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.
Though the major U.S. benchmarks have flatlined of late, boring remains bullish, and notable technical tests are currently in play.
On a headline basis, Dow 25,000 remains under siege — in slow-motion form — while the S&P 500 is pressing less obvious resistance matching the May peak (2,742).
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 is rising from a successful test of the breakout point (2,710). Consecutive session lows have registered within one point.
Conversely, next resistance (2,742) closely matches the mid-March gap (2,741.4), and currently defines the May peak (2,742.10), established May 14.
Tuesday’s early session high (2,742.24) has almost precisely matched the May peak.
Meanwhile, the Dow Jones Industrial Average has tagged a nominal new high.
More specifically, the blue-chip benchmark has gapped atop the 2017 peak, rising to challenge the 25,000 mark.
The slight breakout places the Dow in less-cluttered territory, better illustrated on the daily chart.
Against this backdrop, the Nasdaq Composite is holding the range top.
Recall that last week’s close (7,354) closely matched first support (7,353).
Slightly more broadly, the Nasdaq has maintained the 7,320 breakout point, better illustrated below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has sustained the May breakout.
To reiterate, last week’s low (7,321) closely matched the breakout point, also the April peak (7,320). This is bullish price action, and dovetails with a similar successful retest on the S&P 500.
Looking elsewhere, the Dow Jones Industrial Average has staged a belated technical breakout.
Recall that resistance formerly spanned from 24,859 to 24,876, levels matching the April peak and the 2017 peak.
The Dow has ventured slightly higher this week, rising to challenge the marquee 25,000 mark.
The slight breakout resolves a double bottom — defined by the March and May lows — placing the index in less-cluttered territory. Until this week, the Dow was the lone widely-tracked U.S. benchmark still capped by the April peak.
Meanwhile, the S&P 500 is digesting the steep early-May rally.
To reiterate, the sustained May breakout is constructive, and dovetails with similar Nasdaq price action.
The bigger picture
Collectively, the bigger-picture backdrop supports a bullish bias, and it continues to strengthen.
On a headline basis, the S&P 500 and Nasdaq Composite have sustained the May breakout, effectively nailing well-defined support — S&P 2,710 and Nasdaq 7,320.
Meanwhile, the Dow industrials have broken out belatedly, tagging a new high, and the 25,000 mark, just this week.
Moving to the small-caps, the iShares Russell 2000 ETF has extended its breakout, notching four straight record closes.
Recent strength resolves a double bottom underpinned by the 200-day moving average. The breakout point (160.00) pivots to well-defined support.
Meanwhile, the S&P MidCap 400 is challenging nearly four-month highs
Resistance broadly spans from about 357.10 to 357.90, and is currently under siege.
Conversely, the prevailing upturn originates from well-defined support. Recall that last week’s low (349.80) closely matched its breakout point, the April closing peak (349.75).
Against this backdrop, the SPDR Trust S&P 500 is vying to extend its uptrend.
To reiterate, resistance matches the mid-March gap (274.14) and the May peak (274.08).
Tuesday’s early session high (274.24) has closely matched resistance, an area that continues to draw slight selling pressure. The retest remains underway.
Placing a finer point on the S&P 500’s backdrop, its initial May breakout registered as directionally sharp, placing the index at two-month highs.
The subsequent pullback was comparably flat, underpinned by the 2,710 breakout point. Constructive price action.
Conversely, resistance matching the May peak (2,742.10) is currently under siege.
On further strength, an inflection point rests at 2,761, and is followed by firmer overhead matching its four-month range top spanning from 2,789 to 2,802.
Beyond technical levels, the U.S. benchmarks are making technical progress even amid pronounced cross currents across asset classes, detailed last week.
(For instance, rising Treasury yields and a U.S. dollar breakout have contributed to tandem gold and Japanese yen technical breakdowns.)
The U.S. stock benchmarks’ resilience, and relative stability, amid the cross currents also supports a bullish technical bias.
Tuesday’s Watch List
Drilling down further, the 30-year Treasury note yield continues to press major resistance.
The specific area matches the February peak (3.22) as well as a nearly three-year range top.
