The Technical Indicator: Charting a bullish technical tilt, S&P 500 breaks to record territory

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Technically speaking, the U.S. benchmarks’ already-bullish bigger-picture backdrop continues to strengthen.

Consider that the S&P 500 has rallied to record highs — clearing the 3,400 mark for the first time on record — while the Nasdaq Composite has also reached uncharted territory, rising to nail its projected target (11,460).

Before detailing the U.S. markets’ wider view, the S&P 500’s US:SPX hourly chart highlights the past two weeks.

As illustrated, the S&P has reached uncharted territory, gapping atop the 3,400 mark.

The sharp follow-through punctuates an eight-session, pulling-teeth breakout attempt.

Tactically, a near-term floor matches the top of the gap (3,413) and is followed by the breakout point (3,400).

Meanwhile, the Dow Jones Industrial Average US:DJIA has knifed to six-month highs.

The prevailing upturn originates from major support (27,580) an area better illustrated on the daily chart.

More immediately, the breakout point (28,154) pivots to first support.

True to recent form, the Nasdaq Composite US:COMP remains the strongest major benchmark.

As illustrated, the index has extended its August breakout, notching three straight record closes.

Tactically, the former range top, circa 11,250, is followed by the firmer breakout point (11,126).

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has knifed to record territory, rising from a tight early-August range.

In the process, the index has reached its projected target in the 11,460-to-11,480 area, detailed repeatedly. (See, for instance, the Aug. 3 review and Wednesday’s review.)

Monday’s session high (11,462) matched the target, and thus far modest selling pressure has surfaced.

Tactically, notable support broadly spans from 11,080 to 11,126, an area also detailed on the hourly chart.

Looking elsewhere, the Dow Jones Industrial Average has rallied to six-month highs, notching its first August close atop the 28,000 mark.

The prevailing upturn punctuates a flag-like pattern, underpinned by the breakout point (27,580).

From current levels, additional resistance matches the February gap (28,403), detailed previously.

Tuesday’s early session high (28,400) has matched resistance and a retest remains underway. On further strength, the top of the February gap (28,892) marks an inflection point.

Meanwhile, the S&P 500 has knifed to all-time highs atop the 3,400 mark.

Recall that last week’s high (3,399.96) registered fractionally under the round number. This area roughly matches the February peak (3,393) and pivots to support.

The bigger picture

Collectively, the U.S. benchmarks’ bigger-picture backdrop remains comfortably bullish.

Consider that the S&P 500 and Nasdaq Composite have concurrently notched record highs — reaching previously uncharted territory — while the Dow Jones Industrial Average has reclaimed the 28,000 mark, knifing to six-month highs.

Each benchmark’s breakout has been sufficient to confirm its prevailing uptrend.

Moving to the small-caps, the iShares Russell 2000 ETF is digesting a break to five-month highs.

Recall that trendline support roughly matches the June peak (153.39).

Last week’s low (153.60) registered slightly above the trendline amid a successful retest. Constructive price action.

Meanwhile, the SPDR S&P MidCap 400 ETF has held relatively tightly to its range top. An extended test of the June peak (355.23) remains underway.

Looking elsewhere, the SPDR Trust S&P 500 has rallied to record highs.

The upturn punctuates a tight mid-August range, and has thus far been fueled by lackluster volume.

Placing a finer point on the S&P 500, the index has gapped to all-time highs.

The upturn punctuates an eight-session range, and a grinding-higher breakout attempt. Tactically, initial support matches the top of the gap (3,413).

Slightly more broadly, the S&P’s breakout point broadly spans from 3,393 to 3,400, an area formerly defining the 2020 range top. This area marks first support.

Delving deeper, a notable floor matches the February gap (3,328) and the S&P’s two-week range bottom. (See the hourly chart.)

Beyond technical levels, the S&P is traversing uncharted territory — capped by no true resistance — opening the path to potentially extended upside follow-through. (See the Nasdaq’s early-August breakout, and subsequent follow-through.)

All technical trends point higher, as it applies to the S&P 500, pending signs of a bearish pulse.

Also see: Charting a pulling-teeth breakout attempt: S&P 500, Nasdaq challenge record territory.

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 iShares Transportation Average — most recently profiled Aug. 11 — is acting well technically.

Earlier this month, the group knifed to seven-month highs, clearing resistance matching the June peak. The steep rally marked a two standard deviation breakout, encompassing four straight closes atop the 20-day Bollinger bands.

More immediately, the prevailing bull flag has been underpinned by the breakout point (190.00) positioning the group to build on the early-August spike. (Also see the tight late-July range, at the 200-day moving average, and subsequent decisive follow-through.)

Tactically, trendline support tracks the 50-day moving average, and is rising toward the former range top (180.00). The prevailing rally attempt is intact barring a violation.

Meanwhile, the Financial Select Sector SPDR US:XLF has weathered a key technical test.

Specifically, the group has maintained trendline support (24.30) closely matching the breakout point (24.45).

