By Michael Ashbaugh, MarketWatch
Focus: Communications sector sustains slight breakout, Health care sector maintains key support, XLC, XLV, AMD, CRUS, DLTR, SONO
Technically speaking, the major U.S. benchmarks continue to trend higher amid firmly-bullish late-year price action.
Against this backdrop, the Nasdaq Composite has extended a break to record territory -- placing distance atop the 12,000 mark -- while the S&P 500 is starting December with its latest breakout attempt.
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 asserted a three-week range hinged to the double bottom defined by the September and October lows.
The flag-like pattern has been punctuated by Tuesday's early follow-through to record territory. Bullish price action.
Similarly, the Dow Jones Industrial Average has pulled in to its range from last week's record high.
Tactically, the February peak (29,568) marks an inflection point -- formerly the Dow's record high -- also detailed on the daily chart.
Conversely, notable overhead matches the former range top (29,964) established last month.
Against this backdrop, the Nasdaq Composite has taken flight, knifing to record territory.
The index registered consecutive record closes last week, and slipped just seven points Monday, to punctuate an intraday whipsaw.
Tactically, the 12,108-to-12,114 area marks a near-term floor, levels matching the early-November peak and gap support.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has cleared its range top, reaching uncharted territory.
The upturn marks about a 1.2% breakout, confirming the primary uptrend.
Tactically, the breakout point (12,074) is followed by deeper support at 11,950, an area better illustrated on the hourly chart.
Looking elsewhere, the Dow Jones Industrial Average is digesting unusually strong November gains.
In fact, the blue-chip benchmark just notched its best monthly performance since 1987 and its best November performance since 1928. (Both prior records were punctuated by market crashes, about nine to 12 months later, respectively.)
Still, the Dow in the current case had been working from a low base. Recall the successful test of its 200-day moving average at the October low, and subsequent snap-back to record territory.
More immediately, the Dow registered a single close atop the 30,000 mark last week for the first time on record.
It has since generally held the range top in the broad sweep. A near-term target projects from the prevailing range to the 30,700 mark.
Meanwhile, the S&P 500 has registered record closes across two of the prior four sessions.
Tactically, gap support (3,594) is closely followed by the September peak (3,588).
Monday's session low (3,594) matched gap support. (Also see the hourly chart.)
The bigger picture
Collectively, the major U.S. benchmarks continue to trend higher amid a still comfortably bullish bigger-picture backdrop.
On a headline basis, the Nasdaq Composite has broken out, reaching record territory atop the 12,000 mark.
Against this backdrop, each big three U.S. benchmark has registered a record close at some point across the prior four sessions.
Moving to the small-caps, the iShares Russell 2000 ETF is digesting a late-November break to record territory.
The prevailing leg higher builds on its initially decisive early-November breakout.
Similarly, the SPDR S&P MidCap 400 ETF has sustained its latest rally to record highs.
Here again, the MDY's recent breakout punctuates a mid-November flag-like pattern.
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. Constructive price action.
Placing a finer point on the S&P 500, the index has generally held its range top, notching record closes across two of the prior four sessions.
Tactically, Monday's session low (3,594) matched the top of the gap (3,594).
Separately, the recent upturn punctuates a three-session range, effectively defined by the September and October peaks.
More broadly, the prevailing upturn punctuates a flag-like pattern hinged to the steep early-November rally. (The current pattern is a bit long for a flag, but it's still a bullish continuation pattern.)
Tactically, the S&P has surpassed its absolute record peak (3,645.99) early Tuesday.
The breakout places it in previously uncharted territory, capped by no true resistance. To reiterate, an intermediate-term target projects to the 3,800 area on follow-through.
Beyond technical levels, each big three benchmark's intermediate-term path of least resistance continues to point higher pending signs of a bearish pulse.
Also see: Charting a bullish technical tilt: Dow 30,000 and Nasdaq 12,000 under siege ().
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 ().
Initially profiled Nov. 5, the Communications Services Select Sector SPDR (XLC) has edged slightly higher and remains well positioned.
Fundamentally, the group may benefit from a December re-rotation toward technology in the wake of strong November gains across other sectors. (Recall the Nasdaq's recent breakout after previously lagging slightly behind.)
Against this backdrop, the group is digesting a modest break to record territory.
Tactically, the breakout point (65.20) is followed by the group's former range top, circa 62.60. The prevailing uptrend is firmly-intact barring a violation.
Looking elsewhere, the Health Care Select Sector SPDR is acting well technically.
The group initially spiked four weeks ago, staging a nearly straightline rally to all-time highs. The upturn punctuates a double bottom -- the W formation -- underpinned by the 200-day moving average.
More immediately, the prevailing pullback has been underpinned by the top of the gap (107.74) placing the group at an attractive entry 4.3% under the November peak. (The post-breakout low registered just six cents above gap support.)
Initially profiled July 23, Advanced Micro Devices, Inc. (AMD) has returned 49.9% and remains well positioned.
Technically, the shares have cleared a three-month range top, rising to tag a record close on increased volume. The upturn punctuates a double bottom defined by the September and November lows. An intermediate-term target projects to the 101 area.
Conversely, the breakout point, circa 88.00, pivots to support. A sustained posture higher signals a firmly-bullish bias.
More broadly, the shares are well positioned on the three-year chart, () rising from a bullish continuation pattern hinged to the steep mid-2020 rally.
Cirrus Logic, Inc. (CRUS) is a well positioned mid-cap fabless semiconductor name and an Apple, Inc. supplier.
As illustrated, the shares have reached nine-month highs, clearing resistance matching the April peak (78.46) and November peak (78.48).
More broadly, the strong-volume upturn punctuates a November flag-like pattern hinged to a double bottom defined by the June and September peaks. Tactically, the prevailing rally attempt is intact barring a violation of the breakout point (78.50).
Dollar Tree, Inc. (DLTR) is a well positioned large-cap discount retailer.
Late last month, the shares gapped to 52-week highs, rising sharply after the company's strong third-quarter results.
The ensuing pullback has been comparably flat, placing the shares 3.4% under the November peak.
Tactically, the top of the gap (105.00) is closely followed by the breakout point (104.60). A posture higher signals a bullish bias.
Finally, Sonos, Inc. (SONO) is a mid-cap manufacturer of wireless speakers and related accessories.
As illustrated, the shares have recently gapped sharply higher, rising amid a volume spike after the company's quarterly results. The breakout places the shares at two-year highs, the best levels since the week the company went public.
The initial spike (long white bar) has been punctuated by five inside days -- and this week's slight follow-through -- positioning the shares to build on the breakout. Tactically, gap support (20.20) is closely followed by the post-breakout low (20.01). A posture higher signals a bullish bias.
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. ()
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December 01, 2020 12:37 ET (17:37 GMT)
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