Charting a bullish 2018 start, U.S. benchmarks press record territory

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

Technically speaking, the major U.S. stock benchmarks are starting 2018 against a firmly-bullish bigger-picture backdrop.

On a headline basis, each big three benchmark the S&P 500, Dow industrials and Nasdaq Composite has sustained the decisive late-2017 technical breakout, and remains within striking distance of yet another record high.

Before detailing the U.S. markets wider view, the S&P 500s
SPX, +0.83%
hourly chart highlights the past two weeks.

As illustrated, the S&P concluded 2017 amid a tight two-week range, spanning about 21 points, or less than 0.8%.

Tactically, the range top (2,695) defines the S&Ps record high, while the range bottom closely matches near-term support (2,672).

Similarly, the Dow Jones Industrial Average has asserted a range-bound posture.

Its corresponding range spans about 170 points, or less than 0.7%.

Here again, the range top (24,876) defines the Dows all-time high, while near-term support matches the range bottom.

Meanwhile, the Nasdaq Composites near-term backdrop remains slightly softer.

Consider that near-term resistance (6,955) matches last weeks high, also three consecutive session highs.

The ensuing downturn placed the Nasdaq at two-week lows, via a final-hour 2017 downturn.

Widening the view to six months adds perspective.

On this wider view, the Nasdaqs late-year downturn registers as technically tame. The 2017 close (6,903) closely matched the breakout point and the 20-day moving average.

Delving deeper, trendline support, circa 6,850, has defined the prevailing uptrend. The Nasdaqs intermediate-term bias points firmly higher barring a violation.

Looking elsewhere, the Dow Jones Industrial Average is digesting the late-2017 breakout.

Recall that the November rally was statistically unusual, encompassing five consecutive closes atop the 20-day volatility bands. Put differently, this was a two standard deviation breakout.

The prevailing upturn closely resembles the mid-September breakout (also precisely five closes atop the bands) and subsequent follow-through.

Similarly, the S&P 500 has flatlined of late, digesting the steep late-year rally.

Consider that the 2017 peak (2,695) registered slightly under its projected technical target of 2,705.

The bigger picture

Broadly speaking, the major U.S. benchmarks are starting 2018 against a bullish technical backdrop.

Though each index has pulled in from record territory, the selling pressure remains flat, and limited technical damage has been inflicted.

Moving to the small-caps, the iShares Russell 2000 ETF
IWM, +0.94%
is traversing a five-week range.

Major support matches the breakout point (150.50) and the 50-day moving average, currently 150.40.

Conversely, the range top matches the small-cap benchmarks all-time high. The tight late-year range just under record territory is technically constructive.

Meanwhile, the S&P MidCap 400 is digesting a slightly more decisive late-2017 breakout.

Here again, the tight two-week range, just under all-time highs, improves the chances of follow-through. Tactically, near-term support (340.40) is closely followed by the 50-day moving average.

Against this backdrop, the SPDR Trust S&P 500 is holding tightly to record territory amid decreased volume. It continues to trend atop the 20-day moving average, currently 266.30.

Summing up the backdrop

Collectively, the market technicals remain firmly-bullish against the backdrop of grinding-higher price action.

Moreover, healthy sector rotation continues to underpin the prevailing uptrend, even amid 2017s lackluster final weeks. (See the Dec. 21 review.)

Tactically, the S&P 500 has held relatively tightly to record highs, and remains within striking distance of the 2,705 target.

Conversely, the 20-day moving average, currently 2,667, is rising toward near-term support (2,672), illustrated on the hourly chart. The S&P has registered just one close under the 20-day since Aug. 29, and its near-term uptrend is firmly intact barring a violation.

See also: Bull trend confirmed, charting the approach of Dow 25,000.

Tuesdays 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 United States Oil Fund
USO, +0.50%
has extended its uptrend, rising amid heightened geopolitical tensions. The fund tracks the price of West Texas Intermediate (WTI) light, sweet crude oil.

Technically, the USO has confirmed its uptrend, rising to 18-month highs from trendline support. The former range top (11.79) pivots to well-defined support.

