Charting a failed technical test, S&P 500 stalls at the breakdown point

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The major U.S. stock benchmarks continue to digest the August downturn, the years most technically damaging to date.

In the process, the S&P 500 has failed its latest retest of major resistance S&P 2,453 amid potentially consequential emerging trends across asset classes. The charts below add color:

Before detailing the U.S. markets wider view, the S&P 500s SPX, +0.08% hourly chart highlights the past two weeks.

As illustrated, the index has violated major support S&P 2,453 and observed this area as resistance. Bearish near-term price action.

To reiterate, an eventual close atop the breakdown point would place the S&P on firmer technical ground. Conversely, first support (2,437) is followed by a firmer floor matching the August low (2,417).

Similarly, the Dow Jones Industrial Average is traversing a near-term range.

In its case, first support (21,770) is followed by a firmer floor matching the breakout point (21,682) better illustrated on the daily chart.

Meanwhile, the Nasdaq Composites price action remains technical.

Consider that the prevailing range top closely matches the late-June peak (6,303) also illustrated below.

Slightly more broadly, the Nasdaq continues to range around the 50-day moving average, currently 6,281.

Widening the view to six months adds perspective.

On this wider view, the Nasdaqs August price action remains jagged, capped by the 6,342 breakdown point. An eventual close higher would neutralize the early-month downdraft.

Separately, the Nasdaq has staged an extended late-August retest of the 50-day moving average.

Combined, the bearish late-July reversal, subsequent failed retest of the 6,342 resistance, and more recent sluggishness at the 50-day moving average, constitute a bearish-leaning near- to intermediate-term backdrop.

Looking elsewhere, the Dow industrials backdrop remains stronger.

The blue-chip benchmark has thus far maintained the breakout point (21,682) a level matching the 50-day moving average, currently 21,684. This area has drawn buyers early Tuesday.

Conversely, last weeks high (21,912) closely matched the 20-day moving average, a level that has capped the Dow since Aug. 17.

Meanwhile, the S&P 500 has failed a headline technical test at least so far.

Specifically, the S&P has registered five straight session highs closely matching the 2,453 resistance, without closing higher. Recall that the flatlining 50-day moving average, currently 2,451, effectively matches resistance.

The bigger picture

Broadly speaking, the August consolidation phase remains underway against a persistently uneven technical backdrop.

On a headline basis, the Nasdaq Composite has stalled near the 50-day moving average, while the S&P 500 remains capped by well-documented overhead.

Moving to the small-caps, the iShares Russell 2000 ETF IWM, +0.02% has maintained the range bottom (132.40) rising from support on decreased volume.

A retest of the 200-day moving average, currently 137.35, remains underway. As always, the 200-day is a widely-tracked longer-term trending indicator, and a posture lower raises the flag to a potential primary trend shift.

Similarly, the SPDR S&P MidCap 400 is vacillating at the 200-day moving average, currently 311.35.

More broadly, the small- and mid-cap benchmarks are rising from three-month lows following a tandem violation of the 200-day moving average and the rally attempt has thus far been flat. Bearish price action.

An eventual rally atop the trending indicators would mark technical progress.

Summing up the backdrop

All told, the U.S. benchmarks continue to digest the years most technically damaging downdraft.

(To be sure, the 2017 uptrend has been so strong that it presents a low bar for a downturn to register as the years most damaging.)

The downturn has been relatively broadly-based, and fueled by increased volume, contributing to the violation of several key technical levels. Recall that the small- and mid-cap benchmarks have ventured under the 200-day moving average, while the S& P 500 and Nasdaq Composite have violated major support, and failed the initial retest from underneath.

By comparison, the August rally attempts have registered as flat. At least so far.

Tactically, the S&P 500s headline 2,453 resistance closely matches the 50-day moving average, and a close higher would mark technical progress. The recent extended retest, from underneath, has thus far drawn selling pressure.

Conversely, S&P 2,405 matches important support, as initially detailed Aug. 18. An eventual violation would mark an intermediate-term lower low raising the flag to more serious technical concerns.

Beyond the prevailing intermediate-term consolidation phase, the S&P 500s more important primary uptrend is intact.

See also: Charting a corrective bounce, S&P 500 rallies to the 2,450 breakdown point.

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 10-year Treasury note yield TNX, -1.07% profiled Aug. 11 has extended its downturn amid a persistent safe-haven trade.

