The Technical Indicator: Charting a slow-motion breakout attempt, S&P 500 challenges major resistance (2,874)

Technically speaking, the U.S. benchmarks’ jagged April recovery attempt remains in play amid still receding market volatility.

Against this backdrop, the S&P 500 has ventured slightly atop major resistance (2,874), a key intermediate-term bull-bear inflection point. The slight breakout’s sustainability, and follow-through, remain an open question.

Before detailing the U.S. markets’ wider view, the S&P 500’s
SPX,
-0.52%

hourly chart highlights the past two weeks.

As illustrated, the S&P has rallied atop major resistance, an area broadly spanning from about 2,855 to 2,874.

The slight breakout originates from the S&P’s 50% retracement of the 2020 crash (2,793). The index registered consecutive session lows last week within one point.

Meanwhile, the Dow Jones Industrial Average
DJIA,
-0.13%

has rallied toward its range top.

Tactically, an inflection point matches the April peak (24,264). The index has ventured atop this area early Tuesday.

Against this backdrop, the Nasdaq Composite
COMP,
-1.40%

remains the strongest major benchmark.

As illustrated, the index has cleared its range top, reaching a nearly seven-week high.

In the process, the Nasdaq has reclaimed the November peak (8,705) an area also detailed below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has sustained a break atop several key levels:

  • The 50-day moving average, currently 8,211.
  • The 50% retracement of the 2020 crash (8,235).
  • Former resistance matching the September peak (8,243).
  • The late-2019 breakout point (8,339).
  • The 200-day moving average, currently 8,418.

As detailed repeatedly, the area broadly detailed above — spanning from about 8,240 to 8,400 — marks the distinction between “corrective bounce” and “legitimate market rally attempt.”

Last week’s closing low (8,263) registered slightly atop major support, punctuating a successful retest. The Nasdaq’s intermediate-term bias remains bullish, based on today’s backdrop.

Looking elsewhere, the Dow Jones Industrial Average has rallied less aggressively, though its April price action remains constructive.

As illustrated, the index has reclaimed its 50-day moving average, currently 23,764, closing atop the trending indicator for the first time since Feb. 21.

Additional overhead matches the April peak (24,264). A close higher would mark a “higher high” — combined with a posture atop the 50-day moving average — signaling a bullish intermediate-term bias.

On further strength, a more distant inflection point matches the June low (24,680).

Meanwhile, the S&P 500 has extended a break atop the 50-day moving average, notching consecutive closes higher.

The prevailing upturn punctuates a jagged test of the 2,742 support, a level matching the March 11 close (2,741).

The bigger picture

As detailed above, the U.S. benchmarks’ April price action remains constructive.

On a headline basis, the big three benchmarks concurrently closed Monday atop the 50-day moving average for the first time since February.

As always, the 50-day moving average is a widely-tracked intermediate-term trending indicator. A break higher raises the flag to a potential intermediate-term trend shift.

But to be sure, the bigger-picture backdrop is not nearly so straightforward. The technical backdrop is never hinged to a single variable (in this instance, the 50-day) and especially not in the wake of a market crash.

More broadly, the major benchmarks remain in divergence mode — each index is acting slightly differently — amid a constructive, but still uneven, market recovery attempt.

Moving to the small-caps, the iShares Russell 2000 ETF has extended its recovery attempt, building on a bullish divergence detailed last week.

The small-cap benchmark is vying Tuesday to close atop its 50-day moving average, currently 126.85, for the first time since February.

The prevailing upturn punctuates a successful test of its breakout point.

Similarly, the SPDR S&P MidCap 400 ETF is challenging its 50-day moving average, currently 291.58.

Here again, the prevailing upturn has been fueled by increased volume, punctuating a successful test of the breakout point.

Meanwhile, the SPDR Trust S&P 500
SPY,
-0.46%

remains stronger than the small- and mid-caps.

In its case, the SPY has notched consecutive closes atop the 50-day moving average, also rising to reclaim its breakdown point (284.80). Constructive price action.

Moving to the four-year view, the S&P 500 has extended a massive whipsaw from the March low.

Against this backdrop, recall that the mid-April closing peak (2,874) matched next resistance (2,873).

Monday’s close (2,878) registered slightly atop resistance, punctuating a nearly seven-week high.

Placing a finer point on the S&P 500, its slight breakout originates from the 50% retracement (2,793), a level also detailed on the four-year chart. The successful test from above is constructive.

Slightly more broadly, the prevailing flag-like pattern — the jagged two-week range — is hinged to the steep early-April rally illustrated below.

Returning to the six-month view, the S&P has ventured atop major resistance — the 2,855-to- 2,874 area — levels matching the breakdown point and the January 2018 peak.

To reiterate, Monday’s close (2,878) registered slightly atop the inflection point.

Tactically, sustained follow-through atop the 2,874 area would mark a “higher high” — combined with a posture atop the 50-day moving average — signaling a bullish intermediate-term bias. The retest remains underway.

Conversely, the S&P’s recovery attempt is intact barring a violation of the 2,650 support. (This area matches the April breakout point (2,641) and the 200-week moving average, currently 2,660.)

So all told, the S&P 500’s near-term recovery attempt is firmly intact. The prevailing test of the 2,874 area remains underway and should be a useful intermediate-term bull-bear gauge. The next several sessions, and the monthly close, will likely add color.

Also see: Market bears resurface, S&P 500 reverses from major resistance.

Also see: Charting the repair process, S&P 500 approaches next major test.

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 Health Care Select Sector SPDR
XLV,
-2.01%

continues to act well technically.

