Technically speaking, the U.S. benchmarks are off to a constructive May start, rising modestly month-to-date amid a seasonal headwind.
Against this backdrop, the S&P 500 and Nasdaq Composite are pressing record territory — just above S&P 2,400 and Nasdaq 6,100 — and the muted selling pressure near resistance positions each for a potential breakout.
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 notched consecutive nominal all-time closing highs.
Practically speaking, resistance spans from 2,398 to 2,401 — levels matching the April and March peaks, respectively — and the breakout attempt remains underway.
The prevailing upturn punctuates a successful test of the 2,381 support, a level matching the top of the April gap.
Meanwhile, the Dow industrials’
backdrop remains constructive, but slightly weaker.
In its case, the blue-chip benchmark has notched its second-best close on record (21,012) and just the fifth close atop the 21,000 mark.
The Dow’s all-time closing high, established March 1, rests at 21,115.
Conversely, first support matches the top of the April gap (20,909), and is followed by a deeper floor, circa 20,850.
Perhaps not surprisingly, the Nasdaq Composite’s
backdrop remains the strongest.
Like the S&P, the Nasdaq has notched two straight nominal all-time closing highs — at 6,100 and 6,102.
In practice, the breakout attempt remains underway. The index has ventured higher early Tuesday.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq is digesting a statistically unusual April breakout. The initial spike encompassed five straight closes atop the 20-day Bollinger bands. (See added detail regarding the bands in the next section.)
More broadly, the breakout resolves a former continuation pattern, the two-month range underpinned by the 5,800 mark. Though near-term extended, the Nasdaq’s longer-term bias remains firmly bullish.
Near-term support closely matches the April close (6,047) illustrated on the hourly chart.
Moving to the Dow, the blue-chip benchmark is digesting the April spike from trendline resistance.
The record close (21,115) and absolute record peak (21,169) remain within striking distance.
Conversely, the 50-day moving average, currently 20,790, is rising toward support matching the bottom of the March 1 gap, circa 20,850.
See also: Dow rallies from a two-month low (with an asterisk), Nasdaq rattles cage on record close.
Similarly, the S&P 500 is acting well technically.
The late-April break from trendline resistance has been punctuated by a bull flag, and consecutive record closes. Recall that resistance closely matches the 2,400 mark.
The bigger picture
As detailed above, the U.S. benchmarks are off to a constructive May start. The S&P and Nasdaq have notched consecutive record highs, though narrowly, while the Dow Jones Industrial Average has notched its second-best close.
Against this backdrop, consider a different measure of the prevailing rally’s strength.
The S&P 500’s six-month chart above includes the Bollinger bands, also known as volatility bands.
Those bands, illustrated in red, encompass two standard deviations of the S&P 500’s 20-day volatility.
Consider that consecutive closes higher signal a tension between two time horizons.
For the near-term, they signal that the S&P is overbought, and due to consolidate. The breakout has been statistically unusual, placing it outside the trailing two standard deviation range.
But more importantly, the underlying bullish momentum has been measurably extreme, likely laying the groundwork for longer-term follow-through. See the December and February closes atop the bands, and subsequent follow-through.
More immediately, the late-April breakout — the break from the trendline, illustrated on the S&P 500’s standard chart — was punctuated by two straight closes higher.
Against this backdrop, the S&P 500 has immediately established the tightest 10-session range in its history. (The 10-session range concluding Monday.)
So combined, the S&P staged a directionally sharp late-April breakout, and has subsequently flatlined at, or just under, all-time highs.
The muted selling pressure near major resistance is constructive, improving the chances of an eventual breakout.
Tactically, first support matches the top of the April gap — S&P 2,381 — an area that has initially drawn buyers. This is followed by a firmer floor matching the 50-day moving average, currently 2,367.
(The March 1 gap — punctuating the S&P 500’s initial spike to all-time highs — spanned from 2,367 to 2,380. Effectively, former gap support matches more immediate technical floors.)
Conversely, a near-term S&P target projects to the 2,420 area, while an intermediate-term target projects from the prevailing two-month range to about 2,480.
Beyond technical targets, the S&P 500’s intermediate-term bias points firmly higher pending signs of a bearish pulse.
See also: Nasdaq extends spike to uncharted territory, S&P 500 breakout attempt underway.
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.
Initially profiled Jan. 13, Amazon.com, Inc.
— the fourth-largest U.S. company, as measured by market cap — has returned 16.1% and remains well positioned.
Late last month, the shares knifed to record territory, rising amid a sustained volume spike after the company’s first-quarter results. The 1,000 mark is not too distant.
The breakout has been punctuated by a bull flag, defined by the tight May range. Near-term support, circa 930, underpins the pattern, and a posture higher positions the shares to extend the uptrend.
