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Charting a successful technical test, S&P 500 nails the breakout point

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Technically speaking, the major U.S. benchmarks continue to digest an October breakout amid still bullish bigger-picture price action.

Against this backdrop, the S&P 500 and Nasdaq Composite have effectively nailed their first significant support — the S&P 3,428 and Nasdaq 11,460 areas — to punctuate a pullback that has thus far inflicted limited damage.

Charting a successful technical test, S&P 500 nails the breakout point 2

Before detailing the U.S. markets’ wider view, the S&P 500’s
SPX,
+1.05%

 hourly chart highlights the past two weeks.

As illustrated, the S&P has weathered its first test of the breakout point (3,428), an area detailed previously.

Monday’s close (3,427) matched support, and Tuesday’s early upturn punctuates a successful retest. Constructive price action.

Tactically, the mid-month gap (3,482) marks notable overhead, a level closely matching consecutive session closes, including the weekly close (3,483).

Charting a successful technical test, S&P 500 nails the breakout point 3

Similarly, the Dow Jones Industrial Average
DJIA,
+0.96%

 has pulled in from its range top.

Tactically, the 2019 close (28,538) has marked an inflection point, a level defining positive year-to-date territory. The Dow has alternated closes lower, and higher, across three straight sessions.

Delving deeper, the 28,000 mark closely matches the 200-day moving average, currently 27,996.

Charting a successful technical test, S&P 500 nails the breakout point 4

Meanwhile, the Nasdaq Composite
COMP,
+0.93%

has maintained its first notable support.

The specific area spans from 11,448 to 11,460, also detailed on the daily chart below.

Monday’s session low (11,454) closely matched support to punctuate a successful retest.

Charting a successful technical test, S&P 500 nails the breakout point 5

Widening the view to six months adds perspective.

On this wider view, the Nasdaq remains in consolidation mode.

As detailed repeatedly, the early-October rally marked a two standard deviation breakout, encompassing consecutive closes atop the 20-day Bollinger bands. The subsequent pullback has filled the gap.

Perhaps more notably, the mid-month downturn has been underpinned by the Nasdaq’s first notable support, circa 11,460. Constructive price action.

Delving deeper, the 50-day moving average, currently 11,270, is closely followed by the breakout point (11,245). The Nasdaq’s intermediate-term bias remains bullish barring a violation.

Charting a successful technical test, S&P 500 nails the breakout point 6

Looking elsewhere, the Dow Jones Industrial Average is digesting a less decisive October breakout.

Against this backdrop, the index has pulled in to its former range. Tactically, the February gap (28,403) remains an inflection point.

Delving deeper, the 50-day moving average, currently 27,996, closely matches the 28,000 mark. A posture atop this area signals a comfortably bullish intermediate-term bias.

Recall that the 50-day moving average (in blue) underpinned the May, June and late-July lows.

Charting a successful technical test, S&P 500 nails the breakout point 7

Meanwhile, the S&P 500 has effectively nailed its first significant support.

To reiterate, Monday’s close (3,427) matched the breakout point (3,428) to punctuate a successful initial retest.

The bigger picture

As detailed above, the major U.S. benchmarks are acting relatively well technically.

On a headline basis, the S&P 500 and Nasdaq Composite have weathered a pullback from one-month highs, effectively nailing their first significant support — the S&P 3,428 and Nasdaq 11,460 areas.

Against this backdrop, each benchmark’s intermediate-term bias remains bullish. The mid-month downturn has inflicted limited damage in the broad sweep.

Charting a successful technical test, S&P 500 nails the breakout point 8

Moving to the small-caps, the iShares Russell 2000 ETF has sustained a break to seven-month highs.

In the process, the small-cap benchmark has registered nine consecutive closes atop its breakout point, circa 159.80.

Charting a successful technical test, S&P 500 nails the breakout point 9

Similarly, the SPDR S&P MidCap 400 ETF is holding seven-month highs.

Here again, notable support matches the breakout point, circa 360.20.

Slightly more broadly, the small- and mid-caps have asserted tandem bull flags, digesting breaks to less-charted territory. Constructive price action.

Charting a successful technical test, S&P 500 nails the breakout point 10

Looking elsewhere, the SPDR Trust S&P 500
SPY,
+1.01%

 is digesting a rally to one-month highs.

The mid-October peak marked the SPY’s third-best close on record, and has been punctuated by a comparably flat downturn.

On a granular note, consider that last week’s rallies (Monday and Friday) registered amid increased volume, and have been punctuated by lighter-volume pullbacks. Constructive price action.

Charting a successful technical test, S&P 500 nails the breakout point 2

Placing a finer point on the S&P 500, the index has nailed its first notable support.

To reiterate, Monday’s close (3,427) matched the breakout point (3,428) to punctuate a successful initial retest.

Separately, recall that the mid-month gap (3,482) marks notable overhead, a level closely matching consecutive session closes, including the weekly close (3,483).

Charting a successful technical test, S&P 500 nails the breakout point 7

More broadly, the S&P 500’s mid-month pullback remains flattish to punctuate an initially sharp two standard deviation breakout, encompassing a single close atop the 20-day Bollinger bands.

