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Michael Ashbaugh

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Feb. 11, 2020, 12:41 p.m. EST

Charting a bull-flag breakout, S&P 500 extends to record territory

Focus: Industrials challenge record highs, Energy sector’s technical breakdown, IBM digests strong 2020 start XLI, XLE, IBM, LITE, TEAM, SHAK

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By Michael Ashbaugh, MarketWatch

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Looking elsewhere, the SPDR Trust S&P 500 has reclaimed trendline resistance, rising to tag its latest record close.

The prevailing upturn punctuates a successful test of the 50-day moving average, nearly to the decimal (Within three cents.)

Placing a finer point on the S&P 500, the index has rallied to its latest record high, punctuating a sharp early-February rally.

Tactically, inflection points match the 20-day moving average, currently 3,303 (illustrated below), and the S&P’s former range bottom (3,280).

The top of last week’s gap (3,280) matched support. A sustained posture atop this area signals a bullish near-term bias.

Delving deeper, the 50-day moving average, currently 3,239, is followed by the familiar 3,215 support, a bull-bear inflection point detailed repeatedly.

The late-January low (3,215) matched major support, and has been punctuated by a sharp reversal to record territory. The S&P’s intermediate-term bias remains bullish barring a violation of the 3,215 area.

On further strength, a near- to intermediate-term S&P 500 target projects from the January low to about 3,445, an area detailed last week.

Also see: Charting a bullish reversal, S&P 500 extends spike from major support.

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 has weathered the recent market downdraft. (Yield = 1.9%.)

Against this backdrop, the sharp February rally places the group’s record close (84.41) under siege. A near-term target projects to the 88 area on follow-through.

Conversely, the 50-day moving average is rising toward the breakout point (82.50) an area roughly matching last week’s gap (82.80). A breakout attempt is in play barring a violation.

More broadly, the group is also well positioned on the four-year chart, rising from a massive head-and-shoulders bottom.

Conversely, the Energy Select Sector SPDR /zigman2/quotes/206420077/composite XLE -0.46%  has broken down technically, pressured at least partly amid concerns over a virus-fueled global economic slowdown.

As illustrated, the group has recently plunged to four-year lows, violating well-defined support amid a sustained volume increase.

The subsequent rally attempt has been capped by the breakdown point (55.90). The group’s technical bias remains firmly bearish pending a close atop this area. Separately, notice the downward sloping 50- and 200-day moving averages, consistent with bearish longer-term trends.

More broadly, the group remains vulnerable on four-year chart, traversing less-charted territory amid poorly-defined support.

Profiled Jan. 22, Dow 30 component International Business Machines Corp. /zigman2/quotes/203856914/composite IBM +0.30%  has added 7.3% and remains well positioned.

The shares initially spiked three weeks ago, gapping to the range top after the company’s quarterly results. The subsequent late-January gap higher registered after the company appointed a new CEO.

More immediately, the prevailing pullback has been flat, fueled by decreased volume, placing the shares 2.6% under the February peak. A sustained posture atop the breakout point, circa 145, supports a bullish bias.

Separately, notice the pending golden cross — or bullish 50-day/200-day moving average crossover — an event that will likely signal Tuesday or Wednesday. (As this is written, the 50-day moving average, currently 138.27, rests just one penny under the 200-day moving average, currently 138.28.)

Lumentum Holdings, Inc. /zigman2/quotes/204419752/composite LITE +1.42%  is a large-cap manufacturer of optical networking components and an Apple, Inc. supplier.

Earlier this month, the shares knifed to all-time highs, rising after the company’s quarterly results.

The subsequent flag-like pattern has formed amid decreased volume, signaling muted selling pressure at record territory. Tactically, the 50-day moving average has defined the recent trend, and is rising toward the breakout point (83.50). The prevailing uptrend is intact barring a violation.

Initially profiled Jan. 7 — amid the break atop trendline resistance — Atlassian Corp. /zigman2/quotes/207177221/composite TEAM +3.91%  has returned 18.1% and remains well positioned.

Late last month, the shares gapped to record territory, rising amid a volume spike after the company’s quarterly results.

The subsequent tight range positions the shares to build on the steep January rally. Tactically, the prevailing range bottom (145.00) is followed by the top of the gap (140.65). A posture higher supports a bullish bias.