More broadly, the shares are within striking distance of major overhead (12.45), an area matching a two-year range top. An eventual breakout opens the path to less-charted territory, and potentially material follow-through.

Amid rising oil prices, the VanEck Vectors Oil Services ETF is acting well technically.

Late last month, the group rallied to the range top, edging above the 200-day moving average, currently 25.60.

The ensuing pullback has been flat, underpinned by the 200-day, positioning the group for a potential breakout.

More broadly, the range top matches a multi-year inflection point, illustrated on the two-year chart. A breakout opens the path to less-charted territory, and potentially material follow-through.

Looking elsewhere, the SPDR Gold Trust
GLD, +1.21%
has also come to life technically.

As illustrated, the shares staged a late-December resurgence, knifing atop trendline resistance, as well as the 50- and 200-day moving averages.

In the process, the GLD tagged a fractional three-month peak to conclude 2017.

Tactically, trendline support closely matches the major moving averages, circa 121, and the rally attempt is intact barring a violation.

Moving to specific names, Hovnanian Enterprises, Inc.
HOV, -0.90%
is a well positioned small-cap homebuilder.

Technically, the shares have launched to two-year highs, rising from a cup-and-handle defined by the September and December lows. Recent strength punctuates a successful test of the 50-day moving average.

Though near-term extended, and due to consolidate, the shares are attractive on a pullback. Well-defined support matches the breakout point, circa 3.00.

More broadly, the shares are traversing less-charted territory, illustrated on the four-year chart, opening the path to potentially material longer-term follow-through.

Xperi Corp.
XPER, +1.02%
is a mid-cap developer of computer-vision, audio and semiconductor technologies.

As illustrated, the shares have recently knifed atop trendline resistance, and the major moving averages, rising amid a sustained volume increase.

The ensuing pullback has been flat, fueled by decreased volume, placing the shares at an attractive entry near support, and 16% under the December peak.

Profiled Oct. 2, Neurocrine Biosciences, Inc.
NBIX, +2.20%
has returned 24.4% and remains well positioned.

The shares initially spiked two months ago, gapping higher after the companys third-quarter results.

The ensuing pullback has been underpinned by the top of the gap, and the 50-day moving average, an area defining the prevailing uptrend.

More broadly, the shares are well positioned the three-year chart, rising from a flag-like pattern pinned to the initial October spike. Tactically, well-defined support matches the breakout point, circa 75.50.