The “expected” consolidation phase, or cooling-off period, remains underway.

As detailed repeatedly, the S&P’s first significant support (3,428) is followed by the 50-day moving average, currently 3,403, and the former breakout point (3,393).

Delving deeper, likely last-ditch support (3,328) matches the late-September gap, an area from which the steep October rally originates. The S&P 500’s intermediate-term bias remains bullish barring a violation.

Also see: Bull trend strengthens: S&P 500, Nasdaq clear 20-day volatility bands.

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.

Charting a successful technical test, S&P 500 nails the breakout point 13

Drilling down further, the VanEck Vectors Semiconductor ETF
SMH,
+0.62%

 is acting well technically.

Earlier this month, the group reached record territory, clearing resistance matching the September peak.

The subsequent pullback has been comparably flat, placing the group near the breakout point (184.60) and 2.9% under the October peak.

Delving deeper, the former range top (174.75) closely matches the 50-day moving average, currently 174.90. A sustained posture higher signals a comfortably bullish bias.

Charting a successful technical test, S&P 500 nails the breakout point 14

Moving to specific names, Micron Technology, Inc.
MU,
+2.11%

 is a well positioned large-cap semiconductor name.

Technically, the shares have rallied to the range top, rising to challenge four-month highs. The chart illustrates a head-and-shoulders bottom defined by the late-June, August and October lows.

More immediately, the prevailing upturn punctuates a tight one-week range — amid tandem volume spikes — laying the groundwork for a potential breakout.

Tactically, a near-term floor closely matches gap support, circa 50.80, and is followed by the 200-day moving average, currently 49.15. A breakout attempt is in play barring a violation.

Charting a successful technical test, S&P 500 nails the breakout point 15

Initially profiled Aug. 10, Freeport-McMoRan, Inc.
FCX,
+2.91%

 has returned 19.2% and remains well positioned.

Earlier this month, the shares rallied to the range top, rising to challenge two-year highs on increased volume. The subsequent tight range has formed amid decreased volume, signaling muted selling pressure near resistance.

Tactically, a near-term target projects to the 19.50 area on follow-through. Conversely, trendline support closely tracks the ascending 50-day moving average, currently 15.75. A sustained posture higher signals a bullish bias.

Note that the company’s quarterly results are due out Thursday, Oct. 22.

Charting a successful technical test, S&P 500 nails the breakout point 16

Chegg, Inc.
CHGG,
+1.84%

 is a large-cap provider of online education solutions.

As illustrated, the shares have rallied to press record highs, territory matching the August peak.

Underlying the upturn, Chegg’s relative strength index (not illustrated) has recently notched its best levels since May, improving the chances of eventual follow-through.

Tactically, a near-term floor (81.90) closely matches the former range top and last week’s low. A breakout attempt is in play barring a violation.

Charting a successful technical test, S&P 500 nails the breakout point 17

Finally, Gogo, Inc.
GOGO,
-0.65%

 is a small-cap provider of in-flight connectivity and wireless entertainment services.

The shares initially spiked seven weeks ago, rising after the company announced the sale of its commercial aviation business unit.

The subsequent range is a bullish continuation pattern, positioning the shares to build on the initial strong-volume spike. Tactically, the 20-day moving average, currently 9.95, has underpinned the recent range. The prevailing breakout attempt is intact barring a violation.

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

Atlassian Corp.

TEAM

Oct. 19

Vulcan Materials Co.

VMC

Oct. 19

iRobot Corp.

IRBT

Oct. 19

Utilities Select Sector SPDR

XLU

Oct. 19

Northern Trust Co.

NTRS

Oct. 16

XPO Logistics, Inc.

XPO

Oct. 16

ON Semiconductor Corp.

ON

Oct. 16

Ford Motor Co.

F

Oct. 15

Texas Instruments, Inc.

TXN

Oct. 15

Skyworks Solutions, Inc.

SWKS

Oct. 14

International Business Machines Corp.

IBM

Oct. 14

CRISPR Therapeutics A.G.

CRSP

Oct. 14

Amazon.com, Inc.

AMZN

Oct. 13

First Solar, Inc.

FSLR

Oct. 13

Nevro Corp.

NVRO

Oct. 12

Teradyne, Inc.

TER

Oct. 12

SPDR S&P Homebuilders ETF

XHB

Oct. 9

Broadcom, Inc.

AVGO

Oct. 9

STMicroelectronics N.V.

STM

Oct. 9

Shake Shack, Inc.

SHAK

Oct. 9

SPDR S&P Biotech ETF

XBI

Oct. 8

Alexion Pharmaceuticals, Inc.

ALXN

Oct. 8

Twilio, Inc.

TWLO

Oct. 8

Cloudflare, Inc.

NET

Oct. 7

Ceridian HCM Holding, Inc.

CDAY

Oct. 7

Guess, Inc.

GES

Oct. 7

Gap, Inc.

GPS

Oct. 6

Motorola Solutions, Inc.

MSI

Oct. 6

Sunnova Energy International, Inc.

NOVA

Oct. 6

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

SailPoint Technology Holdings, Inc.

SAIL

Oct. 1

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

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

Industrial Select Sector SPDR

XLI

Aug. 6

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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