S&P 500’s summer price action remains firmly technical.
As illustrated, gap resistance (2,742.9) — established to start last week — closely matched the S&P’s breakdown point, defined by the May peak (2,742.2). This area capped two subsequent retests.
Meanwhile, the S&P’s 50-day moving average, currently 2,719, effectively bisects the range, and matched the June close (2,718.4).
Delving deeper, recall that important S&P 500 support broadly spans from 2,673 to 2,695, levels matching the 2017 close and the 2017 peak. The 200-day moving average, currently 2,671, is rising toward support.
Against this backdrop, a consolidation phase remains underway to start the third quarter, though the S&P 500’s intermediate- to longer-term bias remains bullish barring a violation of the 2,673 support. The response to the Federal Reserve’s meeting minutes, due out Thursday, and Friday’s monthly U.S. jobs report, may add color.
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
has taken flight, reaching 32-month highs. The fund tracks the price of West Texas Intermediate (WTI) light, sweet crude oil.
The shares initially gapped higher two weeks ago, rising after OPEC’s Vienna meeting concluded with a smaller-than-expected production increase.
The rally has followed through after last week’s bullish inventory data, signaling a 9.2 million drop in crude supplies, and as the U.S. has instructed countries to cut Iran oil imports to zero by November.
Technically, the shares have extended the break atop trendline resistance, rising to less-charted territory.
More broadly, the shares have cleared the 200-week moving average (14.10) — illustrated on the three-year chart — also consistent with a bullish longer-term trend shift. Significant support spans from about 14.50 to 14.70, levels matching the top of the June gap and the breakout point.
Moving to U.S. sectors, the transports
have turned lower, pressured partly amid surging oil prices.
Recent weakness has been fueled by a sustained volume increase, placing the 200-day moving average, currently 186.40, under siege.
Underlying the downturn, the transports’ relative strength index (not illustrated) has recently registered five-month lows, improving the chances of eventual downside follow-through. Deeper support matches the range bottom, circa 181.50.
Conversely, a close atop resistance roughly matching the 50-day moving average would place the brakes on bearish momentum.
Looking elsewhere, the Utilities Select Sector SPDR
is showing signs of life. (Yield = 3.4%.)
Easing Treasury yields, detailed last week, have contributed to the rate-sensitive sector’s resurgence. (For instance, the 30-year Treasury note yield continues to challenge its 200-day moving average.)
Technically, the XLU has edged atop the 200-day moving average, reaching six-month highs. The breakout point pivots to support (51.80) and the group’s recovery attempt is intact barring a violation.
Moving to specific names, Silicon Motion Technology Corp.
is a mid-cap Hong Kong-based semiconductor name positioned to rise.
The shares initially spiked two weeks ago, knifing atop well-defined resistance after a positive research note.
The subsequent flag is a continuation pattern, positioning the shares to build on the June rally. Tactically, a near-term floor (51.70) is followed by the breakout point, and the recovery attempt is intact barring a violation.
is a well positioned large-cap REIT. (Yield = 3.1%.)
As illustrated, the shares are challenging well-defined overhead matching six-month highs.
The upturn comes from a tight range — underpinned by the 200-day moving average — laying the groundwork for potentially decisive upside follow-through. A breakout attempt is in play barring a violation of the 200-day, currently 36.35.
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.
Public since August 2016, At Home Group, Inc.
is a mid-cap specialty retailer positioned to rise.
Late last month, the shares gapped to record territory, rising after an analyst upgrade.
The subsequent pullback has been flat, positioning the shares to build on the tandem June spikes. Tactically, trendline support closely matches the May range top (37.50), and the uptrend is intact barring a violation.
Initially profiled Jan. 11, Arrowhead Pharmaceuticals, Inc.
has returned 195% and remains well positioned.
As illustrated, the shares staged a strong-volume mid-June breakout, reaching three-year highs after the company reported positive news for its genetic liver disease treatment.
The subsequent flag pattern has been punctuated by July follow-through. Tactically, the breakout point (14.00) is followed by the former range bottom (12,90) and a posture higher supports 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.
