Charting a break to ‘clear skies’ territory, S&P 500 sustains rally atop 3,000 mark

Posted by jbrumley on July 16, 2019 2:31 PM

- Focus: Industrial sector presses major resistance, Gold miners digest massive multi-year breakout, XLI, GDX, CYBR, ADI, XLNX, LPSN -

By Michael Ashbaugh, MarketWatch

Technically speaking, each big three U.S. benchmark has reached record territory, confirming its uptrend with a strong third-quarter start.

Against this backdrop, the S&P 500 is digesting its July breakout, a move opening the path to a longer-term target (3,150) precisely 5.0% above the 3,000 mark.


Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, -0.37%  hourly chart highlights the past two weeks.

As illustrated, the S&P 500 has extended its July break to record territory.

Tactically, the breakout points pivot to support, an area broadly spanning from 2,995 to 3,003.


Meanwhile, the Dow Jones Industrial Average DJIA, -0.06%  has taken flight, placing distance atop the 27,000 mark.

Near-term inflection points match last week’s gap, at 27,135 and 27,088. Delving deeper, a firmer floor matches the breakout point (26,966).


Against this backdrop, the Nasdaq Composite COMP, -0.46%  has also tagged another record high.

The prevailing upturn punctuates a successful test of the breakout point (8,172). Bullish price action.

More broadly, recall that last week’s low (8,061) closely matched gap support (8,059) an area also detailed below.


Widening the view to six months adds perspective.

On this wider view, the Nasdaq has extended its July breakout, reaching uncharted territory. Significant support spans from 8,172 to 8,176, an area also detailed on the hourly chart.

Delving deeper, the prevailing breakout originates from a tight range, underpinned by the top of the July gap (8,059). The upturn resolves a bullish V-shaped reversal from the June low.


Looking elsewhere, the Dow Jones Industrial Average has truly taken flight.

The nearly straightline spike punctuates a successful test of its breakout point, an area matching the April peak (26,696).

On a more granular note, the Dow has staged a bullish two standard deviation breakout, notching consecutive closes atop its 20-day Bollinger bands. Though near-term extended, this statistically unusual event likely lays the groundwork for incremental intermediate-term gains.


Meanwhile, the S&P 500 has also extended its July breakout.

The prevailing upturn punctuates a successful test of the June peak (2,964) an area also detailed on the hourly chart.

The bigger picture

Collectively, each major U.S. benchmark has reached record territory, building on an already strong third-quarter start.

Moreover, each benchmark’s prevailing upturn punctuates a successful test of well-defined support — see the S&P 2,964, Nasdaq 8,060 and Dow 26,700 areas.

Put differently, the benchmarks are rising amid distinctly technical July price action, consistent with a firmly-grounded uptrend.


Moving to the small-caps, the iShares Russell 2000 ETF continues to lag behind.

Still, the small-cap benchmark has asserted a tight July range, digesting the early-July rally atop the major moving averages.


Similarly, the SPDR S&P MidCap 400 has established a tight July range, refusing to stay far from next resistance (354.70).

Tactically, the prevailing range top (359.25) is closely followed by the MDY’s year-to-date closing peak (261.02).


Looking elsewhere, the SPDR Trust S&P 500 has extended its July break to record territory.

In the process, the SPY has registered consecutive closes atop the 300 mark for the first time on record.


Against this backdrop, the S&P 500 has cleared the 3,000 mark, and is traversing previously uncharted territory.

As detailed previously, a longer-term S&P 500 target projects to the 3,150 area, precisely 5.0% above the 3,000 mark.

(Using closing levels, start with the April closing peak (2,945.8) and subtract the June low (2,744.5) = 201.3 points. Then, add the result to the breakout point: 2,945.8 + 201.3 = 3,147.)

Conversely, a notable floor matches the breakout point — the 2,952-to-2,964 area, detailed last week — and is followed by the familiar 2,912 support. The S&P 500’s intermediate-term bias remains bullish barring a violation.

See also: S&P 500 nails near-term target (2,995), sustains July break to 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 Industrial Select Sector SPDR is showing signs of life. (Yield = 2.0%.)

As illustrated, the group has established an orderly three-week range, rising to challenge nine-month highs.

Tactically, the 50-day moving average has marked a bull-bear inflection point — currently underpinning the July range — and the breakout attempt is intact barring a violation. A near-term target projects to the 80.50 area on follow-through.


Looking elsewhere, the VanEck Vectors Gold Miners ETF GDX, +0.34%  is acting well technically.

The group initially spiked three weeks ago, gapping to 33-month highs amid surging precious metals prices.

The subsequent orderly range — and more immediate tight one-week range — position the group to build on the massive June spike. Tactically, the range bottom matches the top of the gap (24.54) and a posture higher supports a bullish bias.

On a related note, the iShares Silver Trust has extended its trendline breakout, most recently detailed July 2.


Initially profiled Jan. 11, CyberArk Software Ltd. CYBR, -1.16%  has returned 80.1% and remains well positioned.

Technically, the shares have knifed to record highs, clearing well-defined resistance amid a volume spike. An intermediate-term target projects to the 150 area.

Conversely, the breakout point pivots to support, circa 135.50, and the prevailing uptrend is firmly intact barring a violation.


Analog Devices, Inc. ADI, -1.26%  is a well positioned large-cap semiconductor name. (Yield = 1.9%.)

As illustrated, the shares are challenging major resistance (117.60), rising from a flag-like pattern, the tight range pinned to the steep June rally.

The range top matches record highs, meaning that a breakout opens the path to uncharted territory and potentially material upside. A near-term target projects to the 123.50 area on follow-through.


Xilinx, Inc. XLNX, -0.27%  is a large-cap semiconductor name showing signs of life.

Specifically, the shares are rising from a bullish cup-and-handle pattern defined by the May and July lows.

Tactically, near-term support (114.20) is followed by the 50-day moving average (111.40) — a level that has defined the recent trend (see the April gap) — and the recovery attempt is intact barring a violation.


Finally, LivePerson, Inc. LPSN, -0.09%  is a mid-cap developer of e-commerce support software solutions.

Technically, the shares have knifed to record territory, rising from a four-month range bisected by the 50-day moving average.

Underlying the upturn, its relative strength index (not illustrated) has registered its best levels since early March, improving the chances of longer-term follow-through.

Though near-term extended, and due to consolidate, a pullback toward the breakout point (30.45) would offer an attractive entry.

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