S and P 500 – Charting market cross currents, S&P 500 pulls in to the range
U.S. stocks are lower early Wednesday, pressured as the latest economic data fuel the debate regarding potential pending inflation.
Against this backdrop, each big three U.S. benchmark has reversed from Tuesday’s record high, pulling in to its former range amid largely garden-variety selling pressure.
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 tagged its latest record high Tuesday.
The index has pulled back in to its former range early Wednesday. Tactically, the range bottom (3,885) is followed by the firmer breakout point (3,270).
Meanwhile, the Dow Jones Industrial Average
continues to register bullish, but comparably sluggish, price action.
As illustrated, the index remains range-bound despite briefly tagging record highs.
Tactically, the 31,236-to-31,272 area marks a familiar floor.
Against this backdrop, the Nasdaq Composite
has also registered a false breakout of sorts.
Here again, the index has pulled in to its range after briefly tagging its latest record high.
Recall that a near-term target projects from the January range to the 14,200 area. The week-to-date peak (14,175) has registered in the vicinity.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq remains in consolidation mode.
Tactically, the breakout point (13,729) marks its first notable floor and is followed by the early-February gap (13,535).
Delving deeper, the former breakout point (13,208) is followed by the ascending 50-day moving average, currently 13,145.
Meanwhile, likely last-ditch support spans from 12,973 to 12,985, levels matching the 2020 peak and the late-January low. The Nasdaq’s intermediate-term bias remains bullish barring a violation.
Looking elsewhere, the Dow Jones Industrial Average has registered a less decisive, but still grinding-higher, breakout.
Tactically, the breakout point pivots to support — the 31,236-to-31,272 area — and is followed by the 50-day moving average, currently 30,662.
Delving deeper, the prevailing upturn originates from an area that continues to mark likely last-ditch support (29,964).
Meanwhile, the S&P 500 continues to digest a respectable February breakout.
Recall that its first notable floor matches the breakout point (3,870) an area also detailed on the hourly chart.
The bigger picture
As partly detailed above, the bigger-picture backdrop remains broadly constructive.
On a headline basis, each big three U.S. benchmark briefly tagged record highs Tuesday, and has since pulled in to its former range.
Though the prevailing downturns punctuate a false breakout, the subsequent downside follow-through has been muted as it applies to the S&P 500 and Dow industrials. (The Nasdaq Composite has registered more respectable selling pressure, though as always, one day rarely alters a trend.)
Each benchmark’s intermediate-term bias remains bullish, based on today’s backdrop.
Moving to the small-caps, the iShares Russell 2000 ETF
continues to digest the most decisive February breakout.
Recall that the early-month spike marked a two standard deviation breakout, likely laying the groundwork for longer-term follow-through.
Tactically, the breakout point (216.70) closely matches trendline support.
Meanwhile, the SPDR S&P MidCap 400 ETF
has slightly extended a less decisive breakout.
Tactically, gap support, circa 453.10, is closely followed by the breakout point (451.50).
Delving deeper, the prevailing upturn originates from support (425.30) closely matching the 2020 peak.
Looking elsewhere, the SPDR Trust S&P 500
continues to consolidate in grinding-higher form.
Recall that the prevailing upturn originates from major support closely matching the 50-day moving average.
Placing a finer point on the S&P 500, the index is acting well technically.
To reiterate, the range bottom (3,885) is closely followed by the firmer breakout point (3,270).
Widening to the six-month view, the ascending 50-day moving average, currently 3,780, is followed by the former range bottom (3,750).
Delving deeper, likely last-ditch support points match the December gap (3,723) and late-January low (3,694).
As detailed repeatedly, an eventual violation of these areas would mark a material “lower low” likely raising a technical caution flag.
Beyond technical levels, the S&P 500’s prevailing uptrend remains firmly-grounded, and its intermediate-term bias remains comfortably bullish.
Wednesday’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.
Charting the reflation trade as risk-on sentiment persists
Drilling down further, the 10-year Treasury note yield
has registered what is likely this week’s most technically consequential price action.
Specifically, the yield has extended its 2021 breakout, reaching nearly 52-week highs, the highest level since Feb. 26, 2020.
The prevailing upturn originates from gap support (1.00) almost precisely matching the marquee 1.00% mark.
More immediately, the prevailing upturn places major resistance under siege. Consider that the yield’s breakdown point matches the 2016 low (1.34), detailed on the five-year chart.
The week-to-date peak (1.33) has registered nearby. A retest remains underway.
Separately, the prevailing breakout confirms the yield’s late-2020 uptrend, detailed previously. (Also see the Jan. 6 review.)
Meanwhile,the United States Oil Fund
has extended its February breakout, knifing to 10-month highs. The fund tracks daily changes in the spot price of light, sweet crude oil.
As illustrated, the prevailing upturn punctuates a tight range underpinned by trendline support.
Delving deeper, the 50-day moving average has marked an inflection point — (see the September through November price action) — and is rising toward the breakout point (36.30). A sustained posture atop these areas signals a bullish intermediate-term bias.
More broadly, rising oil prices and interest rates (yields) would conventionally present a broad-market headwind amid inflationary concerns.
Against the current backdrop, the price action is likely still consistent with a reflation trade, an expected return toward pre-virus economic conditions.
Fundamentally, the producer-price index (PPI) — a measure of wholesale price inflation, released Wednesday morning — rose 1.3% in January, its largest increase on record going back to 2009. This marks the latest data point amid the inflation/reflation debate. Are prices rising for the right reasons (healthy economic growth), or the wrong reasons (unhealthy inflation)?