Editors 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 Date Profiled
Under Armor, Inc. UA Dec. 21
Vale S.A. VALE Dec. 21
Proteostasis Therapeutics, Inc. PTI Dec. 21
Finisar Corp. FNSR Dec. 20
Pioneer Natural Resources Co. PXD Dec. 20
Nucor Corp. NUE Dec. 20
Westport Fuel Systems, Inc. WPRT Dec. 20
Zions Bancorp ZION Dec. 20
Intel Corp. INTC Dec. 19
BB&T Corp. BBT Dec. 19
Ubiquiti Networks, Inc. UBNT Dec. 19
McDonalds Corp. MCD Dec. 18
Silicon Motion Technology Corp. SIMO Dec. 18
SPDR S&P Aerospace & Defense ETF XAR Dec. 18
Century Aluminum Co. CENX Dec. 18
Prosperity Bancshares, Inc. PB Dec. 18
NuVasive, Inc. NUVA Dec. 18
Ebay, Inc. EBAY Dec.15
Target Corp. TGT Dec.15
iRobot Corp. IRBT Dec.15
GlycoMimetics, Inc. GLYC Dec.15
SPDR S&P Metals & Mining ETF XME Dec. 14
Blueprint Medicines Corp. BPMC Dec. 14
Dunkin Brands Group, Inc. DNKN Dec. 14
JD.com, Inc. JD Dec. 14
Seagate Technology STX Dec. 13
TJX Companies, Inc. TJX Dec. 13
Consumer Staples Select Sector SPDR XLP Dec. 12
Nordstrom, Inc. JWN Dec. 12
VeriSign, Inc. VRSN Dec. 12
Catalyst Pharmaceuticals, Inc. CPRX Dec. 12
F5 Networks, Inc. FFIV Dec. 11
Best Buy Co. BBY Dec. 11
Lowes Companies, Inc. LOW Dec. 11
PNC Financial Services Group, Inc. PNC Dec. 11
Bank of America Corp. BAC Dec. 8
Verizon Communications, Inc. VZ Dec. 7
Regions Financial Corp. RF Dec. 7
KeyCorp KEY Dec. 6
Kohls Corp. KSS Dec. 6
CNX Resourcers Corp. CNX Dec. 6
Norfolk Southern Corp. NSC Dec. 4
Medtronic plc MDT Dec. 4
East West Bancorp, Inc. EWBC Dec. 4
Caterpillar, Inc. CAT Dec. 1
Kulicke and Soffa Industries, Inc. KLIC Dec. 1
iShares Transportation Average ETF IYT Nov. 30
SPDR S&P Regional Banking ETF KRE Nov. 29
Macys, Inc. M Nov. 29
Copa Holdings, S.A. CPA Nov. 29
International Game Technology IGT Nov. 29
Loews Corp. L Nov. 29
Nuance Communications, Inc. NUAN Nov. 28
NetEase, Inc. NTES Nov. 27
Advance Auto Parts, Inc. AAP Nov. 27
AutoNation, Inc. AN Nov. 27
Walt Disney Co. DIS Nov. 22
FleetCor Technologies, Inc. FLT Nov. 21
SPDR S&P Retail ETF XRT Nov. 20
Abercrombie & Fitch Co. ANF Nov. 20
American Eagle Outfitters, Inc. AEO Nov. 20
MSCI, Inc. MSCI Nov. 20
Verisk Analytics, Inc. VRSK Nov. 20
Halozyme Therapeutics, Inc. HALO Nov. 16
SkyWest, Inc. SKYW Nov. 16
Consumer Discretionary SPDR XLY Nov. 14
Motorola Solutions, Inc. MSI Nov. 14
Skechers U.S.A., Inc. SKX Nov. 13
Polaris Industries, Inc. PII Nov. 13
Tractor Supply Co. TSCO Nov. 13
Splunk, Inc. SPLK Nov. 9
Aimmune Therapeutics, Inc. AIMT Nov. 9
Teradata Corp. TDC Nov. 7
Corning, Inc. GLW Nov. 7
InterXion Holding, N.V. INXN Nov. 6
Yum Brands, Inc. YUM Nov. 6
First Solar, Inc. FSLR Nov. 3
Twitter, Inc. TWTR Nov. 1
Ambarella, Inc. AMBA Nov. 1
Melco Resorts & Entertainment Limited MLCO Nov. 1
Broadcom Limited AVGO Oct. 31
Akamai Technologies, Inc. AKAM Oct. 30
Cisco Systems, Inc. CSCO Oct. 25
Mosaic Co. MOS Oct. 25
Builders FirstSource, Inc. BLDR Oct. 25
Marvell Technology Group, Ltd. MRVL Oct. 24
Lululemon Athletica, Inc. LULU Oct. 24
PPG Industries, Inc. PPG Oct. 23
SPDR S&P Homebuilders ETF XHB Oct. 20
Travelers Companies, Inc. TRV Oct. 20
Johnson & Johnson JNJ Oct. 20
Steel Dynamics, Inc. STLD Oct. 20
Michael Kors Holdings Limited KORS Oct. 18
Marathon Oil Corp. MRO Oct. 17
SM Energy Co. SM Oct. 16
Nutanix, Inc. NTNX Oct. 16
Dollar General DG Oct. 16
Paychex, Inc. PAYX Oct. 13
Union Pacific Corp. UNP Oct. 12
International Business Machines Corp. IBM Oct. 11
Ford Motor Co. F Oct. 11
3M Co. MMM Oct. 5
LGI Homes, Inc. LGIH Oct. 5
HubSpot, Inc. HUBS Oct. 4
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