Charting shaky technical tests, U.S. benchmarks maintain key support
U.S. stocks are higher early Monday, rising to start February in the wake of a respectable market downdraft.
Against this backdrop, each big three U.S. benchmark has registered a shaky — but apparently successful — retest of its next notable support. The session close will likely add color.
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 concluded January with a respectable downturn from record highs.
The monthly close (3,714) registered slightly under the 50-day moving average, currently 3,718, and major support (3,723) detailed repeatedly.
Monday’s early upturn punctuates a shaky turn-of-the-month retest.
Meanwhile, the Dow Jones Industrial Average
has violated major support.
The specific area broadly spans from 30,283 to 30,324, levels matching the December gap and the 50-day moving average. The pending retest from underneath will likely add color.
Delving deeper, the Dow has initially maintained last-ditch support matching the mid-November range top (29,964), detailed repeatedly.
Both areas are also illustrated on the daily chart.
Against this backdrop, the Nasdaq Composite
remains the strongest major benchmark.
Nonetheless, the index has violated its breakout point (13,220) to punctuate a failed test of gap resistance (13,329) from underneath.
The downturn has been underpinned by deeper support matching the 2020 peak (12,973) detailed previously.
Here again, both areas are also illustrated on the daily chart below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has violated first support (13,220) for the first time since November.
The downturn also punctuates its first closing violation of the 20-day moving average, currently 13,190, for the first time since Nov. 3.
On a positive note, the Nasdaq has successfully tested next support matching the 2020 peak (12,973). Last week’s low (12,985) registered nominally higher.
Delving deeper, the 50-day moving average, currently 12,747, is followed by a former breakout point (12,607). An eventual violation would mark a material “lower low” likely raising an intermediate-term caution flag.
Looking elsewhere, the Dow Jones Industrial Average concluded January with the most technically damaging downturn.
Recall that the index has violated major support — the 30,283-to-30,324 area — levels matching the December gap and the 50-day moving average.
This marks the first close under the 50-day moving average — a widely-tracked intermediate-term trending indicator — since early-November.
Also recall that likely last-ditch support matches the mid-November range top (29,964), detailed repeatedly.
The January close (29,982) registered about 18 points above support.
To reiterate, an eventual violation of this area would mark a material “lower low” — combined with violation of the 50-day moving average — raising an intermediate-term caution flag.
Meanwhile, the S&P 500 has pulled in to a shaky retest of major support.
Recall that the January close (3,714) registered slightly under the 50-day moving average, currently 3,718, and a notable floor in the 3,723-to-3,726 area.
The bigger picture
As detailed above, the major U.S. benchmarks concluded January with a respectable market downturn.
The pullback places the S&P 500 and Dow industrials in slightly negative year-to-date territory, while the Nasdaq Composite has preserved a nominal year-to-date gain.
On a more technical note, each index has effectively maintained its next notable floor.
Specifically, the Nasdaq Composite has maintained the 2020 peak (12,973), the Dow Jones Industrial Average has maintained its former breakout point (29,964) and the S&P 500 seems to have weathered a shaky test of its 50-day moving average — at least on the initial test.
Each benchmark’s intermediate-term bias remains bullish, based on today’s backdrop.
Moving to the small-caps, the iShares Russell 2000 ETF
has pulled in from recent record highs amid increased volume.
Tactically, the post-breakout low (204.66) is followed by the breakout point (201.20).
Last week’s low (204.84) registered slightly above the former.
Meanwhile, the SPDR S&P MidCap 400 ETF
has pulled in more aggressively.
Tactically, the former range bottom (434.40) remains an overhead inflection point.
Conversely, the 50-day moving average, currently 420.60, is rising toward the breakout point (425.30).
Looking elsewhere, the SPDR Trust S&P 500
has challenged major support amid a sustained volume increase.
Recall that the specific area spans from about 371.00 to 371.10, levels matching the former range top and the 50-day moving average.
The January close (370.07) registered slightly under support amid an extended retest.
Separately, and importantly, the late-January downturn registered amid conspicuously tame market breadth — selling pressure inconsistent with a major trend shift.
Placing a finer point on the S&P 500, the late-January downdraft has placed major support in play.
