Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.
Technically speaking, market cross currents have resurfaced ahead of the Federal Reserve’s policy directive, and widely-expected interest-rate hike, due out Wednesday afternoon.
Against this backdrop, the S&P 500 has violated its 50-day moving average, while thus far maintaining major support matching the 2017 peak.
Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, -0.04% hourly chart highlights the past two weeks.
As illustrated, the S&P has violated the 50-day moving average, pulling in to nail its next notable support.
Monday’s session low (2,694.6) closely matched the 2017 peak (2,695).
Tactically, near-term resistance roughly matches the former trendline, circa 2,730.
True to recent form, the Dow industrials’ backdrop remains characteristically weaker.
In its case, the index has violated major support, levels matching the 2017 close and the 2017 peak.
This area broadly encompasses a trendline, illustrated on the daily chart, and pivots to resistance. A retest from underneath is currently underway.
Meanwhile, the Nasdaq Composite COMP, -0.05% has pulled in to a headline technical test from record territory.
Consider that Monday’s session low registered less than one point from the 50-day moving average, currently 7,289.
This area is closely followed by more important trendline support, illustrated on the daily chart below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has violated its breakout point, plunging to a thus far successful retest of the 50-day moving average.
The downturn builds on the Nasdaq’s bearish key reversal from the March peak, detailed last week.
It also technically resolves a bearish island reversal defined by tandem March gaps.
Tactically, trendline support, circa 7,250, is followed by the March low (7,084) and the Nasdaq’s intermediate-term uptrend is intact barring a violation.
Looking elsewhere, the Dow Jones Industrial Average is more tenuously positioned.
Recall that major support matches the 2017 close (24,719) and the lower bound of its symmetrical triangle. A retest from underneath is underway early Tuesday.
Delving deeper, likely last-ditch Dow support matches the March low (24,218). An eventual violation would mark a “lower low” — combined with the break under the trendline — more firmly signaling an intermediate-term trend shift.
Meanwhile, the S&P 500’s backdrop splits the difference between that of the other major benchmarks.
Though the S&P did not register a new high at the March peak, concurrently with the Nasdaq, it has thus far maintained major support matching the 2017 close and 2017 peak — the 2,673-to-2,695 area.
The bigger picture
Technically speaking, the bigger-picture market technicals register as increasingly uneven amid persistently volatile March price action. The major benchmarks have diverged, and the prevailing backdrop is not one-size-fits-all.
Moving to the small-caps, the iShares Russell 2000 ETF topped last week fractionally under record territory, and has subsequently pulled in.
Still, the downturn registers as orderly, thus far inflicting limited damage. Recall that the breakout point, circa 155.50, is closely followed by the 50-day moving average, currently 154.75.
Meanwhile, the S&P MidCap 400 has topped more firmly under record territory.
The subsequent downturn places notable support under siege, an area matching the 2017 peak (349.16) and the 50-day moving average, currently 348.95. An extended retest remains underway.
Against this backdrop, the SPDR Trust S&P 500 has extended its pullback from one-month highs.
As detailed previously, notable support broadly spans from 266.86 to 268.60, levels matching the 2017 close and 2017 peak.
This week’s low (268.62) has registered two cents above support — at least so far. Delving deeper, likely last-ditch support (264.82) matches the March low.
Summing up the backdrop
Collectively, the widely-tracked U.S. benchmarks have diverged.
On a headline basis, the Nasdaq Composite remains comparably resilient while the Dow Jones Industrial Average is tenuously positioned.
Meanwhile, the small- and mid-caps have pulled in from recent highs, though the technical damage has been limited. Both benchmarks have initially maintained the 50-day moving average.
Against this backdrop, the S&P 500 has violated its 50-day moving average, currently 2,748, and more or less nailed its next notable floor.
As detailed repeatedly, S&P support broadly spans from 2,673 to 2,695, levels matching the December and January breakout points. (Alternately, levels matching the 2017 close and the 2017 peak.)
