The U.S. marketsâ worst six months seasonally â May through October â are less than a week away.
This seasonal tendency withstands statistical scrutiny, and is actually a global-market phenomenon, though itâs prone to exceptions. Against this backdrop, the prevailing market technicals support a bullish view.
Before detailing the U.S. marketsâ wider view, the S&P 500âs
Â hourly chart highlights the past two weeks.
As illustrated, the S&P has thus far maintained first support matching the 2,080 mark.
Its range top rests at 2,111, and is closely followed by major overhead at 2,117, a level matching the March and November peaks. To this point, the downturn from major resistance has been orderly.
Similarly, the Dow Jones Industrial Average
Â has pulled in from recent highs.
Consider that its first notable support matches the November peak, technically 17,977.85. Last weekâs closing low held four points higher, and the Dow closed Monday at 17,977.
Itâs staged a shaky, but thus far successful, test of first support. On further weakness, a deeper floor rests at 17,800, also illustrated on the daily chart.
And the Nasdaq Compositeâs
Â near-term backdrop remains weaker.
As illustrated, the index has violated its range bottom, plunging to one-week lows. The 4,921 breakdown point, matching Fridayâs high, pivots to resistance.
Conversely, last weekâs low held at 4,872, though technical support is better illustrated on the daily chart below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has plunged to its former range, violating support spanning from 4,921 to 4,926.
Consider that the 20-day moving average, currently 4,901, has marked a 2016 inflection point. The index hasnât closed lower since Feb. 16.
This is followed by the 200-day moving average, currently 4,850, and more important support matching the 2014 peak of 4,815. (The April low rests at 4,809.)
Looking elsewhere, the Dow industrialsâ wider view remains stronger.
Recall that the 17,980 area marks first support, matching the breakout point from its double bottom defined by the August and January lows. (The specific level rests at 17,977.85, matching Mondayâs close of 17,977.24.)
This is followed by the 17,800 support, closely matching the 20-day moving average, and a deeper floor spanning from 17,540 to 17,580.
More broadly, the Dowâs initial pullback from 10-month highs has been orderly, inflicting limited technical damage.
Meanwhile, the S&P 500 has pulled in from five-month highs.
Here again, the initial downturn has been orderly, with the index maintaining first support. Bullish price action.
The bigger picture
Broadly speaking, the U.S. marketsâ bigger-picture backdrop remains technical, and constructive. Though the S&P 500 and Dow industrials have pulled in from multi-month highs, each benchmark has closely observed well-defined support.
Moving to the small-caps, the iShares Russell 2000 ETF
Â has sustained a break atop its 200-day moving average, currently 112.15. As always, the 200-day is a widely-tracked longer-term trending indicator, with a posture higher signaling a primary uptrend.
Separately, the small-cap benchmarkâs recent rallies have been directionally sharp, fueled by increased volume, while the subsequent pullbacks have been comparably flat.
Meanwhile, the SPDR S&P MidCap 400âs backdrop remains stronger.
Itâs recently reached eight-month highs, amid several recent volume spikes, while the intervening pullbacks have been comparably flat. Also notice the impending golden cross, or bullish 50-day/200-day moving average crossover.
Against this backdrop, the S&P 500 has topped slightly under major resistance at 2,117, a level matching the March and November peaks.
Though still underway, and the seasonal backdrop is worth considering, its initial downturn has been orderly, fueled by tame volume and breadth.
More broadly, the S&P 500âs bull trend is underpinned by several positives, detailed last week. Specifically:
- The trend is frequently punctuated by distinctly technical price action, partly illustrated above.
- The sub-sector price action is increasingly rotational, fueled by a rolling series of sector breakouts.
- The major benchmarks are rising on news of any kind, bad or good, including last weekâs failed Doha meeting.
- The uptrend is paced by new leadership, most notably the relative absence of the formerly dominant FANG stocks. (Facebook, Amazon, Netflix, and Google.)
To the extent these traits persist, the market technicals support a bullish view.
Tactically, the S&P 500âs prevailing range spans from 2,080 to 2,117, and a breakout attempt is in play barring a violation of the range bottom. Deeper support rests at the 2,040 mark â closely matching the trendline, and the 2015 close â and a posture higher supports a bullish longer-term bias.
Also see: Broadening sector participation signals bull trend has room to run.
Tuesdayâs Watch List
The charts below detail names that are technically well positioned. These are radar screen names â sectors or stocks poised to move in the near term. For the original comments on the stocks below, see The Technical Indicator Library.
Initially profiled Feb. 18, the Market Vectors Junior Gold Miners ETF
Â has returned 30.9%.
Though near-term extended, and due to consolidate, the group remains well positioned for the longer-term. Consider that the April breakout has been directionally sharp, punctuated by consecutive volume spikes.
First support rests at 33, and is followed by a firmer floor around 30.75, closely matching the 2015 peak and trendline support. The groupâs longer-term bias supports a bullish view barring a violation.
Callon Petroleum Co.
Â is a well positioned mid-cap name.