Specific levels match the 50-day moving average, currently 3,718, and a notable floor in the 3,723-to-3,726 area.
Monday’s early upturn punctuates a shaky, but potentially successful turn-of-the-month retest. As always, it’s the session close that matters.
Tactically, a swift reversal atop the former range bottom (3,750) would place the brakes on recent bearish momentum. A retest from underneath is currently underway.
Widening to the six-month view illustrates the prevailing test of major support.
To reiterate, Monday’s early upturn punctuates a potentially successful test of the 50-day moving average.
Delving deeper, the post-breakout low (3,662) — also the January low — is closely followed by major support at 3,646. (Recall the November peak (3,645.99) and early-December gap (3,645.87) closely matched.)
This area likely marks last-ditch support. A closing violation would raise an intermediate-term caution flag.
Beyond technical levels, it’s not just what a benchmark does, it’s how it does it.
The S&P 500 has thus far registered a respectable pullback fueled by internally lukewarm selling pressure. Separately, the U.S. sub-sector backdrop remains bullish-leaning amid successful tests, partly detailed in the next section.
Monday’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.
Revisiting the traditional sector leaders: Backdrop bends, but has not cracked
Drilling down further, the U.S. sub-sector backdrop has softened amid recent selling pressure, though true technical damage remains limited, in the broad sweep. Quickly reconsider the traditional sector leaders — the technology sector, financials and transports.
To start, the PowerShares QQQ Trust
— a large-cap technology sector proxy — tracks the Nasdaq 100 Index.
As illustrated, the shares extended a pullback to conclude January, edging under trendline support closely matching the breakout point (315.30).
Despite the slight violation — amid increased volume — the downturn does not yet scream “raging bear.”
Tactically, the 50-day moving average, currently 309.50, is followed by an inflection point matching the September peak (303.50). Follow-through under these areas would raise a caution flag.
Meanwhile, the Financial Select Sector SPDR
has staged an extended test of notable support. (Yield = 2.2%.)
The specific area — detailed Tuesday — matches the 50-day moving average, currently 29.23, and the former range top, circa 29.00.
The January close (28.95) registered fractionally under support amid a retest that remains in play. Tactically, material follow-through under this area would raise an intermediate-term caution flag.
Conversely, a rally atop gap resistance (29.77) would place the group on firmer technical ground.
Against this backdrop, the iShares Transportation Average ETF
has registered the most aggressive downturn of the trio.
In the process, the group has placed distance under its former breakout point (226.50) and the 50-day moving average, currently 222.40.
Still, consider that Friday’s session low (212.80) precisely matched major support, detailed last week — the 212.80-to-214.50 area.
To reiterate, an eventual violation would mark a material “lower low” raising an intermediate-term caution flag.
Moving to specific names, Avis Budget Group, Inc.
is a well positioned mid-cap name.
Late last month, the shares knifed to 11-month highs, clearing well-defined resistance.
The subsequent pullback has been fueled by decreased volume, placing the shares near the breakout point (40.10) and 7.0% under the January closing peak. A sustained posture atop the breakout point signals a comfortably bullish bias.
Initially profiled Oct. 15, Ford Motor Co. has returned 38.2% and remains well positioned.
Technically, the shares have recently staged a strong-volume spike, knifing sharply higher after an analyst upgrade. (The upturn tagged a 30-month peak, to the decimal, a level matching the mid-2018 peak (12.15). See the three-year chart.)
More immediately, the prevailing pullback has been fueled by decreased volume, placing the shares 9.5% under the January closing peak. Tactically, a sustained posture atop support, circa 10.15, signals a bullish near-term bias.
Note that the company’s quarterly results are due out Feb. 4.
Finally, Netgear, Inc. is a well positioned mid-cap networking equipment name.
As illustrated, the shares are digesting a recent strong-volume spike to two-year highs. The prevailing downturn places the shares 9.3% under the January closing peak.
More broadly, the shares are well positioned on the three-year chart, rising from a continuation pattern hinged to a massive head-and-shoulders bottom.
Note that the company’s quarterly results are due out Feb. 3.