Against this backdrop, the yield is rising from a bullish cup-and-handle pattern underpinned by the 50-day moving average. An eventual breakout opens the path to less-charted territory, though a near-term target projects to 3.31.
In related price action, the 10-year Treasury note yield is digesting its May spike to nearly seven-year highs, detailed last week.
Moving to U.S. sectors, the transports have come to life technically.
As illustrated, the iShares Transportation Average ETF has reached nearly four-month highs, edging atop well-defined resistance.
The prevailing upturn originates from trendline support, as well as a successful test of the 200-day moving average.
More immediately, the breakout point, circa 195, pivots to support. A sustained posture higher leaves the path open to a potential retest of record territory matching the January peak.
Looking elsewhere, the VanEck Vectors Oil Services ETF is acting well technically.
The group has recently staged a bull-flag breakout, rising to challenge 52-week highs.
Muted selling pressure near resistance, across three sessions — combined with a relative strength index (not illustrated) that has reached four-month highs — improve the chances of an eventual breakout.
More broadly, consider that the transports and energy sector are frequently inversely correlated. The prevailing tandem transports and energy sector resurgence is broad-market constructive, consistent with economic strength.
Initially profiled Oct. 30, Akamai Technologies, Inc. has returned 44.3% and remains well positioned.
As illustrated, the shares are rising from a bullish cup-and-handle defined by the April and mid-May lows.
More broadly, the range top matches major overhead, illustrated on the five-year chart.
Tactically, a breakout attempt is in play barring a violation of near-term support, circa 74.20. An eventual close atop the March peak (78.30) opens the path to less-charted territory, and potentially material follow-through.
Electronic Arts, Inc. is a well positioned large-cap video game producer.
Earlier this month, the shares knifed to record territory, rising after the company’s fourth-quarter results.
The subsequent pullback has been flat, fueled by decreased volume, positioning the shares to build on the initial spike. Tactically, first support matches the breakout point, circa 130, and the rally attempt is intact barring a violation.
Momo, Inc. is a large-cap Beijing-based social networking platform operator.
As illustrated, the shares have rallied to the range top, rising to challenge nine-month highs.
Tactically, near-term support closely matches the 50-day moving average (36.95), a recent inflection point, and a breakout attempt is in play barring a violation. An intermediate-term target projects to the 46 area on follow-through.
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 |
| Industrial Select Sector SPDR | May 21 | |
| Deere & Co. | May 21 | |
| Union Pacific Corp. | May 21 | |
| Twilio, Inc. | May 21 | |
| SolarEdge Technologies, Inc. | May 21 | |
| Intercept Pharmaceuticals, Inc. | May 21 | |
| Energy Select Sector SDPR | May 18 | |
| Viper Energy Partners LP | May 18 | |
| Energen Corp. | May 18 | |
| Boyd Gaming Corp. | May 18 | |
| Packaging Corp. of America | May 17 | |
| Range Resources Corp. | May 17 | |
| Ternium S.A. | May 17 | |
| SPDR S&P Metals & Mining ETF | May 17 | |