Delving deeper, consider that the ascending 50-day moving average has recently defined the trend.
Tableau Software, Inc.
is a mid-cap name positioned to rise.
As illustrated, the shares have recently gapped to 52-week highs, rising after the company’s quarterly results.
The initial breakout has been punctuated by consecutive inside days, fueled by decreased volume.
Near-term support matches the top of the gap (57.65) and is followed by the breakout point, circa 55. A posture higher supports a bullish bias.
Commvault Systems, Inc.
is a mid-cap software vendor coming to life.
Earlier this month, the shares gapped from the 200-day moving average, rising to challenge three-year highs.
The range top matches major resistance — illustrated on the four-year chart — and a breakout opens the path to potentially material follow-through. A breakout attempt is in play barring a violation of near-term support, circa 55.20.
is a large-cap manufacturer of diesel and natural gas engines and related components. (Yield = 2.6%.)
Technically, the shares have recently knifed to all-time highs, gapping higher after the company’s quarterly results.
The ensuing pullback has been fueled by decreased volume, placing the shares at an attractive entry near the breakout point and 4.5% under the May peak.
Cimarex Energy Co.
a large-cap oil and gas name, has turned higher ahead of the company’s quarterly results due out Wednesday.
As illustrated, the shares have cleared a four-month downtrend, and the 50-day moving average, rising amid a volume spike from support matching the March low.
The breakout signals a potential trend shift. Tactically, the trendline, circa 118, pivots to support, and the recovery 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.
|ServiceNow, Inc.||NOW||May 8|
|Trimble, Inc.||TRMB||May 8|
|Coach, Inc.||COH||May 8|
|General Dynamics Corp.||GD||May 4|
|TD Ameritrade Holding Corp.||AMTD||May 4|
|GrubHub, Inc.||GRUB||May 4|
|Union Pacific Corp.||UNP||May 3|
|Hawaiian Holdings, Inc.||HA||May 3|
|Sonus Networks, Inc.||SONS||May 3|
|Xilinx, Inc.||XLNX||May 2|
|Tech Data Corp.||TECD||May 2|
|Silicon Motion Technology Corp.||SIMO||May 1|
|M/I Homes, Inc.||MHO||May 1|
|Timken Co.||TKR||May 1|
|Kansas City Southern||KSU||May 1|
|Caterpillar, Inc.||CAT||Apr. 28|
|Juniper Networks, Inc.||JNPR||Apr. 27|
|Rockwell Collins, Inc.||COL||Apr. 27|
|Trinity Industries, Inc.||TRN||Apr. 27|
|Ferrari N.V.||RACE||Apr. 27|
|Veeco Instruments, Inc.||VECO||Apr. 24|
|Jabil Circuit, Inc.||JBL||Apr. 21|
|Stratasys, Ltd.||SSYS||Apr. 21|
|SPDR S&P Retail ETF||XRT||Apr, 20|
|Consumer Staples Select Sector SPDR||XLP||Apr. 19|
|Cirrus Logic, Inc.||CRUS||Apr. 18|
|Medidata Solutions, Inc.||MDSO||Apr. 18|
|Ryanair Holdings||RYAAY||Apr. 17|
|Tiffany & Co.||TIF||Apr. 13|
|Utilities Select Sector SPDR||XLU||Apr. 13|
|Dillard’s Inc.||DDS||Apr. 12|
|Wal-Mart Stores, Inc.||WMT||Apr. 11|
|Best Buy Co., Inc.||BBY||Apr. 11|
|Five Below, Inc.||FIVE||Apr. 11|
|Sage Therapeutics, Inc.||SAGE||Apr. 10|
|Red Hat, Inc.||RHT||Apr. 7|
|Blackhwak Network Holdings, Inc.||HAWK||Apr. 7|
|Extreme Networks, Inc.||EXTR||Apr. 6|
|Coca-Cola Co.||KO||Apr. 5|
|iShares MSCI India ETF||INDA||Apr. 4|
|Tesla, Inc.||TSLA||Apr. 4|
|Xcerra Corp.||XCRA||Apr. 4|
