The Technical Indicator: Bull trend intact: S&P 500 retests the breakdown point


Technically speaking, the U.S. benchmarks’ bigger-picture backdrop remains bullish, on balance, though amid persistently uneven March price action.

On a headline basis, the S&P 500 and Dow industrials are digesting recent rallies to record territory, while the Nasdaq Composite remains range-bound as it continues to lag behind.

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 weathered a jagged test of familiar support (3,915).

Last week’s close (3,913) and Monday’s session low (3,914) registered nearby to punctuate a relatively tame mid-month pullback.

More immediately, a retest of the breakdown point (3,950) remains underway. Tuesday’s early session high (3,949) has matched resistance.

Similarly, the Dow Jones Industrial Average

 has pulled in from last week’s record high.

Tactically, the 32,500 area has underpinned the downturn. Deeper support matches the Feb. peak (32,009) an area better illustrated on the daily chart.

Separately, the 32,800 area has marked an inflection point across four of the prior five sessions.

True to recent form, the Nasdaq Composite

remains the weakest major U.S. benchmark.

The index topped twice last week near the range top (13,607) and has since pulled in.

Within the range, the 50-day moving average, currently 13,432, marks an overhead inflection point.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq is traversing its former range. Familiar resistance (13,607) has capped the March price action.

Conversely, important support matches the 2020 peak (12,973) and remains a bull-bear fulcrum. The March reversal atop this area encompassed two 7-to-1 up days across a three-session window.

Tactically, the Nasdaq’s backdrop supports a guardedly bullish intermediate-term bias barring a violation of the 2020 peak (12,973).

Looking elsewhere, the Dow Jones Industrial Average is digesting an aggressive March breakout.

The prevailing pullback marks the “expected” consolidation following a sharp two standard deviation breakout, encompassing four straight closes atop the 20-day volatility bands. (See the March 16 review for added detail regarding the bands.)

Tactically, the post-breakout low (32,505) is followed by the breakout point (32,009).

Meanwhile, the S&P 500 has pulled in to its former range amid largely lackluster selling pressure.

Tactically, a retest of the breakdown point (3,950) from underneath is currently underway.

The bigger picture

Collectively, the bigger-picture technicals remain bullish, on balance, though the March backdrop is not one-size-fits-all.

On a headline basis, the S&P 500 and Dow industrials are digesting March rallies to record territory, while the Nasdaq Composite is vying to simply maintain its prevailing range.

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 to its range from all-time highs.

Tactically, the ascending 50-day moving average, currently 220.20, has marked an inflection point.

The small-cap benchmark has not closed under its 50-day moving average since October.

Meanwhile, the SPDR S&P MidCap 400 ETF

 is digesting a more decisive rally to record territory.

An extended retest of the breakout point, circa 470.50, remains underway.

Looking elsewhere, the SPDR Trust S&P 500

 has pulled in to its range, pressured amid increased volume, but lackluster market breadth.

Recall Friday’s quadruple witching contributed to the volume surge.

More broadly, the SPY is traversing a six-week range, punctuated by modest March breaks both higher and lower.

Placing a finer point on the S&P 500, the index has pulled in to its former range.

To reiterate, the 3,915 support — detailed previously — has effectively underpinned the downturn.

Last week’s close (3,913) and Monday’s session low (3,914) registered nearby. Thursday’s close (3,915) also matched support.

Combined, the S&P has yet to close materially under the 3,915 area. The March downturn has inflicted limited damage.

More broadly, the S&P 500’s six-month backdrop remains comfortably bullish.

Tactically, the 50-day moving average, currently 3,867, is rising toward the S&P’s former breakout point (3,870).

Delving deeper, the 3,830 support is followed by a still likely last-ditch floor currently matching the March low (3,723). (See the Feb. 23 review.)

An eventual violation of the March low would mark a material “lower low” — among other issues — likely raising a technical caution flag.