This week’s early upturn punctuates a successful retest, preserving an admittedly lackluster rally attempt.

On further strength, significant resistance matches the August peak (25.77) and the 200-day moving average, currently 25.84. An eventual break higher would mark a “higher high” — combined with a rally atop the 200-day — signaling a primary trend shift. The pending retest from underneath will likely add color.

Initially profiled March 26, Amazon.com, Inc. US:AMZN has returned 69.1% and remains well positioned.

As illustrated, the shares have recently cleared the summer range top, rising to tag a record close.

The strong-volume upturn punctuates a tight early-month range. A near-term target continues to project to the 3,420 area.

Conversely, the breakout point, circa 3,247, is followed by trendline support and the former range bottom (3,073). A sustained posture higher signals a bullish bias.

Norfolk Southern Corp. US:NSC is a well positioned large-cap railroad operator. (Yield = 1.8%.)

Earlier this month, the shares rallied to six-month highs, clearing resistance matching the June peak. The breakout punctuated a cup-and-handle defined by the March and June lows.

More immediately, the prevailing flag pattern has been underpinned by the breakout point (203.10) positioning the shares to extend the uptrend. An intermediate-term target projects to the 230 area on follow-through.

Finally, Westlake Chemical Corp. US:WLK is a well positioned large-cap name. (Yield = 1.8%.)

The shares initially spiked two weeks ago, briefly tagging six-month highs after the company’s second-quarter results.

The ensuing pullback has been comparably flat, placing the shares 10.1% under the August peak.

Tactically, trendline support is closely followed by the 50- and 200-day moving averages — the 55.50 area. The prevailing uptrend is firmly intact barring a violation.

Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.

