U.S. stocks are higher early Friday, rising after a market-friendly batch of economic data.
Against this backdrop, the S&P 500 has extended a rally from its 50-day moving average, while the Nasdaq Composite seems to have narrowly survived a test of key support matching the 2020 peak (12,973). The weekly close will likely add color.
Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, +1.66% hourly chart highlights the past two weeks.
As illustrated, the S&P has weathered a jagged test of major support (3,870) closely matching the 50-day moving average, currently 3,873.
The bullish reversal from support — also illustrated on the daily chart — preserves a comfortably bullish intermediate-term bias.
Meanwhile, the Dow Jones Industrial Average DJIA, +1.39% remains the strongest major benchmark.
Technically, the index has reversed sharply from two-week lows, rising to the former range.
On further strength, the 32,800 area remains a near-term inflection point.
Against this backdrop, the Nasdaq Composite COMP, +1.24% has reached a potentially consequential technical test.
As detailed repeatedly, major support matches the 2020 peak (12,973), a bull-bear inflection point also illustrated on the daily chart below.
Thursday’s close (12,977) registered narrowly atop support amid a retest that remains underway.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has whipsawed this week at major support (12,973).
The specific area matches the 2020 peak (12,973) a level that also marked the early-March breakdown point. (Recall the initial violation of the 2020 peak punctuated a head-and-shoulders top, a bearish pattern that has been at least temporarily neutralized by the swift reversal back to the range, fueled by two 7-to-1 up days.)
The Nasdaq’s response to major support (12,973) — potentially across the next several sessions — should be a useful intermediate-term bull-bear gauge.
Delving deeper, significant support (12,607) closely matches the March closing low (12,609). (See for instance, the Jan. 11 review.)
Looking elsewhere, the Dow Jones Industrial Average remains the strongest major benchmark.
Consider that the week-to-date low (32,071) has registered comfortably atop the breakout point (32,009) an area marking the Dow’s first notable floor.
The pronounced bullish reversal from support — punctuated by a session close 548 points above the session low — is technically constructive.
Delving deeper, the 50-day moving average, currently 31,567, is rising toward the former range top, circa 31,650.
Meanwhile, the S&P 500 has weathered a noteworthy technical test this week.
To reiterate, the index has registered a bullish reversal from major support (3,870) closely matching the 50-day moving average, currently 3,873.
Conversely, recall that the week-to-date price action has been capped by the breakdown point (3,950).
The bigger picture
As detailed above, each big three U.S. benchmark has just weathered a key technical test.
On a headline basis, the S&P 500 has maintained its 50-day moving average, while the Nasdaq Composite has survived a retest of the 2020 peak (12,973) — by the skin of its teeth.
Meanwhile, the Dow Jones Industrial Average remains the strongest major benchmark, reversing sharply from its breakout point (32,009).
Combined, the S&P 500 and Dow industrials have retained a bullish intermediate-term bias.
The Nasdaq’s intermediate-term bias arguably hinges on its response to the 2020 peak (12,973). An extended retest of this area remains underway.
Moving to the small-caps, the iShares Russell 2000 ETF IWM, +1.82% has registered a bullish reversal amid a volume spike.
Tactically, the range bottom (216.70) marks an inflection point, detailed previously.
Thursday’s close (216.66) registered nearby, and the small-cap benchmark has followed through to its former range early Friday.
Tactically, the 50-day moving average, currently 220.50, marks an overhead inflection point.
Meanwhile, the SPDR S&P MidCap 400 ETF MDY, +2.32% remains incrementally stronger.
Consider that the MDY has formed a bullish engulfing pattern, rising from its range bottom.
Put differently, the session’s open and close — the long white bar — engulfed those of the prior session. The MDY’s successful retest, and bullish reversal, are technically constructive.
Looking elsewhere, the SPDR Trust S&P 500 SPY, +1.61% has maintained support closely matching the 50-day moving average.
The bullish reversal registered amid a volume uptick.
More broadly, the SPY has preserved a seven-week range, punctuated by modest March breaks both higher and lower.
Placing a finer point on the S&P 500, the index has reversed respectably from major support.
The familiar area matches the S&P’s former breakout point (3,870) and the 50-day moving average, currently 3,873.
Conversely, the S&P’s breakdown point (3,950) has marked an overhead sticking point.
More broadly, the S&P 500 has staged a largely garden-variety late-March pullback.
The downturn has been underpinned by the range bottom, an area matching the Jan. peak (3,870) and 50-day moving average. The bullish reversal from support — fueled by increased volume — is constructive.
Limited technical damage has been inflicted in the broad sweep.
Separately, the index has preserved a series of “higher highs” and “higher lows” also signaling an intermediate-term uptrend. The S&P’s intermediate-term bias remains bullish, based on today’s backdrop, pending more aggressive selling pressure. (Also see Thursday’s review for added detail on deeper inflection points.)