As illustrated, the shares have recently staged a strong-volume spike, reaching 52-week highs after the company announced the pricing of a common stock offering.
Underlying the upturn, its relative strength index (not illustrated) has concurrently reached a yearly peak, positioning the shares for a potentially more decisive breakout. First support rests fractionally above 10, and its technical bias points higher barring a violation.
Universal Display Corp.
Â is a mid-cap developer of organic light emitting diode (OLED) technologies for use in flat panel displays.
Earlier this month, the shares knifed to five-year highs, clearing resistance matching the 2015 peak.
The ensuing pullback has been flat, fueled by decreased volume, positioning the shares to build on the initial spike. First support matches last weekâs low, and is followed by the breakout point, circa 56.
Emergent Biosolutions, Inc.
Â is a well positioned mid-cap name.
The shares initially spiked three weeks ago, clearing the February peak amid increased volume.
Itâs subsequently established a tight April range, compressing between the breakout point and the 2015 peak. Mondayâs close marked a nominal record high, positioning the shares for a potentially more decisive breakout.
Emergent Biosolutions is also well positioned on the weekly chart.
Â is a fast-food restaurant operator positioned to rise.
Late last month, the shares gapped to 52-week highs, rising after the companyâs strong second-quarter results.
The ensuing pullback has been flat, fueled by decreased volume, placing the shares at an attractive entry near gap support and 4.4% under the April peak. More broadly, Sonic Corp. is challenging record territory, better illustrated on the weekly chart.
Â is a well positioned large-cap name.
Technically, the shares have knifed from a bullish cup-and-handle, a pattern recently underpinned by the 200-day moving average.
The subsequent pullback has been orderly, placing the shares at an attractive entry near the breakout point and 5.7% under the April peak.
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.
|Zillow Group, Inc.||Z||Apr. 25|
|Polaris Industries, Inc.||PII||Apr. 25|
|WellCare Health Plans, Inc.||WCG||Apr. 25|
|Canadian Pacific Railway||CP||Apr. 25|
|Marathon Petroleum Corp.||MPC||Apr. 22|
|Trimble Navigation||TRMB||Apr. 22|
|BioMarin Pharmaceutical, Inc.||BMRN||Apr. 22|
|GW Pharmaceuticals||GWPH||Apr. 21|
|Aspen Technology, Inc.||AZPN||Apr. 21|
|Express Scripts||ESRX||Apr. 21|
|Alibaba Group Holding||BABA||Apr. 21|
|Citigroup, Inc.||C||Apr. 20|
|Fitbit, Inc.||FIT||Apr. 20|
|Actuant Corp.||ATU||Apr. 20|
|Chevron Corp.||CVX||Apr. 20|
|Materials Select Sector SPDR||XLB||Apr. 20|
|iShares MSCI Brazil ETF||EWZ||Apr. 19|
|Agios Pharmaceuticals, Inc.||AGIO||Apr. 18|
|Parker-Hannifin Corp.||PH||Apr. 18|
|Universal Health Services, Inc.||UHS||Apr. 18|
|Taho Resources, Inc.||TAHO||Apr. 18|
|Newmont Mining Corp.||NEM||Apr. 15|
|Genesee & Wyoming, Inc.||GWR||Apr. 15|
|Alder Biopharmaceuticals, Inc.||ALDR||Apr. 15|
|First Republic Bank||FRC||Apr. 15|
|PrivateBancorp, Inc.||PVTB||Apr. 15|
|SPDR S&P Regional Banking ETF||KRE||Apr. 14|
|Qualcomm, Inc.||QCOM||Apr. 14|
|Energy Select Sector SPDR||XLE||Apr. 13|
|Gulfport Energy Corp.||GPOR||Apr. 13|
|FMC Technologies, Inc.||FTI||Apr. 13|
|Helmerich & Payne, Inc.||HP||Apr. 13|
|Tesla Motors, Inc.||TSLA||Apr. 12|
|HP, Inc.||HPQ||Apr. 12|
|Owens-Illinois, Inc.||OI||Apr. 12|
|Chart Industries, Inc.||GTLS||Apr. 12|
