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THE TECHNICAL INDICATOR

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, the U.S. benchmarks’ bigger-picture backdrop has strengthened amid unseasonably constructive October price action.

Against this backdrop, the S&P 500 and Nasdaq Composite have reached less-charted territory, rising within striking distance of record highs.

Before detailing the U.S. markets’ wider view, the S&P 500’s (SPX) hourly chart highlights the past two weeks.

As illustrated, the S&P has taken flight, extending a steep October breakout.

Tactically, the top of the gap (3,499.6) matches the 3,500 mark.

Delving slightly deeper, last week’s high (3,482) marks the bottom of the gap.

Similarly, the Dow Jones Industrial Average (DJIA) has extended its breakout.

In the process, the Dow has notched consecutive closes atop the 2019 close (28,538), placing it in positive year-to-date territory.

The 29,000 mark is increasingly within view.

Against this backdrop, the Nasdaq Composite (COMP) has also knifed to one-month highs.

The prevailing upturn originates from familiar support (11,126), an area detailed previously.

Last week’s low (11,124) closely matched support.

More immediately, the top of the gap (11,704) marks a near-term floor.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has extended its October rally, rising from a successful test of the 50-day moving average (in blue).

Against this backdrop, Monday’s close registered atop the 20-day Bollinger bands to punctuate a bullish two standard deviation breakout.

Tactically, the Nasdaq is near-term extended, and due to consolidate, following a move outside its “expected” trailing 20-day volatility range.

But more importantly, the index has registered statistically unusual bullish momentum, likely laying the groundwork for longer-term incremental gains. As always, consecutive closes atop the volatility bands are more definitively bullish.

On further strength, the Nasdaq’s record close (12,056) is closely followed by its absolute record peak (12,074).

Looking elsewhere, the Dow Jones Industrial Average is also traversing less-charted territory.

Additional resistance matches the September closing peak (29,100) and absolute September peak (29,199), levels defining seven-month highs.

The Dow’s all-time high (29,568.57) — established Feb. 12 — remains more distant.

Meanwhile, the S&P 500 has staged a decisive October spike.

Here again, Monday’s close registered atop the 20-day volatility bands (see link) to punctuate a bullish two standard deviation breakout.

Tactically, the S&P’s record close (3,580.84) and absolute record peak (3,588.11) are increasingly within view.

The bigger picture

Collectively, the bigger-picture backdrop has strengthened amid an unseasonably strong early-October rally.

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Against this backdrop, the S&P 500 and Nasdaq Composite have reached a less-charted patch, rising within striking distance of record highs. Both benchmarks have registered a bullish two standard deviation breakout.

Meanwhile, the Dow Jones Industrial Average continues to lag slightly behind, but has rallied within view of seven-month highs.

Moving to the small-caps, the iShares Russell 2000 ETF has extended a break to seven-month highs. Tactically, the breakout point, circa 159.80, pivots to support.

Similarly, the SPDR S&P MidCap 400 ETF has reached seven-month highs.

Here again, the breakout point, circa 360.20, pivots to support.

More broadly, the small- and mid-caps’ resurgence is consistent with market rotation, and broadening participation, strengthening the bull case.

Looking elsewhere, the SPDR Trust S&P 500 has not registered multi-month highs.

Nonetheless, the SPY has extended a rally atop major resistance, rising within striking distance of record territory.

Placing a finer point on the S&P 500, the index has extended a decisive October breakout.

To reiterate, a near-term floor matches the top of the gap, and the 3,500 mark.

Slightly more broadly, the S&P’s first significant support matches the mid-September peak, circa 3,428, an area also illustrated below.

More immediately, the S&P has reached less-charted territory punctuated by not-so-well-defined resistance.

Load Error

In fact, the absence of resistance has arguably contributed to the swift October follow-through.

Against this backdrop, Monday’s close (3,534) marked the S&P’s second-best close on record. The session close also matched the top of the early-September gap (3,535).

On further strength, the S&P’s record close (3,580.84) and absolute record peak (3,588.11) are increasingly within view.

Beyond technical levels, the S&P 500 is near-term extended, and due to consolidate, following a two standard deviation breakout.

But more importantly, bigger-picture backdrop has strengthened to start October amid broadening participation. (See for instance, the small- and mid-caps’ resurgence.) The S&P 500’s intermediate-term path of least resistance continues to point higher.

Also see: Charting a bullish Q4 start: S&P 500 extends rally from major support.

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 iShares MSCI Emerging Markets ETF is acting well technically. (Yield = 2.0%.)