Safe-haven assets turn lower
Looking elsewhere, safe-haven assets have turned lower amid recent market cross currents.
To start, the SPDR Gold Shares ETF
has pressed a year-to-date low, pressured amid a volume spike.
The prevailing downturn punctuates recent failed tests of trendline resistance and the 200-day moving average.
Also consider that a death cross — or bearish 50-day/200-day moving average crossover— has signaled early Wednesday.
Tactically, an eventual close atop the breakdown point (173.60) and the major moving averages would place the brakes on bearish momentum.
Fundamentally, gold is a non-interest-bearing asset, and can be pressured amid a rising-yield backdrop.
Meanwhile, the Invesco CurrencyShares Japanese Yen ETF
has violated its 200-day moving average, reaching four-month lows.
The downturn punctuates a “lower low” confirming the yen’s late-January trend shift.
Combined, the Japanese yen and gold are conventional flight-to-safety assets. The week-to-date downturns are consistent with a prevailing risk-on trade.
Against this backdrop, the U.S. dollar has asserted a holding pattern, of sorts, as it applies to the very near-term backdrop.
As illustrated, the Invesco U.S. Dollar Bullish Index has recently topped under its breakdown point, pulling in to hug the 50-day moving average.
Fundamentally, competing cross currents have likely driven the U.S. dollar stalemate.
Rising Treasury yields conventionally make the U.S. dollar more attractive versus competing currencies, sending the dollar higher.
Conversely, aggressive stimulus measures can weigh on the dollar’s value, pressuring it lower.
These tandem forces may be contributing to the dollar’s sluggish backdrop, even amid otherwise pronounced moves across asset classes.
Financials break out amid surging Treasury yields
Moving to U.S. sectors, the Financial Select Sector SPDR
has broken out, reaching record territory. (Yield = 2.0%.)
The strong-volume upturn originates from major support, circa 29.00, detailed Tuesday.
Similarly, the SPDR S&P Regional Banking ETF
has broken out, reaching two-year highs.
The prevailing upturn punctuates a successful test of trendline support matching the January gap, detailed previously. (See the Feb. 2 review.)
As always, the banks benefit from rising Treasury yields in the form of an improved rate spread, the difference between the rate at which a bank borrows, and the rate it subsequently lends to customers.
The tandem breakouts punctuate a still constructive U.S. sub-sector backdrop.
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|
|Lyft, Inc.||LYFT||Feb. 16|
|Inphi Corp.||IPHI||Feb. 16|
|Intel Corp.||INTC||Feb. 12|
|KLA Corp.||KLAC||Feb. 12|
|Pinterest, Inc.||PINS||Feb. 12|
|Nvidia Corp.||NVDA||Feb. 11|
|Veeva Systems, Inc.||VEEV||Feb. 11|
|Helmerich & Payne, Inc.||HP||Feb. 11|
|Zoom Video Communications, Inc.||ZM||Feb. 10|
|Hologic, Inc.||HOLX||Feb. 10|
|McDonald’s Corp.||MCD||Feb. 10|
|U.S. Global Jets ETF||JETS||Feb. 9|
|Lowe’s Companies, Inc.||LOW||Feb. 9|
|Motorola Solutions, Inc.||MSI||Feb. 9|
|iShares U.S. Home Construction ETF||ITB||Feb. 8|
|Lennar Corp.||LEN||Feb. 8|
|Nike, Inc.||NKE||Feb. 8|
|Beyond Meat, Inc.||BYND||Feb. 8|
|Cisco Systems, Inc.||CSCO||Feb. 5|
|Datadog, Inc.||DDOG||Feb. 5|
|Appian Corp.||APPN||Feb. 4|
|Diamondback Energy, Inc.||FANG||Feb. 4|
|Gogo, Inc.||GOGO||Feb. 4|
|Wix.com, Ltd.||WIX||Feb. 3|
|CarMax, Inc.||KMX||Feb. 3|
|Toll Brothers, Inc.||TOL||Feb. 2|
|Eagle Materials, Inc.||EXP||Feb. 2|
|Avis Budget Group, Inc.||CAR||Feb. 1|
|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|
|Zebra Technologies Corp.||ZBRA||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|
|Synaptics, Inc.||SYNA||Jan. 4|
|Sunrun, Inc.||RUN||Dec. 23|
|ShockWave Medical, Inc.||SWAV||Dec. 23|
|JPMorgan Chase & Co.||JPM||Dec. 22|
|LivePerson, Inc.||LPSN||Dec. 21|
|United Therapeutics Corp.||UTHR||Dec. 21|
|Shopify, Inc.||SHOP||Dec. 18|
|Calix, Inc.||CALX||Dec. 17|
|Elastic N.V.||ESTC||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|
|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|
|Sonos, Inc.||SONO||Dec. 1|
|American Airlines Group, Inc.||AAL||Nov. 30|
|Zillow Group, Inc.||ZG||Nov. 23|
|Bank of America Corp.||BAC||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|
|8×8, Inc.||EGHT||Nov. 3|
|Exact Sciences Corp.||EXAS||Nov. 2|
|Universal Display Corp.||OLED||Nov. 2|
|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|
|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|
|SailPoint 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|
|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|
|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.|
S and P 500 – Charting market cross currents, S&P 500 pulls in to the range
Tags: S and P 500, S&P 500