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Michael Ashbaugh

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July 2, 2019, 1:00 p.m. EDT

Charting a bullish Q3 start, S&P 500 approaches the 3,000 mark

Focus: Charting the sector leaders, Crude oil nails major resistance, Silver’s bullish trend shift, QQQ, XLF, IYT, USO, SLV

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By Michael Ashbaugh, MarketWatch

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Looking elsewhere, the SPDR Trust S&P 500 is challenging record highs.

Consider that tandem rallies to the range top have been fueled by increased volume, while the intervening late-June pullback registered as shallow, fueled by decreased volume.

This is bullish price action, improving the chances of more decisive follow-through.

Against this backdrop, the S&P 500 is also acting well technically.

To start, the June rally was directionally sharp, and punctuated by shallow pullbacks, underpinned by well-defined support — the 2,873 and 2,912 areas. This marked the S&P’s strongest June rally since 1955.

More immediately, the strong July start places the S&P in uncharted territory, capped by no true resistance, opening the path to potentially material follow-through.

Tactically, a near-term target projects from the late-June low to the 2,995 area.

Beyond specific levels, the S&P 500’s intermediate-term path of least resistance points higher to start the third quarter pending signs of a bearish pulse.

See also: Bull trend strengthens, S&P 500 presses uncharted territory ahead of G-20.

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.

U.S. sub-sector backdrop strengthens (slightly) amid trade-fueled market rally

Drilling down further, the U.S. sub-sector backdrop remains uneven, though it continues to strengthen. Quickly consider the traditional sector leaders: The technology sector, financials and transports.

To start, the Invesco QQQ Trust /zigman2/quotes/208575548/composite QQQ +0.37%  — a large-cap technology sector proxy — has rallied within striking distance of its record high (191.32) a level matching the April and May peaks.

The prevailing upturn builds on the steep June rally, and comparably flat late-month pullback, laying the groundwork for a potential breakout. A near-term target projects to the 195 area on follow-through.

Meanwhile, the Financial Select Sector SPDR /zigman2/quotes/209660484/composite XLF -0.41%  has also come to life, rising to challenge eight-month highs.

The prevailing upturn comes from a tight June range and has been fueled by increased volume. Tactically, next resistance matches the May peak (28.14) and the pending retest from underneath should be a useful bull-bear gauge.

Conversely, well-defined support (27.50) closely matches the former range top. The group’s breakout attempt is intact barring a violation.

Looking elsewhere, the iShares Transportation Average ETF remains the weakest of the trio.

Still, the transports are off to a constructive July start.

As illustrated, the group has reached six-week highs, clearing the 50- and 200-day moving averages. The breakout neutralizes the transports’ developing head-and-shoulders top, a pattern formerly defined by the February, April and June peaks.

Tactically, the breakout point pivots to support — the 186-to-187 area — and the group’s recovery attempt is intact barring a violation.

Beyond U.S. sectors, the United States Oil Fund /zigman2/quotes/203483736/composite USO +1.50%  has reached a major technical test to start the third quarter. The fund tracks the price of West Texas Intermediate (WTI) light, sweet crude oil.

Three technical levels, detailed last week, remain in play:

  • The 50-day moving average, currently 12.22.

  • The 200-day moving average, currently 12.35.

  • The bottom of the May gap at 12.37.

Against this backdrop, Monday’s session close (12.28) effectively matched resistance, and an extended retest remains underway.

Tactically, the USO’s technical bias remains bearish based on today’s backdrop, though the prevailing retest, amid a holiday-shortened week for the U.S., will likely add color.

Finally, the iShares Silver Trust /zigman2/quotes/205744453/composite SLV +6.64%  is acting well technically.

As illustrated, the shares staged a decisive June trendline breakout, reaching three-month highs amid a sustained volume increase.

The subsequent pullback has filled the gap, placing the shares at an attractive entry 2.5% under the June peak. (Monday’s session low (14.17) precisely matched the bottom of the gap.)

Delving deeper, the 200-day moving average (14.04) has marked a recent inflection point. Silver’s rally attempt is intact 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
PNC Financial Services Group, Inc. PNC July 1
Teledoc Health, Inc. TDOC July 1
Cummins, Inc. CMI July 1
MSCI, Inc. MSCI July 1
Tesla, Inc TSLA June 28
Whirlpool Corp. WHR June 28
Shake Shack, Inc. SHAK June 28
Momo, Inc. MOMO June 28
Baozun, Inc. BZUN June 27
FMC Corp. FMC June 27
Adient plc ADNT June 27
ArQule, Inc. ARQL June 27
Wendy’s Co. WEN June 26
SunPower Corp. SPWR June 26
Blueprint Medicines Corp. BPMC June 26
Oracle Corp. ORCL June 25
Williams-Sonoma, Inc. WSM June 25
Sunrun, Inc. RUN June 25
Adobe, Inc. ADBE June 24
Spotify Technology SPOT June 24
HollyFrontier Corp. HFC June 24
SPDR S&P Biotech ETF XBI June 24
Apple, Inc. AAPL June 21
VanEck Vectors Gold Miners ETF GDX June 21
iShares Silver Trust SLV June 20
VeriSign, Inc. VRSN June 20
U.S. Steel Corp. X June 20
Aecom ACM June 20
Home Depot, Inc. HD June 19
Lululemon Athletica, Inc. LULU June 19
Sinclair Broadcast Group, Inc. SBGI June 19
Omnicell, Inc. OMCL June 19
Amazon.com, Inc. AMZN June 18
Facebook, Inc. FB June 18
SPDR Gold Shares ETF GLD June 18
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
Kirkland Lake Gold Ltd. KL 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
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
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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