Finally, Shake Shack, Inc. /zigman2/quotes/209397077/composite SHAK +0.04%  is a mid-cap name showing signs of life.

The shares initially spiked four weeks ago, clearing trendline resistance after the company reported strong same-store sales, fueled partly by a recent GrubHub partnership.

More immediately, the shares are challenging the 200-day moving average, currently 74.45, a level roughly matching the 100-day moving average. A breakout opens the path to a less-charted patch and potentially swift near-term follow-through.

Tactically, a near-term floor matches the former range top, circa 71.50, and a breakout attempt is in play 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 Date Profiled
iShares Nasdaq Biotechnology ETF IBB Feb. 10
Lennar Corp. LEN Feb. 10
Perrigo Co. PRGO Feb. 10
Kodiak Sciences, Inc. KOD Feb. 10
Twitter, Inc. TWTR Feb. 7
Church & Dwight Co., Inc. is CHD Feb. 7
Tandem Diabetes Care, Inc. TNDM Feb. 7
Momenta Pharmaceuticals, Inc. MNTA Feb. 7
BioMarin Pharmaceutical, Inc. BMRN Feb. 6
Boeing, Inc. BA Feb. 6
Cognizant Technology Solutions Corp. CTSH Feb. 6
iShares Europe ETF IEV Feb. 5
Norfolk Southern Corp. NSC Feb. 5
Vertex Pharmaceuticals, Inc. VRTX Feb. 5
Five9, Inc. FIVN Feb. 5
L Brands, Inc. LB Feb. 5
Financial Select Sector SPDR XLF Feb. 4
STMicroelectronics, Inc. STM Feb. 4
PTC, Inc. PTC Feb. 4
Okta, Inc. OKTA Jan. 31
eHealth, Inc. EHTH Jan. 31
JetBlue Airways Corp. JBLU Jan. 31
PepsiCo, Inc. PEP Jan. 30
Abbott Laboratories ABT Jan. 30
United Therapeutics Corp. UTHR Jan. 30
Morgan Stanley MS Jan. 29
Halozyme Therapeutics, Inc. HALO Jan. 29
Akamai Technologies, Inc. AKAM Jan. 24
StoneCo Ltd. STNE Jan. 24
Spirit Airlines, Inc. SAVE Jan. 23
Himax Technologies, Inc. HIMX Jan. 23
International Business Machines IBM Jan. 22
Yeti Holdings, Inc. YETI Jan. 22
Home Depot, Inc. HD Jan. 21
PulteGroup, Inc. PHM Jan. 16
Square, Inc. SQ Jan. 16
SailPoint Technologies Holdings, Inc. SAIL Jan. 15
SPDR S&P Homebuilders ETF XHB Jan. 14
Netflix, Inc. NFLX Jan. 14
Newmont Corp. NEM Jan. 13
SBA Communications Corp. SBAC Jan. 13
CME Group, Inc. CME Jan. 10
Motorola Solutions, Inc. MSI Jan. 10
fMcDonald’s Corp. MCD Jan. 9
Big Lots, Inc. BIG Jan. 9
Micron Technology, Inc. MU Jan. 8
Zendesk, Inc. ZEN Jan. 8
Fortinet, Inc. FTNT Jan. 7
Atlassian Corp. TEAM Jan. 7
Twilio, Inc. TWLO Jan. 7
Coupa Software, Inc. COUP Jan. 6
Progressive Corp. PGR Jan. 6
SPDR Gold Shares ETF GLD Jan. 2
Amazon.com, Inc. AMZN Jan. 2
Union Pacific Corp. UNP Dec. 23
Activision Blizzard, Inc. ATVI Dec. 20
Air Products and Chemicals, Inc. APD Dec. 18
PTC Therapeutics, Inc. PTCT Dec. 18
Autodesk, Inc. ADSK Dec. 17
American Express Co. AXP Dec. 16
Paycom Software, Inc. PAYC Dec. 16
NXP Semiconductors N.V. NXPI Dec. 11
Bristol-Myers Squibb Co. BMY Dec. 10
Splunk, Inc. SPLK Dec. 9
Macom Technology Solutions Holding, Inc. MTSI Dec. 6
Yamana Gold. Inc. AUY Dec. 5
VanEck Vectors Gold Miners ETF GDX Dec. 3
Pan American Silver Corp. PAAS Dec. 3