This week’s low (2,694.6) has thus far punctuated the latest successful retest.
More broadly, the S&P 500 has not closed under its support band since Feb. 13, and its recovery attempt is intact barring a violation. The markets’ response to the Federal Reserve’s widely-expected interest-rate hike, due out Wednesday afternoon, may add color.
See also: Charting the market recovery, Nasdaq takes flight as Dow industrials diverge.
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 Feb. 23, 2017, Facebook, Inc. FB, -5.89% had returned 26.8% at Monday’s close, and is now tenuously positioned.
As illustrated, the shares gapped firmly lower Monday, pressured amid reports that a data breach enabled third-party access to users’ personal information.
Technically, three support points stand out:
- The 200-day moving average, currently 172.62.
- The February closing low of 171.58. (The long red bar.)
- Support matching a nearly six month range bottom, circa 169.00.
Against this backdrop, Monday’s close (172.56) effectively matched the 200-day moving average, and the shares have ventured lower early Tuesday.
More broadly, this marks Facebook’s second strong-volume gap lower in about as many months.
Tactically, notable resistance matches the bottom of this week’s gap (177.20) and a nearly immediate reversal higher would place the brakes on bearish momentum. The shares remain vulnerable to downside follow-through pending such a move.
Meanwhile, fellow FAANG member, and Dow 30 component Apple, Inc. AAPL, -0.17% remains comparably resilient.
Though the shares have reversed from record territory, recall that support matches the former range top (175.25) detailed last week.
Monday’s close (175.30) has punctuated a thus far successful retest.
Delving deeper, the 50-day moving average (172.60) has marked an inflection point, and Apple’s intermediate-term bias points higher barring a violation.
Charting the U.S. sub-sector backdrop
Moving to specific sectors, the U.S. sub-sector backdrop remains characteristically uneven. Four groups exemplify the prevailing cross currents.
To start, the PowerShares QQQ Trust QQQ, -0.10% — a large-cap technology proxy — has pulled in from record highs.
In the process, the shares have violated the breakout point amid a volume spike.
Still, recall that trendline support closely tracks the 50-day moving average, currently 166.05, an area that continues to draw buyers. The intermediate-term uptrend is intact baring a violation.
Meanwhile, the Financial Select Sector SPDR’s XLF, +0.28% backdrop is incrementally softer, though the group is acting well enough.
Technically, the group did not register a new high at the March peak, and has subsequently violated the 50-day moving average, an area tracking former trendline support.
Still, it’s thus far maintained the breakout point, circa 28.30, surviving two March retests. The group’s recovery attempt gets the benefit of the doubt barring a violation.
Looking elsewhere, the transports’ backdrop remains incrementally weaker on a headline basis.
But notably, the iShares Transportation Average IYT, +0.30% exhibited relative strength in Monday’s action. The group slipped just 0.3% Monday outpacing the S&P 500’s 1.4% single-day downturn.
Tactically, a close atop the 50-day moving average, currently 193.60, would strengthen the U.S. sub-sector backdrop, and by extension, the bull case.
(The trucking names have been setting up well, contributing to the transports’ slight resurgence.)
Finally, the Materials Select Sector SPDR XLB, -0.10% is precariously positioned.
Consider that the prevailing downturn resolves a double top, the “M” formation defined by the February and March peaks.
Still, significant support spans from about 57.30 to 57.80 — matching a six-month range bottom as well as the 200-day moving average — and the retest remains underway. The eventual downside follow-through, or lack thereof, may serve as a useful bull-bear technical gauge.
Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.
