Bull trend strengthens: S&P 500, Nasdaq clear 20-day volatility bands


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,
-0.39%
 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,
-0.41%
 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,
+0.09%
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.

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.

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,
-1.63%
 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,
+0.94%
 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,
+5.20%
 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,
+0.96%
 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.

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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