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May 22, 2018

Charting a slow-motion breakout attempt, Dow 25,000 (still) under siege - May 22, 2018. - | Articles | MarketWatch


Charting a slow-motion breakout attempt, Dow 25,000 (still) under siege

Michael Ashbaugh

Though the major U.S. benchmarks have flatlined of late, boring remains bullish, and notable technical tests are currently in play.
On a headline basis, Dow 25,000 remains under siege — in slow-motion form — while the S&P 500 is pressing less obvious resistance matching the May peak (2,742).
Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, -0.11%  hourly chart highlights the past two weeks.
As illustrated, the S&P is rising from a successful test of the breakout point (2,710). Consecutive session lows have registered within one point.
Conversely, next resistance (2,742) closely matches the mid-March gap (2,741.4), and currently defines the May peak (2,742.10), established May 14.
Tuesday’s early session high (2,742.24) has almost precisely matched the May peak.
Meanwhile, the Dow Jones Industrial Average DJIA, -0.48%  has tagged a nominal new high.
More specifically, the blue-chip benchmark has gapped atop the 2017 peak, rising to challenge the 25,000 mark.
The slight breakout places the Dow in less-cluttered territory, better illustrated on the daily chart.
Against this backdrop, the Nasdaq Composite is holding the range top.
Recall that last week’s close (7,354) closely matched first support (7,353).
Slightly more broadly, the Nasdaq has maintained the 7,320 breakout point, better illustrated below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has sustained the May breakout.
To reiterate, last week’s low (7,321) closely matched the breakout point, also the April peak (7,320). This is bullish price action, and dovetails with a similar successful retest on the S&P 500.
Looking elsewhere, the Dow Jones Industrial Average has staged a belated technical breakout.
Recall that resistance formerly spanned from 24,859 to 24,876, levels matching the April peak and the 2017 peak.
The Dow has ventured slightly higher this week, rising to challenge the marquee 25,000 mark.
The slight breakout resolves a double bottom — defined by the March and May lows — placing the index in less-cluttered territory. Until this week, the Dow was the lone widely-tracked U.S. benchmark still capped by the April peak.
Meanwhile, the S&P 500 is digesting the steep early-May rally.
To reiterate, the sustained May breakout is constructive, and dovetails with similar Nasdaq price action.
The bigger picture
Collectively, the bigger-picture backdrop supports a bullish bias, and it continues to strengthen.
On a headline basis, the S&P 500 and Nasdaq Composite have sustained the May breakout, effectively nailing well-defined support — S&P 2,710 and Nasdaq 7,320.
Meanwhile, the Dow industrials have broken out belatedly, tagging a new high, and the 25,000 mark, just this week.
Moving to the small-caps, the iShares Russell 2000 ETF has extended its breakout, notching four straight record closes.
Recent strength resolves a double bottom underpinned by the 200-day moving average. The breakout point (160.00) pivots to well-defined support.
Meanwhile, the S&P MidCap 400 is challenging nearly four-month highs
Resistance broadly spans from about 357.10 to 357.90, and is currently under siege.
Conversely, the prevailing upturn originates from well-defined support. Recall that last week’s low (349.80) closely matched its breakout point, the April closing peak (349.75).
Against this backdrop, the SPDR Trust S&P 500 is vying to extend its uptrend.
To reiterate, resistance matches the mid-March gap (274.14) and the May peak (274.08).
Tuesday’s early session high (274.24) has closely matched resistance, an area that continues to draw slight selling pressure. The retest remains underway.