|FleetCor Technologies, Inc.||FLT||July 2|
|Tandem Diabetes Care, Inc.||TNDM||July 2|
|Diamond Offshore Drilling, Inc.||DO||July 2|
|Oceaneering International, Inc.||OII||June 29|
|PTC, Inc.||PTC||June 29|
|Puma Biotechnology, Inc.||PBYI||June 29|
|NII Holdings, Inc.||NIHD||June 29|
|Cirrus Logic, Inc.||CRUS||June 27|
|BioMarin Pharmaceutical, Inc.||BMRN||June 27|
|Canada Goose Holdings, Inc.||GOOS||June 27|
|Church & Dwight Co., Inc.||CHD||June 27|
|iRobot Corp.||IRBT||June 25|
|CF Industries Holdings, Inc.||CF||June 25|
|Marathon Oil Corp.||MRO||June 25|
|Procter & Gamble Co.||PG||June 22|
|Semtech Corp.||SMTC||June 22|
|Lands’ End, Inc.||LE||June 21|
|Endeavor Silver Corp.||EXK||June 21|
|Merck & Co., Inc.||MRK||June 21|
|Williams-Sonoma, Inc.||WSM||June 20|
|Spark Therapeutics, Inc.||ONCE||June 20|
|Vishay Intertechnology, Inc.||VSH||June 18|
|Dillard’s, Inc.||DDS||June 18|
|Alphabet, Inc.||GOOGL||June 15|
|Pepsico, Inc.||PEP||June 14|
|Glu Mobile, Inc.||GLUU||June 14|
|Mosaic Co.||MOS||June 13|
|Consumer Staples Select Sector SPDR||XLP||June 13|
|Roku, Inc.||ROKU||June 12|
|Analog Devices, Inc.||ADI||June 12|
|Viking Therapeutics, Inc.||VKTX||June 12|
|Medicines Co.||MDCO||June 11|
|Health Care Select Sector SPDR||XLV||June 8|
|Monster Beverage Corp.||MNST||June 7|
|Tesla, Inc.||TSLA||June 7|
|VMWare, Inc.||VMW||June 6|
|SPDR S&P Biotech ETF||XBI||June 5|
|Twitter, Inc.||TWTR||June 5|
|Kohl’s Corp.||KSS||June 5|
|Pan American Silver Corp.||PAAS||May 25|
|Immunomedics, Inc.||IMMU||May 24|
|Supernus Pharmaceuticals, Inc.||SUPN||May 23|
|Electronic Arts, Inc.||EA||May 22|
|Momo, Inc.||MOMO||May 22|
|Union Pacific Corp.||UNP||May 21|
|Twilio, Inc.||TWLO||May 21|
|Intercept Pharmaceuticals, Inc.||ICPT||May 21|
|Energy Select Sector SDPR||XLE||May 18|
|Range Resources Corp.||RRC||May 17|
|SPDR S&P Metals & Mining ETF||XME||May 17|
|SPDR S&P Retail ETF||XRT||May 15|
|Lowe’s Companies, Inc.||LOW||May 14|
|Texas Instruments, Inc.||TXN||May 11|
|PowerShares QQQ Trust||QQQ||May 10|
|Facebook, Inc.||FB||May 9|
|Electronics for Imaging, Inc.||EFII||May 9|
|SPDR S&P Oil and Gas Exploration & Production ETF||XOP||May 9|
|Coupa Software, Inc.||COUP||May 8|
|Apple, Inc.||AAPL||May 7|
|PDC Energy, Inc.||PDCE||May 7|
|Under Armour, Inc.||UA||May 2|
|Norfolk Southern Corp.||NSC||May 2|
|Advanced Micro Devices, Inc.||AMD||May 1|
|UnitedHealth Group, Inc.||UNH||Apr. 30|
|Nike, Inc.||NKE||Apr. 30|
|DSW, Inc.||DSW||Apr. 30|
|Home Depot, Inc.||HD||Apr. 27|
|Noble Energy, Inc.||NBL||Apr. 27|
|Costco Wholesale Corp.||COST||Apr. 26|
|CSX Corp.||CSX||Apr. 26|
|Applied Optoelectronics, Inc.||AAOI||Apr. 19|
|Chipotle Mexican Grill, Inc.||CMG||Apr. 19|
|Wingstop, Inc.||WING||Apr. 19|
|F5 Networks, Inc.||FFIV||Apr. 18|
|EOG Resources, Inc.||EOG||Apr. 11|
|Autodesk, Inc.||ADSK||Apr. 10|
|NetApp, Inc.||NTAP||Apr. 9|
|Whiting Petroleum Corp.||WLL||Mar. 22|
|Domino’s Pizza, Inc.||DPZ||Mar. 21|
|Veeva Systems, Inc.||VEEV||Mar. 15|
|Burlington Stores, Inc.||BURL||Mar. 14|
|Baozun, Inc.||BZUN||Mar. 9|
|AxoGen, Inc.||AXGN||Mar. 8|
|TJX Companies, Inc.||TJX||Mar. 6|
|Chart Industries, Inc.||GTLS||Mar. 6|
|Macy’s, Inc.||M||Mar. 5|
|Five9, Inc.||FIVN||Mar. 5|
|LivePerson, Inc.||LPSN||Feb. 28|
|VeriSign, Inc.||VRSN||Feb. 26|
|Shutterfly, Inc.||SFLY||Feb. 22|
|ServiceNow, Inc.||NOW||Feb. 21|
|Palo Alto Networks, Inc.||PANW||Feb. 16|
|Adobe Systems, Inc.||ADBE||Feb. 16|
|Salesforce.com, Inc.||CRM||Feb. 12|
|Fortinet, Inc.||FTNT||Jan 19|
|Arrowhead Pharmaceuticals Corp.||ARWR||Jan. 11|
|Sarepta Therapeutics, Inc.||SRPT||Jan. 3|
|MSCI, Inc.||MSCI||Nov. 20|
|Motorola Solutions, Inc.||MSI||Nov. 14|
|Lululemon Athletica, Inc.||LULU||Oct. 24|
|HubSpot, Inc.||HUBS||Oct. 4|
|XPO Logistics, Inc.||XPO||Oct. 2|
|Nvidia Corp.||NVDA||Sept. 27|
|Bottomline Technologies, Inc.||EPAY||July 13|
|GrubHub, Inc.||GRUB||May 4|
|Square, Inc.||SQ||Mar. 3|
|Netflix, Inc.||NFLX||Oct. 4|
|Microsoft Corp.||MSFT||Aug. 5|