Beyond technical levels, the U.S. sub-sector backdrop remains bullish, and the prevailing uptrend remains firmly-grounded as it applies to the internals. The S&P 500’s intermediate-term path of least resistance continues to point higher.

Also see: Charting rotational breakouts, S&P 500 rallies to record highs.

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 iShares U.S. Home Construction ETF

 is acting well technically.

As illustrated, the group has rallied to the range top, rising to challenge all-time highs.

The prevailing upturn punctuates a successful test of the mid-January breakout point. An intermediate-term target projects to the 72 area on follow-through.

Conversely, a near-term floor matches the former range top (62.85). A breakout attempt is in play barring a violation.

Initially profiled Feb. 12, Dow 30 component Intel Corp.

 has added 6.2% and remains well positioned. (Yield = 2.1%.)

Recall the shares started 2021 with a strong-volume breakout, gapping atop the 200-day moving average after the company appointed a new CEO. The subsequent pullback has been underpinned by the 200-day moving average, and punctuated by March follow-through.

More immediately, the mid-March flag pattern signals a strengthening backdrop, even amid otherwise shaky price action across large-cap technology names.

Tactically, trendline support roughly tracks the 50-day moving average and is rising toward the breakout point (63.20). The prevailing rally attempt is intact barring a violation.

(On a granular note, the January gap higher punctuated a massive bullish island reversal defined by the July and January gaps, illustrated on the one-year chart. The high-reliability reversal pattern has followed through to 52-week highs.)

Dish Network Corp.

 is a well positioned large-cap name.

Earlier this month, the shares knifed to 52-week highs, clearing resistance matching the December peak.

The subsequent pullback places the shares near the breakout point (37.10) and 4.5% under the March peak.

Tactically, deeper support matches the December gap and the former range top, circa 35.00. A sustained posture higher signals a bullish bias.

More broadly, the shares are well positioned on the three-year chart, edging atop major resistance matching the 200-week moving average.

Jabil Circuit, Inc.

 is a well positioned large-cap contract manufacturer.

Technically, the shares have recently launched to 20-year highs, tagging their best level since Nov. 2000.

The sharp rally marked an unusually strong two standard deviation breakout, encompassing five straight closes atop the 20-day Bollinger bands.

More immediately, the prevailing flag pattern signals still muted selling pressure, positioning the shares to build on the initial spike. Tactically, the post-breakout low (49.30) is closely followed by gap support (49.00).

Finally, Lennar Corp.

 is a large-cap homebuilder coming to life technically.

Earlier this month, the shares staged a strong-volume spike, rising after the company reported its first-quarter results and announced plans to spin-off non-core business units.