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|
|Capital One Financial Corp.||COF||Jan. 29|
|NetApp, Inc.||NTAP||Jan. 29|
|Aptiv, plc||APTV||Jan. 29|
|Rio Tinto Group||RIO||Jan. 26|
|Sorrento Therapeutics, Inc.||SRNE||Jan. 26|
|Netflix, Inc.||NFLX||Jan. 25|
|Cummins, Inc.||CMI||Jan. 25|
|Invesco Solar ETF||TAN||Jan. 22|
|Magna International, Inc.||MGA||Jan. 22|
|M.D.C. Holdings, Inc.||MDC||Jan. 22|
|Electronic Arts, Inc.||EA||Jan. 21|
|Zebra Technologies Corp.||ZBRA||Jan. 14|
|Juniper Networks, Inc.||JNPR||Jan. 14|
|Chegg, Inc.||CHGG||Jan. 11|
|Macy’s, Inc.||M||Jan. 11|
|Nexstar Media Group, Inc.||NXST||Jan. 11|
|iShares Transportation Average ETF||IYT||Jan. 11|
|Energy Select Sector SPDR||XLE||Jan. 8|
|Teledoc Health, Inc.||TDOC||Jan. 8|
|Skyworks Solutions, Inc.||SWKS||Jan. 7|
|Financial Select Sector SPDR||XLF||Jan. 7|
|FireEye, Inc.||FEYE||Jan. 5|
|Check Point Software Technologies||CHKP||Jan. 4|
|Synaptics, Inc.||SYNA||Jan. 4|
|Sunrun, Inc.||RUN||Dec. 23|
|ShockWave Medical, Inc.||SWAV||Dec. 23|
|JPMorgan Chase & Co.||JPM||Dec. 22|
|Ballard Power Systems, Inc.||BLDP||Dec. 21|
|LivePerson, Inc.||LPSN||Dec. 21|
|United Therapeutics Corp.||UTHR||Dec. 21|
|Shopify, Inc.||SHOP||Dec. 18|
|CyberArk Software Ltd.||CYBR||Dec. 18|
|Calix, Inc.||CALX||Dec. 17|
|Elastic N.V.||ESTC||Dec. 17|
|Cerner Corp.||CERN||Dec. 17|
|Tenet Healthcare Corp.||THC||Dec. 16|
|Williams-Sonoma, Inc.||WSM||Dec. 15|
|iShares Nasdaq Biotechnology ETF||IBB||Dec. 15|
|SDPR S&P Regional Banking ETF||KRE||Dec. 14|
|Etsy, Inc.||ETSY||Dec. 14|
|Plug Power, Inc.||PLUG||Dec. 9|
|F5 Networks, Inc.||FFIV||Dec. 8|
|Emerson Electric Co.||EMR||Dec. 8|
|Zscaler, Inc.||ZS||Dec. 7|
|Fortinet, Inc.||FTNT||Dec. 7|
|Kulicke and Soffa Industries, Inc.||KLIC||Dec. 7|
|Dillard’s, Inc.||DDS||Dec. 4|
|Spotify Technology S.A.||SPOT||Dec. 3|
|Valero Energy Corp.||VLO||Dec. 3|
|Analog Devices, Inc.||ADI||Dec. 2|
|Cirrus Logic, Inc.||CRUS||Dec. 1|
|Sonos, Inc.||SONO||Dec. 1|
|American Airlines Group, Inc.||(AAL)||Nov. 30|
|Zillow Group, Inc.||ZG||Nov. 23|
|Bank of America Corp.||(BA)C||Nov. 20|
|SPDR S&P Oil & Gas Exploration and Production ETF||XOP||Nov. 20|
|MetLife, Inc.||MET||Nov. 19|
|Kohl’s Corp.||KSS||Nov. 18|
|Applied Materials, Inc.||AMAT||Nov. 17|
|RingCentral, Inc.||RNG||Nov. 13|
|Regions Financial Corp.||RF||Nov. 13|
|Snap, Inc.||SNAP||Nov. 9|
|Norfolk Southern Corp.||NSC||Nov. 9|
|Communications Services Select Sector SPDR||XLC||Nov. 5|
|Health Care Select Sector SPDR||XLV||Nov. 5|
|Alphabet, Inc.||GOOGL||Nov. 5|