Friday’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 United States Oil Fund USO, +4.11% has pulled in to a key technical test The fund tracks daily changes in the spot price of light, sweet crude oil.
Fundamentally, the shares initially turned lower amid concerns over Europe’s virus surge, and the prospect of renewed economic lockdowns. Oil prices have subsequently stabilized, at least for the near-term, following a solid round of U.S. economic data and amid the Suez Canal debacle.
Technically, the shares have whipsawed this week near trendline support amid increased volume.
Notable support matches prevailing range bottom (39.30) and the 50-day moving average, currently 39.82. An eventual violation would mark a “lower low” — and punctuate a head-and-shoulders top — raising a caution flag.
The USO’s intermediate-term bias remains guardedly-bullish, based on today’s backdrop, barring downside follow-through.
Moving to specific names, Home Depot, Inc. HD, +2.23% is a Dow 30 component coming to life. (Yield = 2.2%.)
As illustrated, the shares have knifed to record highs, punctuating a nearly straightline bullish reversal from the March low.
Underlying the upturn, its relative strength index (not illustrated) has tagged its best levels since August, improving the chances of longer-term follow-through.
Tactically, the breakout point (290.00) is followed by the former range top (285.80). The prevailing rally attempt is intact barring a violation.
More broadly, the shares are well positioned on the three-year chart, rising from a prolonged continuation pattern hinged to the massive 2020 V-shaped reversal.
Initially profiled Nov. 17, Applied Materials, Inc. AMAT, +7.45% has returned 60.7% and remains well positioned.
Earlier this week, the shares knifed to the range top, rising after the company announced a $7.5 billion share buyback plan.
Slightly more broadly, recent persistence near the range top — amid comparably sluggish semiconductor sector price action — improves the chances of an eventual breakout.
Tactically, the 50-day moving average, currently 111.70, is rising toward the prevailing range bottom (112.15). A breakout attempt is in play barring a violation.
Ferrari N.V. RACE, +0.15% is a large-cap Italy-based luxury and performance auto manufacturer.
The shares started the week with a breakout, knifing atop trendline resistance and the 50-day moving average.
The subsequent pullback has been comparably flat, placing the shares 2.7% under the March peak.
Tactically, the former breakdown point, circa 200, has underpinned the prevailing pullback and is closely followed by the 200-day moving average, currently 196.00. The rally attempt is intact barring a violation.
Finally, Inc. Funko, Inc. FNKO, -6.48% is a small-cap maker of pop-culture collectibles.
The shares have come to life of late, rising after the company signaled its intention to enter the non-fungible token (NFT) market.
Technically, the shares are near-term extended — following a two standard deviation breakout — though the aggressive strong-volume spike likely lays the groundwork for longer-term follow-through.
Tactically, the mid-March peak is followed by the firmer breakout point (18.83).
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|
|Cisco Systems, Inc.||CSCO||Mar. 25|
|Steel Dynamics, Inc.||STLD||Mar. 25|
|Procter & Gamble Co.||PG||Mar. 25|
|Consumer Staples Select Sector SPDR||XLP||Mar. 25|
|iShares U.S. Home Construction ETF||ITB||Mar. 23|
|Lennar Corp.||LEN||Mar. 23|
|Jabil Circuit, Inc.||JBL||Mar. 23|
|Dish Network Corp.||DISH||Mar. 23|