|Spirit Airlines, Inc.||SAVE||Apr. 3|
|Microsoft Corp.||MSFT||Mar. 31|
|UnitedHealth Group, Inc.||UNH||Mar. 31|
|Brooks Automation, Inc.||BRKS||Mar. 31|
|Pepsico, Inc.||PEP||Mar. 29|
|Scientific Games Corp.||SGMS||Mar. 29|
|iShares MSCI Hong Kong ETF||EWH||Mar. 24|
|Cerner Corp.||CERN||Mar. 24|
|Oracle Corp.||ORCL||Mar. 23|
|Universal Display Corp.||OLED||Mar. 21|
|iShares MSCI All Country Asia ex Japan ETF||AAXJ||Mar. 21|
|iShares MSCI Australia ETF||EWA||Mar. 20|
|Check Point Software Technologies||CHKP||Mar. 17|
|Zebra Technologies Corp.||ZBRA||Mar. 17|
|iShares MSCI South Korea ETF||EWY||Mar. 16|
|Momo, Inc.||MOMO||Mar. 15|
|Burlington Stores, Inc.||BURL||Mar. 15|
|Veeva Systems, Inc.||VEEV||Mar. 14|
|SPDR S&P Homebuilders ETF||XHB||Mar. 13|
|Builders FirstSource, Inc.||BLDR||Mar. 13|
|Arista Networks, Inc.||ANET||Mar. 8|
|Amkor Technology, Inc.||AMKR||Mar.7|
|Activision Blizzard, Inc.||ATVI||Mar.7|
|Square, Inc.||SQ||Mar. 3|
|Idexx Laboratories, Inc.||IDXX||Mar. 1|
|Wyndham Worldwide Corp.||WYN||Mar. 1|
|Marriott International, Inc.||MAR||Feb. 28|
|Toll Brothers, Inc.||TOL||Feb. 28|
|3M Co.||MMM||Feb. 27|
|Paycom Software, Inc.||PAYC||Feb. 24|
|Facebook, Inc.||FB||Feb. 23|
|Latam Airlines Group||LFL||Feb. 23|
|Sony Corp.||SNE||Feb. 17|
|SPDR S&P Biotech ETF||XBI||Feb. 15|
|Fortinet, Inc.||FTNT||Feb. 15|
|MSCI, Inc.||MSCI||Feb. 15|
|Eaton Corp.||ETN||Feb. 14|
|Microchip Technology, Inc.||MCHP||Feb. 13|
|iShares U.S. Home Construction ETF||ITB||Feb. 13|
|Skyworks Solutions, Inc.||SWKS||Feb. 10|
|Wix.com Ltd.||WIX||Feb. 9|
|CBOE Holdings, Inc.||CBOE||Feb. 8|
|Boeing Co.||BA||Feb. 7|
|McDonald’s Corp.||MCD||Feb. 3|
|Texas Instruments, Inc.||TXN||Jan. 31|
|Exact Sciences Corp.||EXAS||Jan. 30|
|KB Home||KBH||Jan. 27|
|iShares Europe ETF||IEV||Jan. 26|
|iShares India 50 ETF||INDY||Jan. 26|
|Home Depot, Inc.||HD||Jan. 24|
|Adobe Systems, Inc.||ADBE||Jan. 24|
|Shopify, Inc.||SHOP||Jan. 20|
|Cognex Corp.||CGNX||Jan. 19|
|Agilent Technologies, Inc.||A||Jan. 19|
|MaxLinear, Inc.||MXL||Jan. 18|
|Advanced Energy Industries, Inc.||AEIS||Jan. 17|
|Anthem, Inc.||ANTM||Jan. 13|
|iShares MSCI Emerging Markets ETF||EEM||Jan. 11|
|Digital Realty Trust, Inc.||DLR||Jan. 11|
|Alphabet, Inc.||GOOGL||Jan. 9|
|Alibaba Group Holding Limited||BABA||Jan. 5|
|ASML Holding N.V.||ASML||Jan. 3|
|AutoDesk, Inc.||ADSK||Dec. 20|
|Cavium, Inc.||CAVM||Dec. 20|
|Broadcom Limited||AVGO||Dec. 14|
|Take-Two Interactive Software, Inc.||TTWO||Dec. 14|
|Apple, Inc.||AAPL||Dec. 9|
|Consumer Discretionary SPDR||XLY||Dec. 5|
|Western Digital Corp.||WDC||Nov. 29|
|Applied Materials, Inc.||AMAT||Nov. 18|
|VMware, Inc.||VMW||Nov. 18|
|Financial Select Sector SPDR||XLF||Nov. 8|
|T-Mobile US, Inc.||TMUS||Nov. 8|
|Teradyne, Inc.||TER||Nov. 8|
|Technology Select Sector SPDR||XLK||Oct. 25|
|Lam Research Corp.||LRCX||Oct. 20|
|Copa Holdings||CPA||Oct. 18|
|Netflix, Inc.||NFLX||Oct. 4|
|iShares Transportation Average||IYT||Sept. 8|
|Deere & Co.||DE||Sept. 7|
|Microsoft Corp.||MSFT||Aug. 5|
|Micron Technology, Inc.||MU||Aug. 2|
|CSX Corp.||CSX||July 20|
|PowerShares QQQ ETF||QQQ||July 19|
|Industrial Select Sector SPDR||XLI||July 15|
|Materials Select Sector SPDR||XLB||July 15|
|VanEck Vectors Semiconductor ETF||SMH||June 23|