|Keysight Technologies, Inc.||KEYS||Nov. 4|
|Harley-Davidson, Inc.||HOG||Nov. 4|
|8×8, Inc.||EGHT||Nov. 3|
|Exact Sciences Corp.||EXAS||Nov. 2|
|Universal Display Corp.||OLED||Nov. 2|
|Dentsply Sirona, Inc.||XRAY||Oct. 27|
|Maxim Integrated Products, Inc.||MXIM||Oct. 21|
|The Travelers Companies, Inc.||TRV||Oct. 21|
|Micron Technology, Inc.||MU||Oct. 20|
|Vulcan Materials Co.||VMC||Oct. 19|
|ON Semiconductor Corp.||ON||Oct. 16|
|Ford Motor Co.||F||Oct. 15|
|First Solar, Inc.||FSLR||Oct. 13|
|Teradyne, Inc.||TER||Oct. 12|
|SPDR S&P Homebuilders ETF||XHB||Oct. 9|
|Shake Shack, Inc.||SHAK||Oct. 9|
|SPDR S&P Biotech ETF||XBI||Oct. 8|
|Twilio, Inc.||TWLO||Oct. 8|
|Cloudflare, Inc.||NET||Oct. 7|
|RSailPoint Technology Holdings, Inc.||SAIL||Oct. 1|
|Martin Marietta Materials, Inc.||MLM||Sept. 30|
|Abercrombie & Fitch Co.||ANF||Sept. 29|
|Zendesk, Inc.||ZEN||Sept. 23|
|Scientific Games Corp.||SGMS||Sept. 23|
|Crocs, Inc.||CROX||Sept. 14|
|Five Below, Inc.||FIVE||Sept. 10|
|Eastman Chemical Co.||EMN||Sept. 10|
|International Paper Co.||IP||Sept. 3|
|Deere & Co.||DE||Aug. 24|
|Johnson Controls International||JCI||Aug. 21|
|Canadian Solar, Inc.||CSIQ||Aug. 20|
|General Motors Co.||GM||Aug. 20|
|Builders FirstSource, Inc.||BLDR||Aug. 18|
|Enphase Energy, Inc.||ENPH||Aug. 13|
|Freeport McMoRan, Inc.||FCX||Aug. 10|
|Industrial Select Sector SPDR||XLI||Aug. 6|
|Penn National Gaming, Inc.||PENN||July 30|
|SPDR S&P Metals & Mining ETF||XME||July 28|
|iShares MSCI South Korea ETF||EWY||July 28|
|Advanced Micro Devices, Inc.||AMD||July 23|
|Materials Select Sector SPDR||XLB||July 20|
|Caterpillar, Inc.||CAT||July 20|
|Roku, Inc.||ROKU||July 16|
|Consumer Discretionary Select Sector SPDR||XLY||July 13|
|SunPower Corp.||SPWR||July 13|
|Danaher Corp.||DHR||June 24|
|Fiverr International, Ltd.||FVRR||June 19|
|Square, Inc.||SQ||June 8|
|SPDR S&P Retail ETF||XRT||June 3|
|iShares MSCI Japan ETF||EWJ||May 29|
|Synopsis, Inc.||SNPS||May 27|
|Agilent Technologies, Inc.||A||May 15|
|Qualcomm, Inc.||QCOM||May 12|
|Five9, Inc.||FIVN||Apr. 24|
|Chewy, Inc.||CHWY||Apr. 24|
|Tesla, Inc.||(TSLA)||Apr. 23|
|VanEck Vectors Semiconductor ETF||SMH||Apr. 17|
|Okta, Inc.||OKTA||Apr. 16|
|Target Corp.||TGT||Apr. 16|
|Invesco QQQ Trust||QQQ||Apr. 14|
|Apple, Inc.||AAPL||Mar. 27|
|iShares MSCI Emerging Markets ETF||EEM||Mar. 19|
|Microsoft Corp.||(MSFT)||Feb. 22|
|* Click each symbol for current chart.|
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Dow Jones – Charting shaky technical tests, U.S. benchmarks maintain key support