Charting a major technical test
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CINCINNATI (MarketWatch) -- Technically speaking, the U.S. markets' path of least resistance points higher.
Nonetheless, the Standard & Poor's 500 Index has risen within view of significant resistance -- S&P 1,420 -- and the response to this area should be a useful bull/bear gauge.
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 has rallied to a nominal three-month high.
On further strength, its next notable resistance holds at the May closing high of 1,406.
Conversely, first support rests at the July peak of 1,391.
Meanwhile, the Dow industrials' near-term backdrop is similar.
Here again, the blue-chip benchmark has rallied to a nominal three-month high.
Looking ahead, its next significant overhead spans from 13,264 to 13,279, bracketing the 2012 closing peaks.
And the Nasdaq Composite has also extended to new highs.
In the process, it's challenging significant resistance around the 3,000 mark, better illustrated below.
Widening the view to six months adds perspective.
As illustrated, the Nasdaq has cleared trendline resistance, rising to its next technical test at the 3,000 mark.
On further strength, next resistance holds at 3,016 -- matching the top of the May gap -- and is followed by additional overhead at 3,060.
Moving to the Dow, its six-month backdrop remains stronger.
As detailed previously, its next notable overhead holds at the 2012 closing peaks, spanning from 13,264 to 13,279.
And the S&P 500 has also extended its recent breakout.
Namely, the index has notched a "higher high" vs. the July peak, confirming its jagged uptrend.
Also consider that the S&P's upturn follows a successful test of trendline support. The August closing low has held at S&P 1,365, matching support detailed last week.
The bigger picture
As detailed above, the U.S. markets' recovery attempt is intact.
But against this backdrop, the Standard & Poor's 500 Index has closed in on technically significant resistance.
Widening the view to 19 years adds perspective. Each bar on the chart represents one month.
As illustrated, the S&P has risen within view of the July 1999 peak -- S&P 1,420.
This means that a buy-and-hold investor, with a 13-year time horizon, has almost reached break even.
So the chart above amplifies the tension between long-term, and tactical, investing.
Granted, the July 1999 peak of 1,420 might be viewed as an arbitrary reference point.
Nonetheless, this area becomes more technically notable when narrowing the view to six months.
Consider that the S&P's 2012 peak holds at 1,422, matching the high initially established 13 years ago.
Summing up the backdrop
Technically speaking, the S&P has approached a notable inflection point.
Its uptend is technically intact, though the index has risen within view of the 2012 peak. The response to this area should be a useful bull/bear gauge.
Looking ahead, the S&P's six-month backdrop is more technically useful -- see the 19-year chart -- and its path of least resistance points higher barring a violation of trendline 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.
ETFSymbolMon CloseSupport ResistanceiShares Emerging Markets IndexEEM$40.18$38.70$40.50Drilling down further, the iShares Emerging Markets Index ETF (EEM) is showing signs of life technically. (Yield = 2.1%.)
Most obviously, the group has cleared a well-defined five-month downtrend.
And in the process, it's risen to challenge resistance at the July peak and the 200-day moving average.
Underlying the upturn, the group's relative strength index (not illustrated) has notched its best levels since March, improving the chances of an eventual breakout.
CompanySymbolMon CloseSupport ResistanceIntel Corp. (INTC) is a Dow 30 component coming to life. (Yield = 3.4%.)
As illustrated, the shares have edged atop a three-month downtrend and the major moving averages.
Both events signal a trend shift, and the risk/reward can be favorable from current levels with a stop around the 200-day moving average.
Intel currently holds 11.3% under the May peak.
CompanySymbolMon CloseSupport ResistanceInitially profiled July 27, Baker Hughes (BHI) remains well positioned.
Late last month, the shares gapped sharply higher, rising on the company's second-quarter results.
It's since held tightly to the 200-day moving average -- consolidating on lighter volume -- and its narrow two-week range positions the shares for a potential breakout.
CompanySymbolMon CloseSupport ResistanceFlowserve Corp. (FLS) is a large-cap manufacturer of flow-control products for the oil and gas, and water-management, industries.
Technically speaking, the shares have knifed to 52-week highs, clearing a well-defined five-month range top.
Though near-term extended, and due to consolidate, a pullback toward the breakout point would offer a high risk/reward entry.
CompanySymbolMon CloseSupport ResistancePPG Industries, Inc. (PPG) is a large-cap manufacturer of protective coatings for automotive, aerospace and military applications. (Yield = 2.2%.)
As illustrated, the shares have recently gapped to record territory, rising on the company's quarterly results.
By comparison, the ensuing pullback has been flat -- suggesting sell pressure is limited -- positioning the shares to build on the initial breakout.
The risk/reward can be favorable from current levels with a stop at the breakout point.
CompanySymbolMon CloseSupport ResistanceSchnitzer Steel Industries, Inc. (SCHN) is a small-cap name coming to life. (Yield = 2.4%.)
With this week's upturn, the shares have edged from a bullish cup-and-handle, clearing resistance at the July peak.
Moreover, its relative strength index (not illustrated) has notched nine-month highs, improving the chances of a more decisive breakout.