As illustrated, the group has extended a rally atop the 50- and 200-day moving averages, punctuating a bullish V-shaped reversal.

The upturn places the group’s record high (105.08) — established Jan. 22 — within striking distance. The pending retest from underneath should be a useful bull-bear gauge.

Conversely, the former breakdown point, circa 100.00, is followed by the deeper 200-day moving average, currently 94.98. The group’s recovery attempt is intact barring a violation.

Moving to specific names, Dollar General Corp.
DG,
-0.59%

is a large-cap discount retailer.

Earlier this month, the shares knifed to all-time highs, clearing resistance matching the March peak.

The subsequent flag pattern is hinged to the steep early-April rally, positioning the shares to build on the initial spike.

Tactically, the prevailing range bottom (174.10) is followed by the breakout point, circa 167.00. A sustained posture higher signals a bullish bias.

Keysight Technologies, Inc.
KEYS,
-0.41%

is a large-cap developer of electronic design and test solutions, and a contributor to the 5G buildout.

As illustrated, the shares have reclaimed trendline resistance, rising to challenge the 200-day moving average.

Tactically, the trendline closely tracked the 50-day moving average, currently 91.10. The 50-day has marked a a recent bull-bear inflection point, and prevailing the recovery attempt is intact barring a violation.

AngloGold Ashanti Ltd.
AU,
-4.69%

is a well positioned large-cap gold miner.

Technically, the shares have knifed to seven-year highs, clearing well-defined resistance.

Though still near-term extended, and due to consolidate, the shares are attractive on a pullback. The breakout point (23.50) closely matches the top of last week’s gap (23.62) and pivots to support.

Finally, U.S. Steel Corp.
X,
+3.57%

is a mid-cap name showing signs of life.

As illustrated, the shares have cleared trendline resistance — closely tracking the 50-day moving average — rising amid increased volume.

Underlying the upturn, its relative strength index (not illustrated) has registered its best level since November, improving the chances of a durable trend shift. Tactically, the trendline pivots to support and the recovery attempt is intact barring a violation.

Note that the company’s quarterly results are due out Thursday, April 30.

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

Cadence Design Systems, Inc.

CDNS

Apr. 27

ServiceNow, Inc.

NOW

Apr. 27

Snap, Inc.

SNAP

Apr. 27

Centene Corp.

CNC

Apr. 27

Abbott Laboratories

ABT

Apr. 24

Five9, Inc.

FIVN

Apr. 24

Chewy, Inc.

CHWY

Apr. 24

Roku, Inc.

ROKU

Apr. 23

Tesla, Inc.

TSLA

Apr. 23

Shopify, Inc.

SHOP

Apr. 23

iShares Nasdaq Biotechnology ETF

IBB

Apr. 21

Teradyne, Inc.

TER

Apr. 20

Electronic Arts, Inc.

EA

Apr. 20

Verizon Communications, Inc.

VZ

Apr. 20

VanEck Vectors Semiconductor ETF

SMH

Apr. 17

Health Care Select Sector SPDR

XLV

Apr. 17

Coupa Software, Inc.

COUP

Apr. 17

Veeva Systems, Inc.

VEEV

Apr. 17

American Tower Corp.

AMT

Apr. 17

Okta, Inc.

OKTA

Apr. 16

Target Corp.

TGT

Apr. 16

Intel Corp.

INTC

Apr. 14

Netflix, Inc.

NFLX

Apr. 14

VanEck Vectors Gold Miners ETF

GDX

Apr. 14

Invesco QQQ Trust

QQQ

Apr. 14

SBA Communications Corp.

SBAC

Apr. 13

Akamai Technologies, Inc.

AKAM

Apr. 13

Citrix Systems, Inc.

CTXS

Apr. 6

Ciena Corp.

CIEN

Apr. 6

Seattle Genetics, Inc.

SGEN

Apr. 6

DocuSign, Inc.

DOCU

Apr. 3

Zscaler, Inc.

ZS

Apr. 3

Moderna, Inc.

MRNA

Apr. 3

RingCentral, Inc.

RNG

Mar. 30

Activision Blizzard, Inc.

ATVI

Mar. 30

Regeneron Pharmaceuticals, Inc.

REGN

Mar. 30

Apple, Inc.

AAPL

Mar. 27

Nvidia Corp.

NVDA

Mar. 27

Dexcom, Inc.

DXCM

Mar. 27

Amazon.com, Inc.

AMZN

Mar. 26

Stamps.com, Inc.

STMP

Mar. 26

Quidel Corp.

QDEL

Mar. 26

Karyopharm Therapeutics, Inc.

KPTI

Mar. 20

Domino’s Pizza, Inc.

DPZ

Mar. 20

Walmart, Inc.

WMT

Mar. 19

Kroger Co.

KR

Mar. 19

Zoom Video Communications, Inc.

ZM

Mar. 19

iShares MSCI Emerging Markets ETF**

EEM

Mar. 19

eHealth, Inc.

EHTH

Jan. 31

Newmont Corp.

NEM

Jan. 13

Atlassian Corp.

TEAM

Jan. 7

SPDR Gold Shares ETF

GLD

Jan. 2

Advanced Micro Devices, Inc.

AMD

Nov. 7

Teledoc Health, Inc.

TDOC

Nov. 1

Costco Wholesale Corp.

COST

Mar. 6

Microsoft Corp.

MSFT

Feb. 22

* Click each symbol for current chart.

** Not necessarily well positioned, though a recovery attempt is intact.

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