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
Deere & Co. DE Aug. 24
PulteGroup, Inc. PHM Aug. 24
Werner Enterprises, Inc. WERN Aug. 24
Expedia Group, Inc. EXPE Aug. 24
Visa, Inc. V Aug. 21
Johnson Controls International JCI Aug. 21
DuPont de Nemours, Inc. DD Aug. 21
Adobe, Inc. ADBE Aug. 20
Canadian Solar, Inc. CSIQ Aug. 20
General Motors Co. GM Aug. 20
Starbucks Corp. SBUX Aug. 18
Emerson Electric Co. EMR Aug. 18
Builders FirstSource, Inc. BLDR Aug. 18
Universal Display Corp. OLED Aug. 17
Steel Dynamics, Inc. STLD Aug. 17
Elanco Animal Health, Inc. ELAN Aug. 17
Eaton Corp. ETN Aug. 14
Pioneer Natural Resources Co. PXD Aug. 14
Brinker International, Inc. EAT Aug. 13
Enphase Energy, Inc. ENPH Aug. 13
Avis Budget Group, Inc. CAR Aug. 12
U.S. Global Jets ETF JETS Aug. 11
Nike, Inc. NKE Aug. 11
Nucor Corp. NUE Aug. 11
Financial Select Sector SPDR XLF Aug. 10
Freeport McMoRan, Inc. FCX Aug. 10
Natera, Inc. NTRA Aug. 10
Lennar Corp. LEN Aug. 7
McDonald’s Corp. MCD Aug. 7
Mastercard, Inc. MA Aug. 6
United Health Group, Inc. UNH Aug. 6
Kansas City Southern KSU Aug. 6
Industrial Select Sector SPDR XLI Aug. 6
Verizon Communications, Inc. VZ Aug. 5
Sunrun, Inc. RUN Aug. 5
Coeur Mining, Inc. CDE Aug. 5
FireEye, Inc. FEYE Aug. 4
Amkor Technology, Inc. AMKR Aug. 4
Utilities Select Sector SPDR XLU Aug. 3
Jabil, Inc. JBL Aug. 3
Southern Copper Corp. SCCO Aug. 3
AMAG Pharmaceuticals, Inc. AMAG July 31
Agco Corp. AGCO July 31
Penn National Gaming, Inc. PENN July 30
At Home Group, Inc. HOME July 30
Procter & Gamble Co. PG July 29
SPDR S&P Metals & Mining ETF XME July 28
iShares MSCI South Korea ETF EWY July 28
HCA Healthcare, Inc. HCA July 28
Toll Brothers, Inc. TOL July 27
Landstar System, Inc. LSTR July 27
HP, Inc. HPQ July 24
Advanced Micro Devices, Inc. AMD July 23
AstraZeneca AZN July 23
Best Buy Co., Inc. BBY July 22
iShares Europe ETF IEV July 21
Fastenal Co. FAST July 21
Materials Select Sector SPDR XLB July 20
Caterpillar, Inc. CAT July 20
Monster Beverage Corp. MNST July 20
Palo Alto Networks, Inc. PANW July 20
iShares U.S. Home Construction ETF ITB July 17
Progressive Corp. PGR July 17
Livongo Health, Inc. LVGO July 17
Roku, Inc. ROKU July 16
Catalent, Inc. CTLT July 16
Cognizant Technology Solutions, Inc. CTSH July 16
Health Care Select Sector SPDR XLV July 16
Consumer Staples Select Sector SPDR XLP July 15
Home Depot, Inc. HD July 15
Costco Wholesale Corp. COST July 15
Kirkland Lake Gold, Ltd. KL July 15
MaxLinear, Inc. MXL July 14
Air Products & Chemicals, Inc. APD July 14
Consumer Discretionary Select Sector SPDR XLY July 13
Alphabet, Inc. GOOGL July 13
Sony Corp. SNE July 13
Eldorado Gold Corp. EGO July 13
SunPower Corp. SPWR July 13
D.R.Horton, Inc. DHI July 9
Taylor Morrison Home Corp. TMHC July 9
LGI Homes, Inc. LGIH July 8
Walmart, Inc. WMT July 8
J.B. Hunt Transport Services, Inc. JBHT July 8
Akamai Technologies, Inc. AKAM July 6
Verisk Analytics, Inc. VRSK July 6
Big Lots, Inc. BIG July 1
Tandem Diabetes Care, Inc. TNDM July 1
Dell Technologies, Inc. DELL June 30
Zebra Technologies Corp. ZBRA June 30
Yeti Holdings, Inc. YETI June 25
Danaher Corp. DHR June 24
RH RH June 24
Hologic, Inc. HOLX June 23
First Solar, Inc. FSLR June 22
SPDR S&P Biotech ETF XBI June 19
Lowe’s Companies LOW June 19
Fiverr International, Ltd. FVRR June 19
Chegg, Inc. CHGG June 18
Etsy, Inc. ETSY June 17
Skyworks Solutions, Inc. SWKS June 16
Lululemon Athletica, Inc. LULU June 16
Carvana Co. CVNA June 10
Williams-Sonoma, Inc. WSM June 9
HubSpot, Inc. HUBS June 8
Square, Inc. SQ June 8
United Parcel Service, Inc. UPS June 5
Xilinx, Inc. XLNX June 4
KLA Corp. KLAC June 4
FedEx Corp. FDX June 3
SPDR S&P Retail ETF XRT June 3
iShares MSCI Japan ETF EWJ May 29
SolarEdge Technologies, Inc. SEDG May 29
Synopsis, Inc. SNPS May 27
Twilio, Inc. TWLO May 26
Take-Two Interactive Software, Inc. TTWO May 26
Lam Research Corp. LRCX May 26
Applied Materials, Inc. AMAT May 19
iShares Silver Trust SLV May 15
Agnico Eagle Mines, Ltd. AEM May 15
Agilent Technologies, Inc. A May 15
Halozyme Therapeutics, Inc. HALO May 15
Wix.com, Ltd. WIX May 13
Extreme Networks, Inc. EXTR May 13
Qualcomm, Inc. QCOM May 12
Kinross Gold Corp. KGC May 11
Salesforce.com, Inc. CRM May 8
Facebook, Inc. FB May 7
Spotify Technology S.A. SPOT May 5
Qorvo, Inc. QRVO Apr. 29
Old Dominion Freight Line, Inc. ODFL Apr. 29
Dollar General Corp. DG Apr. 28
Cadence Design Systems, Inc. CDNS Apr. 27
ServiceNow, Inc. NOW Apr. 27
Five9, Inc. FIVN Apr. 24
Chewy, Inc. CHWY Apr. 24
Tesla, Inc. TSLA Apr. 23
Shopify, Inc. SHOP Apr. 23
Teradyne, Inc. TER Apr. 20
Electronic Arts, Inc. EA Apr. 20
VanEck Vectors Semiconductor ETF SMH Apr. 17
Coupa Software, Inc. COUP Apr. 17
Veeva Systems, Inc. VEEV Apr. 17
Okta, Inc. OKTA Apr. 16
Target Corp. TGT Apr. 16
Netflix, Inc. NFLX Apr. 14
VanEck Vectors Gold Miners ETF GDX Apr. 14
Invesco QQQ Trust QQQ Apr. 14
Ciena Corp. CIEN Apr. 6
DocuSign, Inc. DOCU Apr. 3
Zscaler, Inc. ZS Apr. 3
RingCentral, Inc. RNG Mar. 30
Activision Blizzard, Inc. ATVI Mar. 30
Apple, Inc. AAPL Mar. 27
Nvidia Corp. NVDA Mar. 27
Dexcom, Inc. DXCM Mar. 27
Amazon.com, Inc. AMZN Mar. 26
Stamps.com, Inc. STMP Mar. 26
Domino’s Pizza, Inc. DPZ Mar. 20
Kroger Co. KR Mar. 19
Zoom Video Communications, Inc. ZM Mar. 19
iShares MSCI Emerging Markets ETF EEM Mar. 19
Newmont Corp. NEM Jan. 13
SPDR Gold Shares ETF GLD Jan. 2
Teledoc Health, Inc. TDOC Nov. 1
Microsoft Corp. MSFT Feb. 22
* Click each symbol for current chart.