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 | Date Profiled |
| Western Digital Corp. | WDC | Mar. 19 |
| Williams-Sonoma, Inc. | WSM | Mar. 19 |
| Nasdaq, Inc. | NDAQ | Mar. 19 |
| Orbotech Ltd. | ORBK | Mar. 16 |
| Guidewire Software, Inc. | GWRE | Mar. 16 |
| Eastman Chemical Co. | EMN | Mar. 16 |
| Veeva Systems, Inc. | VEEV | Mar. 15 |
| Centene Corp. | CNC | Mar. 15 |
| Dillard’s, Inc. | DDS | Mar. 15 |
| On Semiconductor Corp. | ON | Mar. 15 |
| Cree, Inc. | CREE | Mar. 14 |
| Autohome, Inc. | ATHM | Mar. 14 |
| Burlington Stores, Inc. | BURL | Mar. 14 |
| Jounce Therapeutics, Inc. | JNCE | Mar. 13 |
| Applied Materials, Inc. | AMAT | Mar. 12 |
| NeoPhotonics Corp. | NPTN | Mar. 12 |
| TE Connectivity Ltd. | TEL | Mar. 12 |
| Vertex Pharmaceuticals, Inc. | VRTX | Mar. 12 |
| Electronic Arts, Inc. | EA | Mar. 9 |
| Baozun, Inc. | BZUN | Mar. 9 |
| PTC Therapeutics, Inc. | PTCT | Mar. 9 |
| Marathon Petroleum Corp. | MPC | Mar. 9 |
| Intel Corp. | INTC | Mar. 8 |
| AxoGen, Inc. | AXGN | Mar. 8 |
| Nektar Therapeutics | NKTR | Mar. 8 |
| Hewlett Packard Enterprise Co. | HPE | Mar. 7 |
| Cardtronics plc | CATM | Mar. 7 |
| Zebra Technologies Corp. | ZBRA | Mar. 7 |
| Westlake Chemical Corp. | WLK | Mar. 7 |
| Tableau Software, Inc. | DATA | Mar. 6 |
| TJX Companies, Inc. | TJX | Mar. 6 |
| Tivo, Inc. | TIVO | Mar. 6 |
| Chart Industries, Inc. | GTLS | Mar. 6 |
| Micron Technology, Inc. | MU | Mar. 5 |
| Macy’s, Inc. | M | Mar. 5 |
| Five9, Inc. | FIVN | Mar. 5 |
| Northern Trust Corp. | NTRS | Feb. 28 |
| Cypress Semiconductor Corp. | CY | Feb. 28 |
| LivePerson, Inc. | LPSN | Feb. 28 |
| Fabrinet | FN | Feb. 28 |
| Apple, Inc. | AAPL | Feb. 26 |
| VeriSign, Inc. | VRSN | Feb. 26 |
| Sina Corp. | SINA | Feb. 26 |
| Momo, Inc. | MOMO | Feb. 26 |
| Shopify, Inc. | SHOP | Feb. 23 |
| Agios Pharmaceuticals, Inc. | AGIO | Feb. 23 |
| Shutterfly, Inc. | SFLY | Feb. 22 |
| Atlassian Corp. | TEAM | Feb. 22 |
| Fate Therapeutics, Inc. | FATE | Feb. 22 |
| ServiceNow, Inc. | NOW | Feb. 21 |
| Global Payments, Inc. | GPN | Feb. 20 |
| Vipshop Holdings Limited | VIPS | Feb. 20 |
| Financial Select Sector SPDR | XLF | Feb. 16 |
| PowerShares QQQ | QQQ | Feb. 16 |
| Ebay, Inc. | EBAY | Feb. 16 |
| Palo Alto Networks, Inc. | PANW | Feb. 16 |
| Adobe Systems, Inc. | ADBE | Feb. 16 |
| Twitter, Inc. | TWTR | Feb. 15 |
| Autoliv, Inc. | ALV | Feb. 15 |
| Varian Medical Systems, Inc. | VAR | Feb. 15 |
| Salesforce.com, Inc. | CRM | Feb. 12 |
