Bulls and bears vie for the summer trend
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CINCINNATI (MarketWatch) -- While the market backdrop remains jagged, and effectively trendless, well-defined technical benchmarks are in play.
Namely, the Standard & Poor's 500 Index has established a "post-correction" trading range, and the break from this area should set the summer technical tone. The charts below add color:
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's backdrop remains jagged, and challenging.
From current levels, notable support rests at 1,308 -- the S&P bottomed Monday at 1,309 -- while near-term resistance holds around 1,324.
Meanwhile, the Dow industrials' near-term backdrop is similar.
In its case, the blue-chip benchmark has knifed through notable support at 12,750, and the subsequent rally attempts have been flat.
On further weakness, initial support holds around 12,400, matching its 200-day moving average, better illustrated on the daily chart.
And the Nasdaq Composite has also reversed sharply from recent highs.
On a headline basis, the 2,885 area marks a significant inflection point better illustrated on the daily chart.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has sold off sharply from well-defined resistance.
Consider that the April low held at 2,946, and the index topped last week at 2,942, matching resistance.
It's now traversing less-charted technical territory, and compressing between the 50-day, and 200-day, moving averages.
Moving the to Dow, its six-month backdrop is equally volatile.
Here again, the index has tried to break from the 200-day moving average to the downside (in gold), and from the 50-day moving average to the upside (in blue), though both tests have failed.
More plainly, the backdrop is trendless, and fragile.
Looking ahead, a sustained break atop the 12,750 area would place the Dow on firmer technical footing.
And the S&P 500's wider view is similar.
Consider that the June closing high has come in at 1,357.98, matching resistance at its breakdown point, the April low of 1,357.4.
Bearish price action.
The bigger picture
On one level, the U.S. markets' technical backdrop is convoluted. The major benchmarks continue to whipsaw amid euro-zone related concerns.
But on a headline basis, the technicals are firmly in play.
Starting with the Nasdaq, resistance holds at the April low of 2,946.
Consider that this month's peak has come in at 2,942 -- matching resistance -- and the index has sold off sharply.
Similarly, S&P 500 resistance holds at the April low of 1,357.4.
In its case, the June closing high has come in at 1,357.98 -- matching resistance -- and again, the index has sold off sharply from resistance.
Summing up the backdrop
All told, the U.S. markets are consolidating the May breakdown, and a true "trend" is absent.
Nonetheless, market bears have drawn a line in the sand at the April lows, detailed above, and a tactical approach remains advisable. (Tactical means sell S&P resistance at 1,357, and buy support around 1,292.)
Within this band, a sluggish summer backdrop is in play.
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.
ETFSymbolMon CloseSupport ResistanceiShares China 25 IndexFXI$31.82$32.40$28.90Drilling down further, the China iShares (FXI) remain on bearish footing.
As illustrated, the FXI stalled last week at its breakdown point -- matching the 50-day moving average -- and has since plunged to eight-month lows.
Its downdraft suggests bearish momentum remains in play, and this is a group to avoid pending technical repairs. A close atop its breakdown point would mark a first step toward stabilization.
CompanySymbolMon CloseSupport ResistanceInitially profiled Oct. 7, Ross Stores Inc. (ROST) has returned 59.5% and remains well positioned.
Earlier this month, the shares rallied to record territory, clearing resistance at the May peak.
By comparison, the ensuing pullback has been orderly, placing the shares at an attractive entry near the breakout point, and 6.2% under the June peak.
CompanySymbolMon CloseSupport ResistanceAT&T, Inc. (T) is a Dow 30 component positioned to rise. (Yield = 5.0%.)
As illustrated, the shares have trended steadily higher since May, despite a broad-market headwind.
Its uptrend roughly tracks the 20-day moving average, and this week's pullback places the shares at a high risk/reward entry near support.
Also consider that the shares are less extended on the
CompanySymbolMon CloseSupport ResistanceVentas, Inc. (VTR) is a large-cap healthcare REIT. The company finances and leases healthcare-related facilities. (Yield = 4.1%.)
Technically speaking, the shares have recently knifed to all-time highs, clearing well-defined resistance.
Since then, it has sustained its gains, and its path of least resistance points higher barring a violation of the breakout point, roughly matching its ascending 50-day moving average.
CompanySymbolMon CloseSupport ResistanceInitially profiled June 8, Sempra Energy (SRE) remains well positioned. (Yield = 3.6%.)
This is another name that's pulled in from all-time highs to an attractive entry near the breakout point.
Moreover, its uptrend tracks the 50-day moving average, and this trending indicator is rising to meet well-defined support.