Placing a finer point on the S&P 500’s backdrop, its initial May breakout registered as directionally sharp, placing the index at two-month highs.
The subsequent pullback was comparably flat, underpinned by the 2,710 breakout point. Constructive price action.
Conversely, resistance matching the May peak (2,742.10) is currently under siege.
On further strength, an inflection point rests at 2,761, and is followed by firmer overhead matching its four-month range top spanning from 2,789 to 2,802.
Beyond technical levels, the U.S. benchmarks are making technical progress even amid pronounced cross currents across asset classes, detailed last week.
(For instance, rising Treasury yields and a U.S. dollar breakout have contributed to tandem gold and Japanese yen technical breakdowns.)
The U.S. stock benchmarks’ resilience, and relative stability, amid the cross currents also supports a bullish technical bias.
See also: Charting a ‘bull-trend’ pullback, S&P 500 retests the breakout point.
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 30-year Treasury note yield TYX, +0.06%  continues to press major resistance.
The specific area matches the February peak (3.22) as well as a nearly three-year range top.
Against this backdrop, the yield is rising from a bullish cup-and-handle pattern underpinned by the 50-day moving average. An eventual breakout opens the path to less-charted territory, though a near-term target projects to 3.31.
In related price action, the 10-year Treasury note yield is digesting its May spike to nearly seven-year highs, detailed last week.
Moving to U.S. sectors, the transports have come to life technically.
As illustrated, the iShares Transportation Average ETF has reached nearly four-month highs, edging atop well-defined resistance.
The prevailing upturn originates from trendline support, as well as a successful test of the 200-day moving average.
More immediately, the breakout point, circa 195, pivots to support. A sustained posture higher leaves the path open to a potential retest of record territory matching the January peak.
Looking elsewhere, the VanEck Vectors Oil Services ETF is acting well technically.
The group has recently staged a bull-flag breakout, rising to challenge 52-week highs.
Muted selling pressure near resistance, across three sessions — combined with a relative strength index (not illustrated) that has reached four-month highs — improve the chances of an eventual breakout.
More broadly, consider that the transports and energy sector are frequently inversely correlated. The prevailing tandem transports and energy sector resurgence is broad-market constructive, consistent with economic strength.
Initially profiled Oct. 30, Akamai Technologies, Inc. AKAM, +0.08%  has returned 44.3% and remains well positioned.
As illustrated, the shares are rising from a bullish cup-and-handle defined by the April and mid-May lows.
More broadly, the range top matches major overhead, illustrated on the five-year chart.
Tactically, a breakout attempt is in play barring a violation of near-term support, circa 74.20. An eventual close atop the March peak (78.30) opens the path to less-charted territory, and potentially material follow-through.
Electronic Arts, Inc. EA, -0.60%  is a well positioned large-cap video game producer.
Earlier this month, the shares knifed to record territory, rising after the company’s fourth-quarter results.
The subsequent pullback has been flat, fueled by decreased volume, positioning the shares to build on the initial spike. Tactically, first support matches the breakout point, circa 130, and the rally attempt is intact barring a violation.
Momo, Inc. MOMO, -0.20%  is a large-cap Beijing-based social networking platform operator.
As illustrated, the shares have rallied to the range top, rising to challenge nine-month highs.