As illustrated, the shares have cleared the range top, rising to tag a two-year high. A near-term target projects to the 48 area on follow-through.

Conversely, the breakout point (45.40) pivots to well-defined support.

More broadly, the shares are well positioned on the three-year chart, rising from a continuation pattern hinged to the massive early-2020 V-shaped reversal.

Initially profiled March 27, Apple, Inc. (AAPL) has returned 92.6% and remains well positioned.

As illustrated, the shares have knifed to one-month highs, rising ahead of Tuesday’s iPhone 12 launch event, Apple’s first phone to support 5G services.

The prevailing upturn originates from trendline support and places record highs within striking distance.

Tactically, the top of the gap (119.28) roughly matches the breakout point, and is followed by the ascending 50-day moving average. A sustained posture higher signals a comfortably bullish bias.

Similarly, Amazon.com, Inc. (AMZN) is a mega-cap name coming to life.

Technically, the shares have staged a strong-volume breakout, rising amid Tuesday’s Amazon Prime Day kick-off, a two-day sales event.

The upturn punctuates a tight early-October range — hinged to the 50-day moving average — and places record highs within view.

Tactically, gap support — at 3,339.50 and 3,289.00 — is followed by the deeper breakout point, circa 3,247. The prevailing rally attempt is intact barring a violation.

First Solar, Inc. (FSLR) is a well positioned large-cap name.

As illustrated, the shares are challenging nine-year highs, an area matching the 2018 peak (81.72) and August peak (81.87).

The October rally has been fueled by increased volume — and punctuated by persistence near the range top — laying the groundwork for potential follow-through. Tactically, near-term support, circa 76.50, offers an area to work against. A breakout attempt is in play barring a violation.

More broadly, the shares are well positioned on the one-decade chart, challenging major resistance from a prolonged multi-year base.

Initially profiled Aug. 20, Adobe, Inc. (ADBE) has added 6.8% and remains well positioned.

As illustrated, the shares have reached one-month highs, clearing resistance matching the mid-September peak. The strong-volume upturn punctuates an extended test of the 50-day moving average.

Tactically, the breakout point (505.50) pivots to well-defined support.

Conversely, Adobe’s record peak (536.88) is followed by an intermediate-term projected target in the 550 area.