CompanySymbolMon CloseSupport ResistanceMosaic Co. (MOS) is a large-cap fertilizer name positioned to rise.
Earlier this month, the shares cleared a three-month downtrend and resistance at the April low.
Its breakout signals a trend shift, and its path of least resistance points higher barring a violation of well-defined support.
CompanySymbolMon CloseSupport ResistanceFemsaFMX$85.09$83.50$85.45Fomento Economico Mexicano SAB (FMX) -- more commonly known as Femsa -- is a large-cap beverage distributor with operations in Central and South America. (Yield = 1.7%.)
The shares initially spiked 10 weeks ago, rising on the company's first-quarter results.
Its since digested the breakout, and this month's upturn has the shares challenging record territory.
The risk/reward can be favorable from current levels with a stop around the 50-day moving average.
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.
CompanySymbolDate ProfiledMerck & Co.June 25JB Hunt Transport ServicesJune 25InterDigital, Inc.June 25Idenix Pharmaceuticals, Inc.June 25Amgen, Inc.June 22Amarin Corp.June 22Union Pacific Corp.June 22LeapFrog Enterprises, Inc.June 22Health Care Select Sector SPDRJune 21Nvidia Corp.June 21Aspen Technology, Inc.June 21Texas Capital BancShares, Inc.June 21Potash Corp.June 20SBA Communications Corp.June 20iShares Nasdaq Biotechnology ETFJune 19Ebay, Inc.June 19Idexx Laboratories, Inc.June 19Antares Pharma Inc.June 19Ulta Salon, Cosmetics & Fragrance, Inc.June 18Canadian Solar, Inc.June 18Dominion Resources, Inc.June 15Smart Balance, Inc.June 15Netspend Holdings, Inc.June 15PetSmart, Inc.June 14DexCom, Inc.June 14Blucora, Inc.June 14Digital Generation, Inc.June 14Vivus, Inc.June 13Questcor Pharmaceuticals, Inc.June 13First Solar, Inc.June 13Snap-on Inc.June 13Zumiez, Inc.June 12Dollar Tree, Inc.June 12Dollar General Corp.June 12Target Corp.June 11Family Dollar Stores, Inc.June 11Athenaheath, Inc.June 11AuthenTec, Inc.June 11Whole Foods Market, Inc.June 8Edwards Lifesciences Corp.June 8Auxilium Pharmaceuticals, Inc.June 8Sempra EnergyJune 8LivePerson, Inc.June 7Web.com Group, Inc.June 7American Water Works Co.June 7Utilities Select Sector SPDRJune 6Xcel Energy, Inc.June 6Under Armour, Inc.June 6Vitamin Shoppe, Inc.June 6The Medicines CompanyJune 6Spreadtrum Communications, Inc.June 5Market Vectors Gold Miners ETFJune 4 Agnico-Eagle Mines Ltd.June 4Duke Energy Corp.June 4Santarus, Inc.June 4Idenix Pharmaceuticals, Inc.May 24Cymer, Inc.May 233D Systems Corp.May 23Incyte Corp.May 22Charter Communications, Inc.May 22Lumber Liquidators Holdings, Inc.May 21Medivation, Inc.May 21Pharmacyclics, Inc.May 21Royal Gold, Inc.May 18Ryland Group, Inc.May 16Walt Disney Co.May 16SolarWinds, Inc.May 16Wright Medical Group, Inc.May 16Align Technology, Inc.May 16Expedia, Inc.May 15Akorn, Inc.May 15BMC Software, Inc.May 15Canadian National RailwayMay 15American Eagle Outfitters, Inc.May 14Whole Foods Market, Inc.May 14Quanta Services, Inc.May 14Amazon.com, Inc.May 10Cirrus LogicMay 10Kimberly-Clark Corp.May 10Cerner Corp.May 8Lennox International, Inc.May 8DuPont Fabros Technology, Inc.May 7Con-way, Inc.May 7LKQ Corp.May 4Logitech InternationalMay 3Equinix, Inc.May 2Dillard's Inc.Apr. 30Mellanox Technologies, Ltd.Apr. 30Onyx Pharmaceuticals, Inc.Apr. 30Amgen, Inc.Apr. 26TransDigm GroupApr. 19Carter's, Inc.Apr. 17Sourcefire, Inc.Apr. 13Family Dollar Stores, Inc.Apr. 11Ebay, Inc.Apr. 10Allot Communications Ltd.Mar. 23Vivus, Inc.Mar. 20SXC Health Solutions Corp.Mar. 16Multimedia GamesMar. 15Dollar GeneralMar. 6Monster Beverage Corp.Dec. 22Ross Stores, Inc.Oct. 7TJX Companies, Inc. Sept. 19
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