In the process, the yield has reached a genuinely significant technical test.

Consider that major support spans from 2.10 to 2.12, levels matching the June low and the bottom of the November gap.

This area is under siege early Tuesday, and the retest remains a watch out. To reiterate, a sustained break lower places the yield in less-charted territory, leaving it vulnerable to potentially material downside follow-through.

Conversely, a sustained posture atop trendine support, circa 2.15, preserves a range-bound technical bias.

Amid falling Treasury yields, the U.S. dollar has violated major support.

As detailed repeatedly, the PowerShares U.S. Dollar Bullish ETF UUP, +0.13% has formed a massive double top, the M formation defined by the 2015 and 2017 peaks.

The bearish pattern is underpinned by major support matching the 2016 low of 23.96.

The shares closed Monday at 23.92, and have extended firmly lower early Tuesday.

More plainly, the double top has been resolved, opening the path to much less-charted territory, and potentially significant follow-through. Conversely, a nearly immediate reversal atop the 24 area would at least temporarily place the brakes on bearish momentum.

The prevailing currency trends were introduced on April 25, and revisited frequently, including last week.

Against this backdrop, the SPDR Gold Trust GLD, -0.22% profiled Aug. 15 has staged the expected technical breakout. Gold and the U.S. dollar are inversely correlated.

Consider two time horizons, the six-month and two-year charts.

To start, the shares have extended the break from a one-year downtrend illustrated on the two-year chart. The initial breakout signaled a potentially material longer-term trend shift.

More immediately, the shares have knifed from a six-month range, resolving a bullish double bottom defined by the May and July lows.

Tactically, the breakout point, circa 123.30, pivots to support, and the GLDs path of least resistance points firmly higher barring a violation. The first pullback to support would be expected to draw buyers.

Moving to U.S. sectors, the VanEck Vectors Gold Miners ETF GDX, +0.66% profiled Aug. 14, has extended its breakout.

Consider that the August upturn punctuates a break from the trendline, as well as the 50- and 200-day moving averages.

Though near-term extended, and due to consolidate, a posture atop the former range top, circa 23.50, supports a bullish intermediate- to longer-term bias.

Finally, the SPDR S&P Metals & Mining ETF XME, +0.94% has also turned higher amid recent broad-market weakness.

The prevailing upturn punctuates a successful test of trendline support following the steep July rally. Tactically, the 200-day moving average (30.95) roughly matches the former range top, and the groups rally attempt is intact barring a violation.

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.

< td id="" align="left" valign="top" colspan=""> TTWO

Company Symbol Date Profiled
Rio Tinto plc RIO Aug. 28
AMC Networks, Inc. AMCX Aug. 28
Diana Shipping, Inc. DSX Aug. 28
SolarEdge Technologies, Inc. SEDG Aug. 25
FibroGen, Inc. FGEN Aug. 25
Crocs, Inc. CROX Aug. 25
BHP Billiton Ltd. BHP Aug. 25
SPDR S&P Metals and Mining ETF XME Aug. 24
Tower Semiconductor, Ltd. TSEM Aug. 24
Prologis, Inc. PLD Aug. 24
Vertex Pharmaceuticals, Inc. VRTX Aug. 23
ASML Holding N.V. ASML Aug. 23
Sempra Energy SRE Aug. 22
Lumber Liquidators Holdings, Inc. LL Aug. 22
VMware, Inc. VMW Aug. 21
Hortonworks, Inc. HDP Aug. 21
Control4 Corp. CTRL Aug. 21
TripAdvisor, Inc. TRIP Aug. 21
Iamgold Corp. IAG Aug. 17
Southern Copper Corp. SCCO Aug. 17
Perrigo Co. PRGO Aug. 17
Atlas Air Worldwide Holdings, Inc. AAWW Aug. 16
Las Vegas Sands Corp. LVS Aug . 16
China Mobile Limited CHL Aug. 16
Boingo Wireless, Inc. WIFI Aug. 16
Verizon Communications, Inc. VZ Aug. 15
Boyd Gaming Corp. BYD Aug. 14
PDL BioPharma, Inc. PDLI Aug. 14
Newmont Mining Corp. NEM Aug. 14
SPDR Gold Trust GLD Aug. 10
Franco-Nevada Corp. FNV Aug. 10
Xerox Corp. XRX Aug. 10
Cognizant Technology Solutions CTSH Aug. 9
LivePerson, Inc. LPSN Aug. 9
Alexion Pharmaceuticals, Inc. ALXN Aug. 8
Cognex Corp. CGNX Aug. 8
HP, Inc. HPQ Aug. 7
Global Payments, Inc. GPN Aug. 7
Cadence Design Systems, Inc. CDNS Aug 4
Sina Corp. SINA Aug. 4
First Solar, Inc. FSLR Aug. 3
Abbott Laboratories ABT Aug. 3
Corcept Therapeutics, Inc. CORT Aug. 3
PNC Financial Services Group, Inc. PNC Aug. 2
Sirius XM Holdings, Inc. SIRI Aug. 1
Air Lease Corp. AL