Nuance Communications, Inc. NUAN Dec. 3
Shopify,Inc. SHOP Nov. 27
Stanley Black & Decker, Inc. SWK Nov. 25
Baidu, Inc. BIDU Nov. 22
Medtronic plc MDT Nov. 21
Wheaton Precious Metals Corp. WPM Nov. 20
Nevro Corp. NVRO Nov. 19
Agios Pharmaceuticals, Inc. AGIO Nov. 18
Allstate Corp. ALL Nov. 14
Adobe, Inc. ADBE Nov. 14
AstraZenaca, plc AZN Nov. 12
Health Care Select Sector SPDR XLV Nov. 11
Advanced Micro Devices, Inc. AMD Nov. 7
Alibaba Holdings Group, Ltd. BABA Nov. 5
Alphabet, Inc. GOOGL Nov. 4
Teledoc Health, Inc. TDOC Nov. 1
Salesforce.com, Inc. CRM Oct. 31
Citrix Systems, Inc. CTXS Oct. 31
Industrial Select Sector SPDR XLI Oct. 31
Invesco QQQ Trust QQQ Oct. 30
Centene Corp. CNC Oct. 30
Generac Holdings, Inc. GNRC Oct. 25
RingCentral, Inc. RNG Oct. 24
United Technologies Corp. UTX Oct. 23
Nvidia Corp. NVDA Oct. 22
Tesla, Inc. TSLA Oct. 21
Garmin, Ltd. GRMN Oct. 18
Skyworks Solutions, Inc. SWKS Oct. 15
Taiwan Semiconductor Manufacturing Co. TSM Sept. 27
RH RH Sept. 27
Sony Corp. SNE Sept. 26
Nike, Inc. NKE Sept. 26
Toll Brothers, Inc. TOL Sept.25
Synaptics, Inc. SYNA Sept.25
Intel Corp. INTC Sept. 18
VanEck Vectors Semiconductor ETF SMH Sept. 11
Kansas City Southern KSU Sept. 10
Lam Research Corp. LRCX Sept. 3
iShares U.S. Home Construction ETF ITB Aug. 27
Apple, Inc. AAPL Aug. 21
XPO Logistics, Inc. XPO Aug. 20
Itron, Inc. ITRI Aug. 19
D.R. Horton, Inc. DHI July 31
Teradyne, Inc. TER July 30
Franco-Nevada Corp. FNV July 18
Inphi Corp. IPHI July 8
Lululemon Athletica, Inc. LULU June 19
Ross Stores, Inc. ROST June 14
Consumer Staples Select Sector SPDR XLP Mar. 28
iShares U.S. Real Estate ETF IYR Mar. 13
Costco Wholesale Corp. COST Mar. 6
Microsoft Corp. MSFT Feb. 22
Procter & Gamble Co. PG Feb. 8
Applied Materials, Inc. AMAT Jan. 25
Utilities Select Sector SPDR XLU Oct. 25
/zigman2/quotes/206420077/composite
US : U.S.: NYSE Arca
$ 38.76
-0.18 -0.46%
Volume: 35.75M
May 29, 2020 4:00p
loading...
/zigman2/quotes/203856914/composite
US : U.S.: NYSE
$ 124.90
+0.37 +0.30%
Volume: 7.93M
May 29, 2020 3:59p
P/E Ratio
12.37
Dividend Yield
5.22%
Market Cap
$110.57 billion
Rev. per Employee
$208,845
loading...
/zigman2/quotes/204419752/composite
US : U.S.: Nasdaq
$ 73.32
+1.03 +1.42%
Volume: 1.20M
May 29, 2020 4:00p
P/E Ratio
50.03
Dividend Yield
N/A
Market Cap
$5.41 billion
Rev. per Employee
$453,140
loading...
/zigman2/quotes/207177221/composite
US : U.S.: Nasdaq
$ 185.30
+6.98 +3.91%
Volume: 1.86M
May 29, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$44.02 billion
Rev. per Employee
$391,879
loading...
/zigman2/quotes/209397077/composite
US : U.S.: NYSE
$ 55.55
+0.02 +0.04%
Volume: 887,654
May 29, 2020 4:00p
P/E Ratio
107.72
Dividend Yield
N/A
Market Cap
$2.12 billion
Rev. per Employee
$75,284
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Michael Ashbaugh writes technical analysis for MarketWatch and is editor of MarketWatch's "The Technical Indicator" newsletter.

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