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* (Click symbol for chart.) Date Profiled
Fastly, Inc. FSLY Oct. 12
Nevro Corp. NVRO Oct. 12
Teradyne, Inc. TER Oct. 12
SPDR S&P Homebuilders ETF XHB Oct. 9
Broadcom, Inc. AVGO Oct. 9
STMicroelectronics N.V. STM Oct. 9
Shake Shack, Inc. SHAK Oct. 9
SPDR S&P Biotech ETF XBI Oct. 8
Alexion Pharmaceuticals, Inc. ALXN Oct. 8
Twilio, Inc. TWLO Oct. 8
Cloudflare, Inc. NET Oct. 7
Ceridian HCM Holding, Inc. CDAY Oct. 7
Guess, Inc. GES Oct. 7
Gap, Inc. GPS Oct. 6
Motorola Solutions, Inc. MSI Oct. 6
Sunnova Energy International, Inc. NOVA Oct. 6
Ross Stores, Inc. ROST Oct. 5
SBA Communications Corp. SBAC Oct. 5
Marvell Technology Group,Ltd. MRVL Oct. 5
Qorvo, Inc. QRVO Oct. 2
NCR Corp. NCR Oct. 2
LGI Homes, Inc. LGIH Oct. 2
SailPoint Technology Holdings, Inc. SAIL Oct. 1
Dell Technologies, Inc. DELL Sept. 30
Martin Marietta Materials, Inc. MLM Sept. 30
Whirlpool Corp. WHR Sept. 29
Abercrombie & Fitch Co. ANF Sept. 29
American Eagle Outfitters AEO Sept. 28
Twitter, Inc. TWTR Sept. 28
Blueprint Medicines Co. BPMC Sept. 28
Zendesk, Inc. ZEN Sept. 23
Datadog, Inc. DDOG Sept. 23
Scientific Games Corp. SGMS Sept. 23
Maxar Technologies, Inc. MAXR Sept. 18
V.F. Corp. VFC Sept. 14
Crocs, Inc. CROX Sept. 14
Toyota Motor Co. TM Sept. 14
Five Below, Inc. FIVE Sept. 10
Dow Inc. DOW Sept. 10
Eastman Chemical Co. EMN Sept. 10
CrowdStrike Holdings, Inc. CRWD Sept. 9
Workhorse Group, Inc. WKHS Sept. 9
International Paper Co. IP Sept. 3
Anaplan, Inc. PLAN Sept. 2
Beyond Meat, Inc. BYND Sept. 1
Elastic N.V. ESTC Sept. 1
Medtronic MDT Aug. 28
Celanese Corp. CE Aug. 26
Norfolk Southern Corp. NSC Aug. 25
Westlake Chemical Corp. WLK Aug. 25
Deere & Co. DE Aug. 24
PulteGroup, Inc. PHM Aug. 24
Expedia Group, Inc. EXPE Aug. 24
Johnson Controls International JCI Aug. 21
Adobe, Inc. ADBE Aug. 20
Canadian Solar, Inc. CSIQ Aug. 20
General Motors Co. GM Aug. 20
Starbucks Corp. SBUX Aug. 18
Builders FirstSource, Inc. BLDR Aug. 18
Steel Dynamics, Inc. STLD Aug. 17
Elanco Animal Health, Inc. ELAN Aug. 17
Brinker International, Inc. EAT Aug. 13
Enphase Energy, Inc. ENPH Aug. 13
Nike, Inc. NKE Aug. 11
Nucor Corp. NUE Aug. 11
Freeport McMoRan, Inc. FCX Aug. 10
Natera, Inc. NTRA Aug. 10
Lennar Corp. LEN Aug. 7
McDonald’s Corp. MCD Aug. 7
Mastercard, Inc. MA Aug. 6
Kansas City Southern KSU Aug. 6
Industrial Select Sector SPDR XLI Aug. 6
Verizon Communications, Inc. VZ Aug. 5
Sunrun, Inc. RUN Aug. 5
Penn National Gaming, Inc. PENN July 30
Procter & Gamble Co. PG July 29
SPDR S&P Metals & Mining ETF XME July 28
iShares MSCI South Korea ETF EWY July 28
Toll Brothers, Inc. TOL July 27
Advanced Micro Devices, Inc. AMD July 23
Best Buy Co., Inc. BBY July 22
Materials Select Sector SPDR XLB July 20
Caterpillar, Inc. CAT July 20
iShares U.S. Home Construction ETF ITB July 17
Progressive Corp. PGR July 17
Livongo Health, Inc. LVGO July 17
Roku, Inc. ROKU July 16
Cognizant Technology Solutions, Inc. CTSH July 16
Consumer Staples Select Sector SPDR XLP July 15
Home Depot, Inc. HD July 15
Costco Wholesale Corp. COST July 15
Air Products & Chemicals, Inc. APD July 14
Consumer Discretionary Select Sector SPDR XLY July 13
SunPower Corp. SPWR July 13
Walmart, Inc. WMT July 8
Big Lots, Inc. BIG July 1
Tandem Diabetes Care, Inc. TNDM July 1
Dell Technologies, Inc. DELL June 30
Danaher Corp. DHR June 24
RH RH June 24
Lowe’s Companies LOW June 19
Fiverr International, Ltd. FVRR June 19
Etsy, Inc. ETSY June 17
HubSpot, Inc. HUBS June 8
Square, Inc. SQ June 8
United Parcel Service, Inc. UPS June 5
FedEx Corp. FDX June 3
SPDR S&P Retail ETF XRT June 3
iShares MSCI Japan ETF EWJ May 29
SolarEdge Technologies, Inc. SEDG May 29
Synopsis, Inc. SNPS May 27
Agilent Technologies, Inc. A May 15
Qualcomm, Inc. QCOM May 12
Salesforce.com, Inc. CRM May 8
Facebook, Inc. FB May 7
Spotify Technology S.A. SPOT May 5
Dollar General Corp. DG Apr. 28
ServiceNow, Inc. NOW Apr. 27
Five9, Inc. FIVN Apr. 24
Chewy, Inc. CHWY Apr. 24
Tesla, Inc. TSLA Apr. 23
VanEck Vectors Semiconductor ETF SMH Apr. 17
Veeva Systems, Inc. VEEV Apr. 17
Okta, Inc. OKTA Apr. 16
Target Corp. TGT Apr. 16
Invesco QQQ Trust QQQ Apr. 14
DocuSign, Inc. DOCU Apr. 3
Zscaler, Inc. ZS Apr. 3
Apple, Inc. AAPL Mar. 27
Nvidia Corp. NVDA Mar. 27
Zoom Video Communications, Inc. ZM Mar. 19
iShares MSCI Emerging Markets ETF EEM Mar. 19
SPDR Gold Shares ETF GLD Jan. 2
Microsoft Corp. MSFT Feb. 22
* Click each symbol for current chart.
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