Tactically, near-term support closely matches the 50-day moving average (36.95), a recent inflection point, and a breakout attempt is in play barring a violation. An intermediate-term target projects to the 46 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.
Company Symbol Date Profiled
Industrial Select Sector SPDR XLI May 21
Deere & Co. DE May 21
Union Pacific Corp. UNP May 21
Twilio, Inc. TWLO May 21
SolarEdge Technologies, Inc. SEDG May 21
Intercept Pharmaceuticals, Inc. ICPT May 21
Energy Select Sector SDPR XLE May 18
Viper Energy Partners LP VNOM May 18
Energen Corp. EGN May 18
Boyd Gaming Corp. BYD May 18
Packaging Corp. of America PKG May 17
Range Resources Corp. RRC May 17
Ternium S.A. TX May 17
SPDR S&P Metals & Mining ETF XME May 17
SPDR S&P Retail ETF XRT May 15
Target Corp. TGT May 15
United Parcel Service, Inc. UPS May 14
Lowe’s Companies, Inc. LOW May 14
Toyota Motor Corp. TM May 14
Fabrinet FN May 14
Pegasystems, Inc. PEGA May 14
Texas Instruments, Inc. TXN May 11
Vale SA VALE May 11
PowerShares QQQ Trust QQQ May 10
Facebook, Inc. FB May 9
Electronics for Imaging, Inc. EFII May 9
Nutanix, Inc. NTNX May 9
SPDR S&P Oil and Gas Exploration & Production ETF XOP May 9
Tableau Software, Inc. DATA May 8
Coupa Software, Inc. COUP May 8
Now, Inc. DNOW May 8
Apple, Inc. AAPL May 7
McDonald’s Corp. MCD May 7
American Express Co. AXP May 7
PDC Energy, Inc. PDCE May 7
Under Armour, Inc. UA May 2
Melco Resorts & Entertainment Ltd. MLCO May 2
Norfolk Southern Corp. NSC May 2
Advanced Micro Devices, Inc. AMD May 1, Inc. WUBA May 1
UnitedHealth Group, Inc. UNH Apr. 30
Nike, Inc. NKE Apr. 30
DSW, Inc. DSW Apr. 30
Home Depot, Inc. HD Apr. 27
Best Buy Co., Inc. BBY Apr. 27
Noble Energy, Inc. NBL Apr. 27
Sanmina Corp. SANM Apr. 27
Golar LNG Limited GLNG Apr. 26
Costco Wholesale Corp. COST Apr. 26
CSX Corp. CSX Apr. 26
Applied Optoelectronics, Inc. AAOI Apr. 19
Chipotle Mexican Grill, Inc. CMG Apr. 19
Wingstop, Inc. WING Apr. 19
F5 Networks, Inc. FFIV Apr. 18
Workday, Inc. WDAY Apr. 18
FedEx Corp. FDX Apr. 17
Pacira Pharmaceuticals, Inc. PCRX Apr. 17
Barrick Gold Corp. ABX Apr. 16
Valero Energy VLO Apr. 16
EOG Resources, Inc. EOG Apr. 11
Sarepta Therapeutics, Inc. SRPT Apr. 11
Autodesk, Inc. ADSK Apr. 10
NetApp, Inc. NTAP Apr. 9
GlaxoSmithKline GSK Apr. 9
AMC Entertainment Holdings, Inc. AMC Apr. 9
Guess, Inc. GES Apr. 2
Continental Resources, Inc. CLR Apr. 2
Whiting Petroleum Corp. WLL Mar. 22
Domino’s Pizza, Inc. DPZ Mar. 21
Orbotech Ltd. ORBK Mar. 16
Eastman Chemical Co. EMN Mar. 16
Veeva Systems, Inc. VEEV Mar. 15
Autohome, Inc. ATHM Mar. 14
Burlington Stores, Inc. BURL Mar. 14
Baozun, Inc. BZUN Mar. 9
Marathon Petroleum Corp. MPC Mar. 9
Intel Corp. INTC Mar. 8
AxoGen, Inc. AXGN Mar. 8
Zebra Technologies Corp. ZBRA Mar. 7
TJX Companies, Inc. TJX Mar. 6
Chart Industries, Inc. GTLS Mar. 6
Macy’s, Inc. M Mar. 5
Five9, Inc. FIVN Mar. 5
LivePerson, Inc. LPSN Feb. 28
VeriSign, Inc. VRSN Feb. 26
Shutterfly, Inc. SFLY Feb. 22
ServiceNow, Inc. NOW Feb. 21
Palo Alto Networks, Inc. PANW Feb. 16
Adobe Systems, Inc. ADBE Feb. 16, Inc. CRM Feb. 12
Red Hat, Inc. RHT Feb. 1
Fortinet, Inc. FTNT Jan 19
Insulet Corp. PODD Jan. 17
Arrowhead Pharmaceuticals Corp. ARWR Jan. 11
Vericel Corp. VCEL Jan. 10
Sarepta Therapeutics, Inc. SRPT Jan. 3
Best Buy Co. BBY Dec. 11
Abercrombie & Fitch Co. ANF Nov. 20
MSCI, Inc. MSCI Nov. 20
Motorola Solutions, Inc. MSI Nov. 14
Splunk, Inc. SPLK Nov. 9
Akamai Technologies, Inc. AKAM Oct. 30
Lululemon Athletica, Inc. LULU Oct. 24
HubSpot, Inc. HUBS Oct. 4
XPO Logistics, Inc. XPO Oct. 2
Nvidia Corp. NVDA Sept. 27
Southern Copper Corp. SCCO Aug. 17
Bottomline Technologies, Inc. EPAY July 13
GrubHub, Inc. GRUB May 4
Square, Inc. SQ Mar. 3
Netflix, Inc. NFLX Oct. 4
Microsoft Corp. MSFT Aug. 5

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