|UnitedHealth Group, Inc.||UNH||Mar. 22|
|DraftKings, Inc.||DKNG||Mar. 22|
|Shift4 Payments, Inc.||FOUR||Mar. 19|
|Whirlpool Corp.||WHR||Mar. 19|
|U.S. Bancorp||USB||Mar. 19|
|Nasdaq, Inc.||NDAQ||Mar. 18|
|D.R. Horton, Inc.||DHI||Mar. 18|
|Facebook, Inc.||FB||Mar. 17|
|AutoNation, Inc.||AN||Mar. 17|
|McDonald’s Corp.||MCD||Mar. 16|
|Virtu Financial, Inc.||VIRT||Mar. 16|
|Spirit Airlines, Inc.||SAVE||Mar. 16|
|LKQ Corp.||LKQ||Mar. 15|
|Anthem, Inc.||ANTM||Mar. 15|
|Walgreens Boots Alliance, Inc.||WBA||Mar. 12|
|International Paper Co.||IP||Mar. 12|
|iShares Europe ETF||IEV||Mar. 11|
|CME Group, Inc.||CME||Mar. 11|
|3M Co.||MMM||Mar. 11|
|Southwest Airlines Co.||LUV||Mar. 10|
|Under Armour, Inc.||UA||Mar. 9|
|Big Lots, Inc.||BIG||Mar. 9|
|Alaska Air Group, Inc.||ALK||Mar. 9|
|State Street Corp.||STT||Mar. 8|
|American Eagle Outfitters, Inc.||AEO||Mar. 8|
|Hess Corp.||HES||Mar. 3|
|Beazer Homes USA, Inc.||BZH||Mar. 3|
|Mastercard, Inc.||MA||Mar. 2|
|Boeing Co.||BA||Mar. 2|
|Starbucks Corp.||SBUX||Mar. 1|
|Eaton Corp.||ETN||Feb. 25|
|Oracle Corp.||ORCL||Feb. 24|
|United Airlines Holdings, Inc.||UAL||Feb. 24|
|Nucor Corp.||NUE||Feb. 23|
|Signet Jewelers Limited||SIG||Feb. 23|
|Old Dominion Freight Line||ODFL||Feb. 22|
|Seagate Technology||STX||Feb. 19|
|Chevron Corp.||CVX||Feb. 18|
|Lyft, Inc.||LYFT||Feb. 16|
|Intel Corp.||INTC||Feb. 12|
|U.S. Global Jets ETF||JETS||Feb. 9|
|Motorola Solutions, Inc.||MSI||Feb. 9|
|Diamondback Energy, Inc.||FANG||Feb. 4|
|CarMax, Inc.||KMX||Feb. 3|
|Toll Brothers, Inc.||TOL||Feb. 2|
|Avis Budget Group, Inc.||CAR||Feb. 1|
|Capital One Financial Corp.||COF||Jan. 29|
|Cummins, Inc.||CMI||Jan. 25|
|Magna International, Inc.||MGA||Jan. 22|
|M.D.C. Holdings, Inc.||MDC||Jan. 22|
|Zebra Technologies Corp.||ZBRA||Jan. 14|
|Nexstar Media Group, Inc.||NXST||Jan. 11|
|iShares Transportation Average ETF||IYT||Jan. 11|
|Energy Select Sector SPDR||XLE||Jan. 8|
|Skyworks Solutions, Inc.||SWKS||Jan. 7|
|Financial Select Sector SPDR||XLF||Jan. 7|
|Synaptics, Inc.||SYNA||Jan. 4|
|JPMorgan Chase & Co.||JPM||Dec. 22|
|Williams-Sonoma, Inc.||WSM||Dec. 15|
|SDPR S&P Regional Banking ETF||KRE||Dec. 14|
|Emerson Electric Co.||EMR||Dec. 8|
|Fortinet, Inc.||FTNT||Dec. 7|
|Kulicke and Soffa Industries, Inc.||KLIC||Dec. 7|
|Dillard’s, Inc.||DDS||Dec. 4|
|Sonos, Inc.||SONO||Dec. 1|
|American Airlines Group, Inc.||AAL||Nov. 30|
|Bank of America Corp.||BAC||Nov. 20|
|SPDR S&P Oil & Gas Exploration and Production ETF||XOP||Nov. 20|
|MetLife, Inc.||MET||Nov. 19|
|Kohl’s Corp.||KSS||Nov. 18|
|Applied Materials, Inc.||AMAT||Nov. 17|
|Regions Financial Corp.||RF||Nov. 13|
|Norfolk Southern Corp.||NSC||Nov. 9|
|Communications Services Select Sector SPDR||XLC||Nov. 5|
|Alphabet, Inc.||GOOGL||Nov. 5|
|Micron Technology, Inc.||MU||Oct. 20|
|ON Semiconductor Corp.||ON||Oct. 16|
|Ford Motor Co.||F||Oct. 15|
|SPDR S&P Homebuilders ETF||XHB||Oct. 9|
|Shake Shack, Inc.||SHAK||Oct. 9|
|Martin Marietta Materials, Inc.||MLM||Sept. 30|
|Abercrombie & Fitch Co.||ANF||Sept. 29|
|Crocs, Inc.||CROX||Sept. 14|
|Five Below, Inc.||FIVE||Sept. 10|
|Deere & Co.||DE||Aug. 24|
|Johnson Controls International||JCI||Aug. 21|
|General Motors Co.||GM||Aug. 20|
|Builders FirstSource, Inc.||BLDR||Aug. 18|
|Industrial Select Sector SPDR||XLI||Aug. 6|
|SPDR S&P Metals & Mining ETF||XME||July 28|
|Materials Select Sector SPDR||XLB||July 20|
|Caterpillar, Inc.||CAT||July 20|
|SPDR S&P Retail ETF||XRT||June 3|
|iShares MSCI Japan ETF||EWJ||May 29|
|Tesla, Inc.||TSLA||Apr. 23|
|Apple, Inc.||AAPL||Mar. 27, 2020|
|Microsoft Corp.||MSFT||Feb. 22, 2019|
|* Click each symbol for current chart.|