CompanySymbolMon CloseSupport ResistanceInitially profiled June 29, Gulfport Energy Corp. (GPOR) has returned 10.6% and remains well positioned.
Technically speaking, the shares are challenging well-defined resistance at three-month highs.
Recent strength comes from a tight one-month base -- and has been driven by increased volume -- improving the chances of a more decisive breakout.
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 ProfiledAmazon.com, Inc.Aug. 6Under Armour, Inc.Aug. 6U.S. Steel Corp.Aug. 6Fluor Corp.Aug. 6HDFC Bank, Ltd.Aug. 6Technology Select Sector SPDRAug. 3Panera Bread Co.Aug. 3Canadian Pacific RailwayAug. 3Tractor Supply Co.Aug. 3Prudential Financial, Inc.Aug. 3Trinity Industries, Inc.Aug. 3NetSuite, Inc.Aug. 2Flir Systems, Inc.Aug. 2Allstate Corp.Aug. 2U.S. BancorpAug. 2Foster Wheeler AGAug. 2Pfizer, Inc.Aug. 1Hess Corp.Aug. 1Akamai Technologies, Inc.Aug. 1AOL, Inc.Aug. 1SPDR Gold SharesJuly 31Alexion Pharmaceuticals, Inc.July 31Watson Pharmaceuticals, Inc.July 31Pulte Group, Inc.July 31OmniVision Technologies, Inc.July 31Industrial Select Sector SPDRJuly 30International Business MachinesJuly 30Home Depot, Inc.July 30American Eagle Outfitters, Inc.July 30National Oilwell Varco, Inc.July 30Market Vectors Oil Services ETFJuly 27Crown Castle International Corp.July 27Baker HughesJuly 27Biogen Idec, Inc.July 27Express Scripts Holding Co.July 26Stanley Black & Decker, Inc.July 26Honeywell International, Inc.July 26PPG Industries, Inc.July 25Colgate-Palmolive Co.July 25Coca-Cola Co.July 24Eaton Corp.July 24Toll Brothers, Inc.July 24Equity ResidentialJuly 23CF Industries Holdings, Inc.July 23AO Smith Corp.July 23Nektar TherapeuticsJuly 23General ElectricJuly 20Qualcomm, Inc.July 20RPC Inc.July 19Stratasys, Inc.July 193M Co.July 19InterOil Corp.July 18Schlumberger Ltd.July 18Seattle Genetics,Inc.July 18Monsanto Co.July 17Citizens Republic Bancorp, Inc.July 17Energy Select Sector SPDRJuly 17Market Vectors Oil Services ETFJuly 16Simon Property Group, Inc.July 16Fastenal Co.July 16Perrigo Co.July 13HCP, Inc.July 13Murphy Oil Corp.July 12American Tower Corp.July 11United Therapeutics Corp.July 11Phillip Morris International, Inc.July 10Oceaneering International, Inc.July 10Raytheon Co.July 10Cardtronics, Inc.July 10iShares Dow Jones U.S. Real Estate ETFJuly 9Health Care REIT, Inc.July 9Abbott LaboratoriesJuly 9Consumer Staples Select Sector SPDRJuly 6Whirlpool Corp.July 6Cimerex Energy Co.July 6SPDR S&P Regional Banking ETFJuly 5Agrium, Inc.July 5Gartner, Inc.July 5Kinder Morgan Energy Partners LPJuly 3Verizon Communications, Inc.July 2Eli Lilly & Co.July 2Dr. Pepper Snapple Group, Inc.June 29Gulfport Energy Corp.June 29Visa, Inc.June 28National Fuel Gas Co.June 28MDC Holdings, Inc.June 28VeriSign, Inc.June 27Costco WholesaleJune 27AT&T, Inc.June 26Ventas, Inc.June 26Mosaic Co.June 26FemsaJune 26Merck & Co.June 25Union Pacific Corp.June 22Health Care Select Sector SPDRJune 21Aspen Technology, Inc.June 21Texas Capital BancShares, Inc.June 21SBA Communications Corp.June 20iShares Nasdaq Biotechnology ETFJune 19Dominion Resources, Inc.June 15Smart Balance, Inc.June 15Blucora, Inc.June 14Target Corp.June 11Athenaheath, Inc.June 11AuthenTec, Inc.June 11Edwards Lifesciences Corp.June 8Sempra EnergyJune 8American Water Works Co.June 7Utilities Select Sector SPDRJune 6Xcel Energy, Inc.June 6Vitamin Shoppe, Inc.June 6The Medicines CompanyJune 6Santarus, Inc.June 4Cymer, Inc.May 233D Systems Corp.May 23Charter Communications, Inc.May 22Lumber Liquidators Holdings, Inc.May 21Medivation, Inc.May 21Ryland Group, Inc.May 16Walt Disney Co.May 16Canadian National RailwayMay 15American Eagle Outfitters, Inc.May 14Kimberly-Clark Corp.May 10Equinix, Inc.May 2Mellanox Technologies, Ltd.Apr. 30Onyx Pharmaceuticals, Inc.Apr. 30Amgen, Inc.Apr. 26Ebay, Inc.Apr. 10TJX Companies, Inc. Sept. 19
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