By Michael Ashbaugh, MarketWatch
Focus: Semiconductor sector presses record territory, Homebuilders stealth breakout attempt, Tesla extends triangle brekout, SMH, XHB, TSLA, KO, MCHP
Technically speaking, the U.S. benchmarks continue to rise amid bullish market rotation and expanding sector participation.
Against this backdrop, two round-number milestones are under siege early Tuesday -- Dow 30,000 and Nasdaq 12,000 -- as each benchmark builds on already firmly-bullish November price action.
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 is digesting the steep early-November rally.
Tactically, a near-term floor matches the October peak (3,550) and is followed by the post-breakout low (3,512).
Conversely, the September peak (3,588) marks an overhead inflection point and is followed by the S&P's record close (3,626.9).
Similarly, the Dow Jones Industrial Average is traversing a range-bound backdrop.
Tactically, overhead inflection points match the Dow's record close (29,950.44) and absolute record peak (29,964.29). Both areas are under siege early Tuesday.
Against this backdrop, the Nasdaq Composite has flatlined, asserting a tight six-session range.
This is the only major U.S. benchmark not to register a record close last week.
Against this backdrop, major resistance remains slightly more distant, areas better illustrated below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq is traversing the November range. The prevailing upturn punctuates a successful test of major support in the 11,450-to-11,460 area.
Conversely, the range top marks significant resistance. Overhead inflection points match the October peak (11,965) and September peak (12,074), formerly the Nasdaq's all-time high.
Also see the Nasdaq's record close (12,056.44), established Sept. 2. To reiterate, the marquee 12,000 mark is under siege early Tuesday.
Looking elsewhere, the Dow Jones Industrial Average has sustained a November breakout.
To reiterate, the prevailing flag-like pattern positions the index to build on the steep early-month rally.
Tactically, notable floors match the September peak (29,199) and gap support (29,127), areas that underpinned last week's pullback.
More broadly, the prevailing upturn punctuates a bullish double bottom -- defined by the September and October lows -- and originates from the 200-day moving average.
Similarly, the S&P 500 has staged an orderly pullback from its record close, established last week.
Here again, the prevailing flag pattern punctuates a well-defined double bottom. Recall that the November rally originates from major support (3,233).
The bigger picture
As detailed above, the major U.S. benchmarks are acting well technically.
On a headline basis, the S&P 500 and Dow industrials have sustained early-November breakouts -- asserting bullish flag patterns -- while the Nasdaq Composite remains range-bound.
More immediately, the Dow Jones Industrial Average has tagged the 30,000 mark early Tuesday for the first time on record.
Perhaps not surprisingly, each benchmark's intermediate-term bias remains firmly bullish.
Moving to the small-caps, the iShares Russell 2000 ETF has extended a break to record highs.
The prevailing upturn punctuates last week's unusually tight range, a backdrop signaling muted selling pressure.
Similarly, the SPDR S&P MidCap 400 ETF has extended its November breakout.
Here again, the prevailing follow-through punctuates last week's tight range near record highs.
Combined, the small- and mid-cap benchmarks have staged tandem bull-flag breakouts, reaching previously uncharted territory.
Looking elsewhere, the SPDR Trust S&P 500 is holding its range top.
As detailed repeatedly, the prevailing flag-like pattern is hinged to a double bottom -- the W formation -- defined by the September and October lows. Bullish price action.
Placing a finer point on the S&P 500, the index is traversing a jagged two-week range.
Within the range, the October peak (3,550) marks a notable floor, a level that has underpinned seven straight closes.
More broadly, the S&P has asserted a flag-like pattern hinged to the steep early-November rally from major support (3,233).
As always, the bull flag is a continuation pattern, improving the chances of upside follow-through.
Tactically, the S&P's record close (3,626.91) and absolute record peak (3,645.99) mark overhead inflection points. The pending retest from underneath should be a useful bull-bear gauge.
Against this backdrop, the prevailing upturn punctuates a double bottom defined by the September and October lows. As detailed repeatedly, an intermediate-term target projects to the 3,800 area on follow-through.
Also see: Charting the approach of Dow 30,000 as bullish sector rotation persists ().
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 VanEck Vectors Semiconductor ETF (SMH) is acting well technically. (Yield = 1.7%.)
Earlier this month, the group gapped to record territory, clearing resistance matching the October peak.
The subsequent pullback has been effectively underpinned by the breakout point, and punctuated by a bull flag, the recently tight one-week range.
Monday's close marked a nominal record close, laying the groundwork for potentially more decisive follow-through. An intermediate-term target continues to project to the 210.00 area.
Meanwhile, the SPDR S&P Homebuilders ETF is showing signs of life.
As illustrated, the group has weathered the Nov. 9 downdraft, the long red bar induced by recent vaccine progress. (A vaccine is expected to redirect spending away from housing, on a relative basis, and toward more conventional spending patterns.)
More immediately, the prevailing upturn has been punctuated by a nominal record high. An intermediate-term target projects to the 62.50 area on follow-through.
Initially profiled April 23 -- and revisited last week -- Tesla, Inc. (TSLA) has returned 255% and remains well positioned.
Earlier this month, the shares knifed atop trendline resistance, rising after the announcement that the company will be added to the S&P 500, effective Dec. 21.
As of today, Tesla would be the seventh-most valuable S&P 500 component.
The subsequent follow-through has been punctuated by a break to record territory. Tactically, a sustained posture atop the breakout point (502.50) signals a firmly-bullish bias. Delving deeper, the post-breakout low (487.60) is followed by the former range top (465.90).
More broadly, the shares are well positioned on the two-year chart, () rising from a continuation pattern hinged to the massive mid-2020 breakout.
Coca-Cola Co. (KO) is a well positioned Dow 30 component. (Yield = 3.1%.)
Technically, the shares have recently gapped to eight-month highs, rising amid a vaccine-fueled strong-volume spike.
The subsequent pullback has been orderly, placing the shares 3.7% under the November peak.
Tactically, the top of the gap (52.07) is followed by the firmer breakout point (51.50). The prevailing rally attempt is intact barring a violation.
Finally, Microchip Technology, Inc. (MCHP) is a well positioned large-cap semiconductor name.
Earlier this month, the shares gapped to all-time highs, rising after the company's strong second-quarter results. The breakout punctuated a prolonged five-month range, underpinned by the 200-day moving average.
More immediately, the shares have registered consecutive record closes fractionally under the early-November peak (131.65). A near-term target projects to the 141 area on follow-through.
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. ()
-Michael Ashbaugh; 415-439-6400; AskNewswires@dowjones.com
Company Symbol* (Click symbol for chart.) Date Profiled
Zillow Group, Inc. ZG Nov. 23
Yeti Holdings, Inc. YETI Nov. 23
Carvana Co. CVNA Nov. 23
Palo Alto Networks, Inc. PANW Nov. 20
Bank of America Corp. BAC Nov. 20
Eaton Corp. ETN Nov. 20
SPDR S&P Oil & Gas Exploration and Production ETF XOP Nov. 20
MetLife, Inc. MET Nov. 19
Hilton Worldwide Holdings, Inc. HLT Nov. 19
American Express Co. AXP Nov. 18
Kohl's Corp. KSS Nov. 18
FleetCor Technologies FLT Nov. 18
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November 24, 2020 12:33 ET (17:33 GMT)
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