| ASML Holding N.V. | ASML | Feb. 12 |
| Red Hat, Inc. | RHT | Feb. 1 |
| iShares Latin American 40 ETF | ILF | Jan. 30 |
| Editas Medicine, Inc. | EDIT | Jan. 29 |
| Array BioPharma, Inc. | ARRY | Jan. 26 |
| Nike, Inc. | NKE | Jan. 22 |
| Fortinet, Inc. | FTNT | Jan 19 |
| SS&C Technologies Holdings,Inc. | SSNC | Jan. 18 |
| Insulet Corp. | PODD | Jan. 17 |
| Maxim Integrated Products, Inc. | MXIM | Jan. 16 |
| Arrowhead Pharmaceuticals Corp. | ARWR | Jan. 11 |
| Vericel Corp. | VCEL | Jan. 10 |
| Sarepta Therapeutics, Inc. | SRPT | Jan. 3 |
| SPDR Gold Trust | GLD | Jan. 2 |
| Zions Bancorp | ZION | Dec. 20 |
| BB&T Corp. | BBT | Dec. 19 |
| Prosperity Bancshares, Inc. | PB | Dec. 18 |
| Target Corp. | TGT | Dec.15 |
| Seagate Technology | STX | Dec. 13 |
| F5 Networks, Inc. | FFIV | Dec. 11 |
| Best Buy Co. | BBY | Dec. 11 |
| PNC Financial Services Group, Inc. | PNC | Dec. 11 |
| Bank of America Corp. | BAC | Dec. 8 |
| Regions Financial Corp. | RF | Dec. 7 |
| KeyCorp | KEY | Dec. 6 |
| Kohl’s Corp. | KSS | Dec. 6 |
| SPDR S&P Regional Banking ETF | KRE | Nov. 29 |
| Advance Auto Parts, Inc. | AAP | Nov. 27 |
| Abercrombie & Fitch Co. | ANF | Nov. 20 |
| MSCI, Inc. | MSCI | Nov. 20 |
| Consumer Discretionary SPDR | XLY | Nov. 14 |
| Motorola Solutions, Inc. | MSI | Nov. 14 |
| Skechers U.S.A., Inc. | SKX | Nov. 13 |
| Splunk, Inc. | SPLK | Nov. 9 |
| Akamai Technologies, Inc. | AKAM | Oct. 30 |
| Cisco Systems, Inc. | CSCO | Oct. 25 |
| Lululemon Athletica, Inc. | LULU | Oct. 24 |
| Steel Dynamics, Inc. | STLD | Oct. 20 |
| HubSpot, Inc. | HUBS | Oct. 4 |
| XPO Logistics, Inc. | XPO | Oct. 2 |
| Neurocrine Biosciences, Inc. | NBIX | Oct. 2 |
| Nvidia Corp. | NVDA | Sept. 27 |
| Silicon Laboratories, Inc. | SLAB | Sep. 15 |
| Southern Copper Corp. | SCCO | Aug. 17 |
| Abbott Laboratories | ABT | Aug. 3 |
| Bottomline Technologies, Inc. | EPAY | July 13 |
| Sangamo Therapeutics, Inc. | SGMO | June 5 |
| Weibo Corp. | WB | May 12 |
| GrubHub, Inc. | GRUB | May 4 |
| UnitedHealth Group, Inc. | UNH | Mar. 31 |
| Square, Inc. | SQ | Mar. 3 |
| Paycom Software, Inc. | PAYC | Feb. 24 |
| SPDR S&P Biotech ETF | XBI | Feb. 15 |
| Amazon.com | AMZN | Jan. 13 |
| iShares MSCI Emerging Markets ETF | EEM | Jan. 11 |
| Alibaba Group Holding Limited | BABA | Jan. 5 |
| Technology Select Sector SPDR | XLK | Oct. 25 |
| Netflix, Inc. | NFLX | Oct. 4 |
| Microsoft Corp. | MSFT | Aug. 5 |
| VanEck Vectors Semiconductor ETF | SMH | June 23 |