The ensuing pullback has been flat, fueled by decreased volume, and effectively underpinned by the breakout point on a closing basis. Tactically, a sustained posture atop the post-breakout low (93.00) signals a comfortably 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
UnitedHealth Group, Inc. UNH Mar. 22
DraftKings, Inc. DKNG Mar. 22
Shift4 Payments, Inc. FOUR Mar. 19
Whirlpool Corp. WHR Mar. 19
U.S. Bancorp USB Mar. 19
Nasdaq, Inc. NDAQ Mar. 18
XPO Logistics, Inc. XPO Mar. 18
D.R. Horton, Inc. DHI Mar. 18
Facebook, Inc. FB Mar. 17
Silicon Motion Technology Corp. SIMO Mar. 17
AutoNation, Inc. AN Mar. 17
McDonald’s Corp. MCD Mar. 16
Virtu Financial, Inc. VIRT Mar. 16
Spirit Airlines, Inc. SAVE Mar. 16
LKQ Corp. LKQ Mar. 15
Nordstrom, Inc. JWN Mar. 15
Anthem, Inc. ANTM Mar. 15
Walgreens Boots Alliance, Inc. WBA Mar. 12
International Paper Co. IP Mar. 12
iShares Europe ETF IEV Mar. 11
CME Group, Inc. CME Mar. 11
Westlake Chemical Corp. WLK Mar. 11
3M Co. MMM Mar. 11
Southwest Airlines Co. LUV Mar. 10
Century Aluminum Co. CENX Mar. 10
MagnaChip Semiconductor Corp. MX Mar. 10
Under Armour, Inc. UA Mar. 9
Big Lots, Inc. BIG Mar. 9
Alaska Air Group, Inc. ALK Mar. 9
State Street Corp. STT Mar. 8
American Eagle Outfitters, Inc. AEO Mar. 8
Hess Corp. HES Mar. 3
Alcoa Corp. AA Mar. 3
Beazer Homes USA, Inc. BZH Mar. 3
EchoStar Corp. SATS Mar. 3
Mastercard, Inc. MA Mar. 2
Boeing Co. BA Mar. 2
Starbucks Corp. SBUX Mar. 1
Oceaneering International, Inc. OII Mar. 1
Eaton Corp. ETN Feb. 25
Oracle Corp. ORCL Feb. 24
United Airlines Holdings, Inc. UAL Feb. 24
Nucor Corp. NUE Feb. 23
Signet Jewelers Limited SIG Feb. 23
Old Dominion Freight Line ODFL Feb. 22
Seagate Technology STX Feb. 19
Chevron Corp. CVX Feb. 18
Lyft, Inc. LYFT Feb. 16
Intel Corp. INTC Feb. 12
Helmerich & Payne, Inc. HP Feb. 11
U.S. Global Jets ETF JETS Feb. 9
Motorola Solutions, Inc. MSI Feb. 9
KeyCorp KEY Feb. 5
Diamondback Energy, Inc. FANG Feb. 4, 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
Aptiv, plc APTV Jan. 29
Cummins, Inc. CMI Jan. 25
Magna International, Inc. MGA Jan. 22
M.D.C. Holdings, Inc. MDC Jan. 22
Zebra Technologies Corp. ZBRA Jan. 14
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
Skyworks Solutions, Inc. SWKS Jan. 7
Financial Select Sector SPDR XLF Jan. 7
Synaptics, Inc. SYNA Jan. 4
JPMorgan Chase & Co. JPM Dec. 22
Calix, Inc. CALX Dec. 17
Tenet Healthcare Corp. THC Dec. 16
Williams-Sonoma, Inc. WSM Dec. 15
SDPR S&P Regional Banking ETF KRE Dec. 14
Etsy, Inc. ETSY Dec. 14
Emerson Electric Co. EMR Dec. 8
Fortinet, Inc. FTNT Dec. 7
Kulicke and Soffa Industries, Inc. KLIC Dec. 7
Dillard’s, Inc. DDS Dec. 4
Valero Energy Corp. VLO Dec. 3
Sonos, Inc. SONO Dec. 1
American Airlines Group, Inc. AAL Nov. 30
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
Regions Financial Corp. RF Nov. 13
Norfolk Southern Corp. NSC Nov. 9
Communications Services Select Sector SPDR XLC Nov. 5
Alphabet, Inc. GOOGL Nov. 5
Micron Technology, Inc. MU Oct. 20
Vulcan Materials Co. VMC Oct. 19
ON Semiconductor Corp. ON Oct. 16
Ford Motor Co. F Oct. 15
SPDR S&P Homebuilders ETF XHB Oct. 9
Shake Shack, Inc. SHAK Oct. 9
Martin Marietta Materials, Inc. MLM Sept. 30
Abercrombie & Fitch Co. ANF Sept. 29
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
General Motors Co. GM Aug. 20
Builders FirstSource, Inc. BLDR Aug. 18
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
Materials Select Sector SPDR XLB July 20
Caterpillar, Inc. CAT July 20
SPDR S&P Retail ETF XRT June 3
iShares MSCI Japan ETF EWJ May 29
Tesla, Inc. TSLA Apr. 23
Apple, Inc. AAPL Mar. 27, 2020
Microsoft Corp. MSFT Feb. 22, 2019
* Click each symbol for current chart.

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