July 26
J.P. Morgan Chase & Co. JPM July 26
International Game Technology IGT July 25
Glu Mobile, Inc. GLUU July 25
American Tower Corp. AMT July 21
SBA Communications Corp. SBAC July 20
D.R. Horton, Inc. DHI July 18
Mastercard Inc. MA July 17
iShares MSCI Brazil ETF EWZ July 14
Bottomline Technologies, Inc. E PAY July 13
Toyota Motor Corp. TM July 13, Inc. WUBA July 11
PulteGroup, Inc. PHM July 11
CF Industries Holdings, Inc. CF July 11
Delphi Automotive DLPH July 10
Novartis AG NVS July 6
Euronet Worldwide, Inc. EEFT June 26
Loxo Oncology, Inc. LOXO June 22
Citigroup, Inc. C June 9
Scientific Games Corp. SGMS June 7
iShares China Large-Cap ETF FXI June 6
Health Care Select Sector SPDR XLV June 5
Sangamo Therapeutics, Inc. SGMO June 5
Monster Beverage Corp. MNST May 24
FMC Corp. FMC May 16
Allstate Corp. ALL May 16
iShares MSCI Japan ETF EWJ May 12
Weibo Corp. WB May 12
Myriad Genetics, Inc. MYGN May 10
Tableau Software, Inc. DATA May 9
GrubHub, Inc. GRUB May 4
Caterpillar, Inc. CAT Apr. 28
Ferrari N.V. RACE Apr. 27
IAC/InterActiveCorp IAC Apr. 24
Ryanair Holdings RYAAY Apr. 17
Utilities Select Sector SPDR XLU Apr. 13
Red Hat, Inc. RHT Apr. 7
Coca-Cola Co. KO Apr. 5
UnitedHealth Group, Inc. UNH Mar. 31
Pepsico, Inc. PEP Mar. 29
iShares MSCI Hong Kong ETF EWH Mar. 24
Oracle Corp. ORCL Mar. 23
Universal Display Corp. OLED Mar. 21
iShares MSCI All Country Asia ex Japan ETF AAXJ Mar. 21
Activision Blizzard, Inc. ATVI Mar.7
Square, Inc. SQ Mar. 3
Paycom Software, Inc. PAYC Feb. 24
Facebook, Inc. FB Feb. 23
Sony Corp. SNE Feb. 17
SPDR S&P Biotech ETF XBI Feb. 15
Microchip Technology, Inc. MCHP Feb. 13
CBOE Holdings, Inc. CBOE Feb. 8
Boeing Co. BA Feb. 7
McDonalds Corp. MCD Feb. 3
Exact Sciences Corp. EXAS Jan. 30
iShares Euro pe ETF IEV Jan. 26
Adobe Systems, Inc. ADBE Jan. 24
Shopify, Inc. SHOP Jan. 20 AMZN Jan. 13
iShares MSCI Emerging Markets ETF EEM Jan. 11
Alphabet, Inc. GOOGL Jan. 9
Alibaba Group Holding Limited BABA Jan. 5
AutoDesk, Inc. ADSK Dec. 20
Broadcom Limited AVGO Dec. 14
Take-Two Interactive Software, Inc. Dec. 14
Apple, Inc. AAPL Dec. 9
Financial Select Sector SPDR XLF Nov. 8
Technology Select Sector SPDR XLK Oct. 25
Lam Research Corp. LRCX Oct. 20
Netflix, Inc. NFLX Oct. 4
Microsoft Corp. MSFT Aug. 5
PowerShares QQQ ETF QQQ July 19
Industrial Select Sector SPDR XLI July 15
Materials Select Sector SPDR XLB July 15
VanEck Vectors Semiconductor ETF SMH June 23

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