Michael Ashbaugh

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June 18, 2019, 12:55 p.m. EDT

Charting a bull-flag breakout, S&P 500 knifes toward record territory

Focus: FAANG-related damage starts repair process, Gold challenges 52-week highs, Transports present headwind, FB, AMZN, GOOGL, GLD, XLV, IYT

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By Michael Ashbaugh, MarketWatch

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Placing a finer point on the S&P 500, its backdrop remains straightforward.

To start, recall that the mid-June peak (2,910.6) has registered slightly under next resistance (2,912), detailed previously.

The mid-month pullback from resistance has been orderly, underpinned by support (2,873) matching the 50-day moving average, currently 2,874.8. Bullish price action.

More immediately, Tuesday’s strong start places record territory within striking distance. The S&P’s record close (2,945.83) is closely followed by its absolute record peak (2,954.13).

Against this backdrop, Tuesday’s early breadth statistics have approached bullish extremes — NYSE advancing volume is declining volume by about a 6-to-1 margin — the earmarks of a healthy uptrend. Recall that the June rally originates from an unusually strong 8-to-1 up day. (Tuesday marks day 11 following that initial rally.)

Combine price action with the June internals and an eventual retest of record highs looks increasingly likely. The S&P’s pending response to resistance, combined with the response to the Federal Reserve’s mid-week policy statement, will likely add color.

See also: Charting a bullish technical tilt, S&P 500 scores decisive trendline breakout.

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.

Charting FAANG-related price action — Large-cap technology begins repair process

Drilling down further, bellwether large-cap technology names have started the process of repairing recent technical damage. Recall that Facebook, Amazon and Alphabet plunged to start June, pressured amid concerns over pending U.S. regulatory oversight.

To start, Facebook, Inc. /zigman2/quotes/205064656/composite FB +3.03%  has staged a steep June reversal, rising from a successful test of the 200-day moving average.

In the process, the shares have reclaimed the breakdown point (174.00), an area closely matching trendline resistance.

As detailed previously, the 50-day moving average, currently 182.50, has defined Facebook’s recent trend, and the prevailing rally attempt is intact barring a violation. (Also see the June 12 review.)

Similarly, Amazon.com, Inc. /zigman2/quotes/210331248/composite AMZN +1.17%  has reversed sharply from the June low.

Here again, the shares have reclaimed the breakdown point (1,823.75), an area roughly matching former trendline resistance.

Separately, consider that the 50-day moving average (1,861) has marked a bull-bear inflection point going back as far as the January and February lows. Tactically, the 50-day is closely followed by gap support (1,818.00) and Amazon’s recovery attempt is intact barring a violation. (Also see the June 10 review.)

Meanwhile, Alphabet, Inc. /zigman2/quotes/202490156/composite GOOGL +0.09%  continues to lag behind its counterparts.

Recall that the shares started June with a sharp gap lower, pressured amid a volume spike. The subsequent rally attempt has been fueled by decreased volume, and thus far capped by gap resistance (1,103.35), detailed previously.

Alphabet has ventured atop resistance early Tuesday, and a close higher would mark progress. On further strength, the 200-day moving average (1,130.70) is within striking distance.

To be sure, Alphabet is not exactly well positioned, based on today’s backdrop, though the process of repairing recent damage is underway.

Looking elsewhere, the SPDR Gold Shares ETF /zigman2/quotes/200593176/composite GLD +0.44%  is digesting a decisive June breakout.

Fundamentally, recently easing interest rates have pressured the U.S. dollar modestly, presenting a gold tailwind. As always, gold and dollar are inversely correlated.

Technically, the shares have knifed atop trendline resistance, rising to challenge 14-month highs. Selling pressure near the range top has been muted, improving the chances of eventual follow-through.

Tactically, near-term support (124.90) closely matches the March peak, and a breakout attempt is in play barring a violation.

Moving to U.S. sectors, the Health Care Select Sector SPDR /zigman2/quotes/205918244/composite XLV -0.97%  has come to life technically. (Yield = 1.5%.)

Earlier this month, the group knifed atop trendline resistance, reaching two-month highs amid increased volume.

The ensuing pullback has been flat, fueled by decreased volume, positioning the group to build on the initial breakout. Tactically, the 200-day moving average is followed by the trendline, circa 90.20, and the group’s recovery attempt is intact barring a violation.

Finally, there’s always something to worry about, and the transports’ prevailing backdrop highlights a concern.

Technically, the iShares Transportation Average ETF /zigman2/quotes/204736489/composite IYT -0.08%  is developing a head-and-shoulders top, a bearish pattern defined by the February, April and June peaks.

As an economically-sensitive sector, the group’s sluggishness — even amid recently pronounced crude-oil price weakness — raises a question mark.