|Whiting Petroleum Corp.||WLL||Apr. 11|
|Cabot Oil & Gas Corp.||COG||Apr. 11|
|Incyte Corp.||INCY||Apr. 11|
|Church & Dwight Co., Inc.||CHD||Apr. 11|
|Pepsico, Inc.||PEP||Apr. 7|
|Anthem, Inc.||ANTM||Apr. 7|
|Hess Corp.||HES||Apr. 7|
|Juno Therapeutics, Inc.||JUNO||Apr. 7|
|Technology Select Sector SPDR||XLK||Apr. 6|
|Continental Resources, Inc.||CLR||Apr. 6|
|Open Text Corp.||OTEX||Apr. 6|
|Seabridge Gold, Inc||SA||Apr. 6|
|Merck & Co.||MRK||Apr. 5|
|Silicon Motion Technology Corp.||SIMO||Apr. 5|
|Vantiv, Inc.||VNTV||Apr. 4|
|Analog Devices, Inc.||ADI||Apr. 4|
|Kinross Gold Corp.||KGC||Apr. 4|
|FedEx Corp.||FDX||Apr. 1|
|U.S. Silica Holdings, Inc.||SLCA||Apr. 1|
|Energy Recovery, Inc.||ERII||Apr. 1|
|Energen Corp.||EGN||Apr. 1|
|Consumer Discretionary SPDR||XLY||Apr. 1|
|Inphi Corp.||IPHI||Mar. 31|
|iShares Emerging Markets ETF||EEM||Mar. 30|
|General Electric||GE||Mar. 29|
|American Tower Corp.||AMT||Mar. 29|
|Adobe Systems, Inc.||ADBE||Mar. 28|
|Schnitzer Steel Industries||SCHN||Mar. 28|
|Microsemi Corp.||MSCC||Mar. 28|
|SBA Communications, Inc.||SBAC||Mar. 28|
|Genuine Parts Co.||GPC||Mar. 24|
|Amedisys, Inc.||AMED||Mar. 24|
|Industrial Select Sector SPDR||XLI||Mar. 23|
|Bruker Corp.||BRKR||Mar. 23|
|Intercept Pharmaceuticals, Inc.||ICPT||Mar. 23|
|KB Home||KBH||Mar. 23|
|Orbotech, Ltd.||ORBK||Mar. 23|
|Kansas City Southern||KSU||Mar. 22|
|Rice Energy, Inc.||RICE||Mar. 22|
|Ulta Salon, Cosmetics & Fragrance||ULTA||Mar. 22|
|Nvidia Corp.||NVDA||Mar. 21|
|iShares Transportation Average||IYT||Mar. 18|
|Proto Labs, Inc.||PRLB||Mar. 18|
|Apache Corp.||APA||Mar. 18|
|AK Steel Holding Corp.||AKS||Mar. 17|
|Devon Energy Corp.||DVN||Mar. 17|
|Patterson-UTI Energy, Inc.||PTEN||Mar. 17|
|Market Vectors Oil Services ETF||OIH||Mar. 16|
|SM Energy Co.||SM||Mar. 16|
|Anadarko Petroleum Corp.||APC||Mar. 16|
|Yum Brands, Inc.||YUM||Mar. 16|
|Gilead Sciences, Inc.||GILD||Mar. 15|
|Kate Spade & Co.||KATE||Mar. 15|
|Applied Materials, Inc.||AMAT||Mar. 14|
|Stratasys, Ltd.||SSYS||Mar. 14|
|Reliance Steel & Aluminum Co.||RS||Mar. 11|
|Goldcorp Inc.||GG||Mar. 11|
|Cogent Communications Holdings||CCOI||Mar. 11|
|Cyrusone, Inc.||CONE||Mar. 8|
|Steel Dynamics, Inc.||STLD||Mar. 8|
|Generac Holdings, Inc.||GNRC||Mar. 8|
|TJX Companies, Inc.||TJX||Mar. 7|
|iShares China Large-Cap ETF||FXI||Mar. 3|
|Nucor Corp.||NUE||Mar. 3|
|Teleflex, Inc.||TFX||Mar. 3|
|Apple, Inc.||AAPL||Mar. 2|
|Cummins, Inc.||CMI||Mar. 2|
|Kindred Healthcare, Inc.||KND||Mar. 2|
|Orbcomm, Inc.||ORBC||Feb. 29|
|Himax Technologies, Inc.||HIMX||Feb. 25|
|Copa Holdings||CPA||Feb. 25|
|Agnico Eagle Mines||AEM||Feb. 24|
|II-VI, Inc.||IIVI||Feb. 24|
|Garmin, Ltd.||GRMN||Feb. 22|
|U.S. Steel Corp.||X||Feb. 22|
|Johnson & Johnson||JNJ||Feb. 19|
|Pan American Silver Corp.||PAAS||Feb. 19|
|Silver Wheaton Corp.||SLW||Feb. 19|
|Market Vectors Junior Gold Miners ETF||GDXJ||Feb. 18|
|SPDR S&P Metals & Mining ETF||XME||Feb. 5|
|Market Vectors Gold Miners ETF||GDX||Feb. 5|
|SPDR Gold Trust||GLD||Feb. 4|
|Consumer Staples Select Sector SPDR||XLP||Feb. 1|
|Stryker Corp.||SYK||Jan. 29|
|iShares Silver Trust||SLV||Jan. 28|
|Coach, Inc.||COH||Jan. 28|
|Utilities Select Sector SPDR||XLU||Jan. 25|
|Huntington Ingalls Industries, Inc.||HII||Jan. 13|
|Barrick Gold Corp.||ABX||Jan. 11|
|Wal-Mart Stores, Inc.||WMT||Jan. 6|
|American Water Works Co.||AWK||Dec. 21|
|ITC Holdings Corp.||ITC||Dec. 21|
|Equity LifeStyle Properties, Inc.||ELS||Dec. 16|
|McDonaldâs Corp.||MCD||Oct. 8|
|Nasdaq, Inc.||NDAQ||Sept. 28|