| SPDR S&P Retail ETF | May 15 | |
| Target Corp. | May 15 | |
| United Parcel Service, Inc. | May 14 | |
| Lowe’s Companies, Inc. | May 14 | |
| Toyota Motor Corp. | May 14 | |
| Fabrinet | May 14 | |
| Pegasystems, Inc. | May 14 | |
| Texas Instruments, Inc. | May 11 | |
| Vale SA | May 11 | |
| PowerShares QQQ Trust | May 10 | |
| Facebook, Inc. | May 9 | |
| Electronics for Imaging, Inc. | May 9 | |
| Nutanix, Inc. | May 9 | |
| SPDR S&P Oil and Gas Exploration & Production ETF | May 9 | |
| Tableau Software, Inc. | May 8 | |
| Coupa Software, Inc. | May 8 | |
| Now, Inc. | May 8 | |
| Apple, Inc. | May 7 | |
| McDonald’s Corp. | May 7 | |
| American Express Co. | May 7 | |
| PDC Energy, Inc. | May 7 | |
| Under Armour, Inc. | May 2 | |
| Melco Resorts & Entertainment Ltd. | May 2 | |
| Norfolk Southern Corp. | May 2 | |
| Advanced Micro Devices, Inc. | May 1 | |
| 58.com, Inc. | May 1 | |
| UnitedHealth Group, Inc. | Apr. 30 | |
| Nike, Inc. | Apr. 30 | |
| DSW, Inc. | Apr. 30 | |
| Home Depot, Inc. | Apr. 27 | |
| Best Buy Co., Inc. | Apr. 27 | |
| Noble Energy, Inc. | Apr. 27 | |
| Sanmina Corp. | Apr. 27 | |
| Golar LNG Limited | Apr. 26 | |
| Costco Wholesale Corp. | Apr. 26 | |
| CSX Corp. | Apr. 26 | |
| Applied Optoelectronics, Inc. | Apr. 19 | |
| Chipotle Mexican Grill, Inc. | Apr. 19 | |
| Wingstop, Inc. | Apr. 19 | |
| F5 Networks, Inc. | Apr. 18 | |
| Workday, Inc. | Apr. 18 | |
| FedEx Corp. | Apr. 17 | |
| Pacira Pharmaceuticals, Inc. | Apr. 17 | |
| Barrick Gold Corp. | Apr. 16 | |
| Valero Energy | Apr. 16 | |
| EOG Resources, Inc. | Apr. 11 | |
| Sarepta Therapeutics, Inc. | Apr. 11 | |
| Autodesk, Inc. | Apr. 10 | |
| NetApp, Inc. | Apr. 9 | |
| GlaxoSmithKline | Apr. 9 | |
| AMC Entertainment Holdings, Inc. | Apr. 9 | |
| Guess, Inc. | Apr. 2 | |
| Continental Resources, Inc. | Apr. 2 | |
| Whiting Petroleum Corp. | Mar. 22 | |
| Domino’s Pizza, Inc. | Mar. 21 | |
| Orbotech Ltd. | Mar. 16 | |
| Eastman Chemical Co. | Mar. 16 | |
| Veeva Systems, Inc. | Mar. 15 | |
| Autohome, Inc. | Mar. 14 | |
| Burlington Stores, Inc. | Mar. 14 | |
| Baozun, Inc. | Mar. 9 | |
| Marathon Petroleum Corp. | Mar. 9 | |
| Intel Corp. | Mar. 8 | |
| AxoGen, Inc. | Mar. 8 | |
| Zebra Technologies Corp. | Mar. 7 | |
| TJX Companies, Inc. | Mar. 6 | |
| Chart Industries, Inc. | Mar. 6 | |
| Macy’s, Inc. | Mar. 5 | |
| Five9, Inc. | Mar. 5 | |
| LivePerson, Inc. | Feb. 28 | |
| VeriSign, Inc. | Feb. 26 | |
| Shutterfly, Inc. | Feb. 22 | |
| ServiceNow, Inc. | Feb. 21 | |
| Palo Alto Networks, Inc. | Feb. 16 | |
| Adobe Systems, Inc. | Feb. 16 | |
| Salesforce.com, Inc. | Feb. 12 | |
| Red Hat, Inc. | Feb. 1 | |
| Fortinet, Inc. | Jan 19 | |
| Insulet Corp. | Jan. 17 | |
| Arrowhead Pharmaceuticals Corp. | Jan. 11 | |
| Vericel Corp. | Jan. 10 | |
| Sarepta Therapeutics, Inc. | Jan. 3 | |
| Best Buy Co. | Dec. 11 | |
| Abercrombie & Fitch Co. | Nov. 20 | |
| MSCI, Inc. | Nov. 20 | |
| Motorola Solutions, Inc. | Nov. 14 | |
| Splunk, Inc. | Nov. 9 | |
| Akamai Technologies, Inc. | Oct. 30 | |
| Lululemon Athletica, Inc. | Oct. 24 | |
| HubSpot, Inc. | Oct. 4 | |
| XPO Logistics, Inc. | Oct. 2 | |
| Nvidia Corp. | Sept. 27 | |
| Southern Copper Corp. | Aug. 17 | |
| Bottomline Technologies, Inc. | July 13 | |
| GrubHub, Inc. | May 4 | |
| Square, Inc. | Mar. 3 | |
| Netflix, Inc. | Oct. 4 | |
| Microsoft Corp. | Aug. 5 |