Tactically, notable resistance matches the June peak (187.06) — as well as the 50- and 200-day moving averages — and a close higher would strengthen the bull case.

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
Synopsys, Inc. SNPS June 17
Zillow Group, Inc. ZG June 17
Verisk Analytics, Inc. VRSK June 17
Cisco Systems, Inc. CSCO June 14
Medtronic plc MDT June 14
Ross Stores, Inc. ROST June 14
Financial Select Sector SPDR XLF June 13
JetBlue Airways Corp. JBLU June 13
Kirkland Lake Gold Ltd. KL June 13
CareDx, Inc. CDNA June 13
Grubhub, Inc. GRUB June 12
Dunkin Brands Group, Inc. DNKN June 12
Ciena Corp. CIEN June 11
Silicon Laboratories, Inc. SLAB June 11
Health Care Select Sector SPDR XLV June 10
Wix.com Ltd. WIX June 10
Ecolab, Inc. ECL June 10
Materials Select Sector SPDR XLB June 7
Brooks Automation, Inc. BRKS June 7
Catalent, Inc. CTLT June 7
iShares U.S. Real Estate ETF IYR June 6
Coca-Cola Co. KO June 6
Nasdaq, Inc. NDAQ June 6
Target Corp. TGT June 5
Dollar General Corp. DG June 5
Repligen Corp. RGEN June 5
Avalara, Inc. AVLR May 23
Progressive Corp. PGR May 22
Copa Holdings, S.A. CPA May 21
Open Text Corp. OTEX May 20
Quest Diagnostics, Inc. DGX May 20
Zscaler, Inc. ZS May 17
Aspen Technology, Inc. AZPN May 17
ServiceNow, Inc. NOW May 16
Atlassian Corp. TEAM May 16
SolarEdge Technologies, Inc. SEDG May 16
Roku, Inc. ROKU May 15
Arena Pharmaceuticals, Inc. ARNA May 15
CME Group, Inc. CME May 10
Johnson Controls International JCI May 10
GW Pharmaceuticals GWPH May 10
Omnicom Group, Inc. OMC May 7
Take-Two Interactive Software, Inc. TTWO May 2
Jacobs Engineering Group, Inc. JEC May 2
Medidata Solutions, Inc. MDSO May 2
JetBlue Airways Corp. JBLU Apr. 30
Honeywell International, Inc. HON Apr. 26
American Express Co. AXP Apr. 24
MetLife, Inc. MET Apr. 17
TE Connectivity, Ltd. TEL Apr. 4
CSX Corp. CSX Apr. 1
Church & Dwight Co., Inc. CHD Mar. 29
Consumer Staples Select Sector SPDR XLP Mar. 28
Travelers Companies, Inc. TRV Mar. 28
Pepsico, Inc. PEP Mar. 27
Shopify, Inc. SHOP Mar. 27
Kimberly-Clark Corp. KMB Mar. 15
iShares U.S. Real Estate ETF IYR Mar. 13
Air Products & Chemicals, Inc. APD Mar. 11
Hilton Worldwide Holdings, Inc. HLT Mar. 6
Costco Wholesale Corp. COST Mar. 6
Marvell Technology Group Ltd. MRVL Mar. 1
Universal Display Corp. OLED Mar. 1
Vulcan Materials Co. VMC Mar. 1
Walmart, Inc. WMT Feb. 22
Microsoft Corp. MSFT Feb. 22
Motorola Solutions, Inc. MSI Feb. 15
First Solar, Inc. FSLR Feb. 15
Mastercard, Inc. MA Feb. 11
Procter & Gamble Co. PG Feb. 8
Global Payments, Inc. GPN Feb. 5
Visa, Inc. V Feb. 4
SPDR S&P Homebuilders ETF XHB Jan. 30
Exact Sciences Corp. EXAS Jan. 28
Applied Materials, Inc. AMAT Jan. 25
SBA Communications Corp. SBAC Jan. 24
Paycom Software, Inc. PAYC Jan. 23
Advanced Micro Devices, Inc. AMD Jan. 22
VeriSign, Inc. VRSN Jan. 18
Coupa Software, Inc. COUP Jan. 16
Veeva Systems, Inc. VEEV Jan. 16
CyberArk Software CYBR Jan. 11
Okta, Inc. OKTA Jan. 9
Tandem Diabetes Care, Inc. TNDM Jan. 9
RingCentral, Inc RNG Jan. 8
Alteryx, Inc. AYX Jan. 8
IAC/InterActivecorp IAC Jan. 7
Workday, Inc. WDAY Dec. 10
Starbucks Corp. SBUX Nov. 5
American Tower Corp. AMT Nov. 5
Utilities Select Sector SPDR XLU Oct. 25
McDonald’s Corp. MCD Oct. 24
Yum! Brands, Inc. YUM Oct. 18
Twilio, Inc. TWLO May 21
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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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