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Michael Ashbaugh

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Feb. 4, 2020, 12:51 p.m. EST

Charting a bullish reversal, S&P 500 extends spike from major support

Focus: Financials absorb market downdraft, Homebuilders sustain break to record territory, XLF, XHB, INTC, STM, PTC, HIMX

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By Michael Ashbaugh, MarketWatch

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Tactically, initial resistance (324.90) is followed by an inflection point matching the late-January peak (328.63). The pending retests from underneath should be a useful bull-bear gauge.

Placing a finer point on the S&P 500, the index asserted a bearish near-term bias last week.

As detailed previously, near-term inflection points match the former range bottom — the 3,280-to-3,283 area — and the 20- day moving average, currently 3,282.

More immediately, Tuesday’s session low (3,280) has matched the inflection point, and the S&P is vying to assert a posture higher. As always, it’s the session close that matters.

To reiterate, a swift reversal atop the 3,280 area would likely neutralize the January downdraft.

More broadly, the S&P 500 has weathered a key intermediate-term technical test.

Recall that important support rests at 3,215, a level matching the December gap (3,216), the January low (3,214.6) and the S&P’s former projected target (3,215).

Last week’s low (3,214.7) matched support, almost precisely, and the S&P has rallied sharply to start this week. Bullish price action, though rally attempt’s quality remains an open question.

When gauging the rally’s quality, two inflection points stand out. Initial resistance at 3,258 and the 3,280 area, detailed previously.

All told, the S&P 500’s intermediate-term bias remains bullish following a successful test of major support (3,215). More immediately, the S&P 3,280 area marks a key near-term technical test. A sustained break atop this area likely neutralizes the January downdraft.

Also see: Charting near-term technical damage, S&P 500 ventures under key support.

Also see: Bull trend persists, S&P 500 digests powerful rally atop 20-day volatility bands.

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 Financial Select Sector SPDR /zigman2/quotes/209660484/composite XLF +2.18%  seems to have weathered the recent market downdraft.

Tactically, a bull-bear inflection point closely matches the December gap (30.30) and the 50-day moving average, currently 30.50. Despite the recent whipsaw at support, downside follow-through has been absent.

Separately, the prevailing downturn punctuates a failed test of major resistance matching record territory — the 31.10 area — detailed previously. (The 2007 peak (30.97) and 2020 peak (31.10) have closely matched.)

The pending retest of this area from underneath should be a useful bull-bear gauge.

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

Meanwhile, the SPDR S&P Homebuilders ETF remains a pocket of relative strength.

The group started 2020 with a decisive breakout, knifing to record territory from a tight three-month base. The upturn marked a two standard deviation breakout, encompassing seven straight closes atop the 20-day Bollinger bands. (Bullish momentum registered as extreme and statistically unusual.)

By comparison, the prevailing downturn has been orderly, placing the group near the breakout point (46.40) and 3.6% under the January peak.

Initially profiled Sept. 18, Dow 30 component Intel Corp. /zigman2/quotes/203649727/composite INTC +1.68%  has returned 24.0% and remains well positioned. (Yield = 2.0%.)

Late last month, the shares knifed to 19-year highs, rising after the company’s fourth-quarter results.

The ensuing pullback has narrowly filled the gap (by just four cents), placing the shares at an attractive entry 7.6% under the January peak. Delving deeper, trendline support closely matches the breakout point (60.80). A sustained posture higher supports a bullish bias.

More broadly, Intel is well positioned on the three-year chart, rising from a massive double bottom defined by the 2018 and 2019 lows.

STMicroelectronics, Inc. /zigman2/quotes/207734906/composite STM +0.18%  is a well positioned large-cap Switzerland-based semiconductor name.

As illustrated, the shares have recently gapped to 17-year highs, rising amid a sustained volume spike after the company’s quarterly results.

The subsequent pullback has been fueled by decreased volume, placing the shares at an attractive entry near the breakout point (28.00) and 7.3% under the January peak.

PTC, Inc. /zigman2/quotes/202034776/composite PTC -0.84%  is a well positioned large-cap software vendor.

Late last month, the shares gapped to six-month highs, rising after the company’s quarterly results.

The subsequent flag-like pattern positions the shares to build on the initial strong-volume spike. Tactically, the range bottom is closely followed by the breakout point (82.00). The prevailing rally attempt is firmly intact barring a violation.

Also notice the recent golden cross — or bullish 50-day/200-day moving average crossover — signaling that the intermediate-term uptrend has overtaken the longer-term trend.

Initially profiled Jan. 23, Himax Technologies, Inc. /zigman2/quotes/201087786/composite HIMX -3.52%  has returned 11.1% and remains well positioned.

The shares started 2020 with a nearly straightline strong-volume rally, rising after the company’s preliminary quarterly results.

By comparison, the ensuing pullback has been flat — underpinned by the designated support (3.58) — and punctuated by a strong-volume rally to 52-week highs. A near-term target projects to the 4.60 area on follow-through.

Note that the company’s quarterly results are due out Feb. 13.

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
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
IntercontinentalExchange, Inc. ICE Jan. 16
PulteGroup, Inc. PHM Jan. 16
Square, Inc. SQ Jan. 16
SailPoint Technologies Holdings, Inc. SAIL Jan. 15
Dunkin Brands Group, Inc. DNKN 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/209660484/composite
US : U.S.: NYSE Arca
$ 25.30
+0.54 +2.18%
Volume: 97.56M
June 4, 2020 4:00p
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/zigman2/quotes/203649727/composite
US : U.S.: Nasdaq
$ 62.97
+1.04 +1.68%
Volume: 22.00M
June 4, 2020 4:00p
P/E Ratio
12.20
Dividend Yield
2.10%
Market Cap
$67.19 million
Rev. per Employee
$659,665
loading...
/zigman2/quotes/207734906/composite
US : U.S.: NYSE
$ 27.63
+0.05 +0.18%
Volume: 2.07M
June 4, 2020 4:00p
P/E Ratio
24.23
Dividend Yield
0.74%
Market Cap
$24.51 billion
Rev. per Employee
$210,075
loading...
/zigman2/quotes/202034776/composite
US : U.S.: Nasdaq
$ 80.26
-0.68 -0.84%
Volume: 576,395
June 4, 2020 4:00p
P/E Ratio
246.35
Dividend Yield
N/A
Market Cap
$9.20 billion
Rev. per Employee
$207,715
loading...
/zigman2/quotes/201087786/composite
US : U.S.: Nasdaq
$ 3.29
-0.12 -3.52%
Volume: 1.39M
June 4, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$9.59 billion
Rev. per Employee
$326,116
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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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