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Michael Ashbaugh

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Dec. 8, 2020, 12:29 p.m. EST

Charting a slow-motion breakout: S&P 500 challenges 3,700 mark

Focus: Retail sector extends break to record highs, Apple sustains trendline breakout, XRT, AAPL, FFIV, SAIL, EMR, PDCO

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By Michael Ashbaugh, MarketWatch

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Looking elsewhere, the SPDR Trust S&P 500 /zigman2/quotes/209901640/composite SPY +0.73%  has extended an early-month breakout.

The December follow-through punctuates a bullish continuation pattern hinged to a familiar double bottom, defined by the September and October lows.

Placing a finer point on the S&P 500, the index is rising amid orderly price action.

Recall that the top of last week’s gap (3,645.87) almost precisely matched the November peak (3,645.99), detailed previously.

The post-breakout low (3,645, Wednesday) registered within about one point of support.

Delving deeper, the prevailing breakout originates from last week’s low (3,594) matching gap support (3,594).

More broadly, the S&P has sustained its December breakout. Recent grinding-higher price action punctuates a continuation pattern hinged to the double bottom defined by the September and October lows.

Tactically, the breakout point (3,646) is followed by a deeper floor in the 3,588-to-3,594 area, levels matching the September peak and last week’s gap.

Delving deeper, the October peak (3,550) is followed by the ascending 50-day moving average, currently 3,499.

Beyond technical levels, the S&P 500’s intermediate-term path of least resistance continues to point higher, based on today’s backdrop, pending signs of a bearish pulse. Late-year selling pressure remains conspicuously flat.

Also see: Market rotation persists: Nasdaq takes flight to record highs.

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 SPDR S&P Retail ETF has taken flight.

Specifically, the group has knifed to record territory, placing distance atop former resistance matching the October peak. The initial upturn marked a bullish two standard deviation breakout, encompassing consecutive closes atop the 20-day Bollinger bands.

Though still near-term extended, and due to consolidate, the steep late-year rally likely lays the groundwork for longer-term follow-through.

More broadly, the prevailing breakout punctuates a prolonged five-year range, illustrated on the one-decade chart. As always, the longer the base, the higher the space.

Initially profiled March 27, Apple, Inc. /zigman2/quotes/202934861/composite AAPL +2.02%  has returned 91.5% and remains well positioned.

The shares started December with a breakout, clearing trendline resistance after a pair of bullish analyst notes.

The strong-volume upturn punctuates a successful test of the 100-day moving average, a level defining the November lows.

On further strength, the October peak (125.40) remains an overhead inflection point. Follow-through higher would resolve a modified double bottom — defined by the September and November lows — likely opening the path to a retest of the record high.

Conversely, the 100-day moving average, currently 114.80, is followed by the late-November low (112.60) and slightly deeper gap support (112.35). A sustained posture higher signals a bullish bias.

F5 Networks, Inc. /zigman2/quotes/209237881/composite FFIV -0.53%  is a well positioned large-cap networking software name.

The shares initially spiked four weeks ago, rising after an activist investor disclosed a less than 5% stake in the company, and management announced a $1 billion share buyback program. (The strong-volume spike coincided with the Nov. 9 vaccine-fueled broad-market rally.)

The ensuing pullback has been underpinned by the breakout point, and punctuated by a nominal 19-month high. A near-term target projects to the 178 area on follow-through.

Initially profiled Oct. 1, SailPoint Technologies Holdings, Inc. /zigman2/quotes/208922889/composite SAIL -1.90%  has edged slightly higher and remains well positioned.

The shares initially spiked about two months ago, rising after the announcement that the company has been added to the S&P MidCap 400 Index.

More immediately, the December upturn places record highs under siege. An intermediate-term target projects to the 57 area on a break from the range top (48.50).

Separately, the shares are well positioned on the three-year chart, rising from a continuation pattern hinged to the steep mid-2020 rally.

Emerson Electric Co. /zigman2/quotes/200181610/composite EMR +0.99%  is a well positioned large-cap diversified industrial name. (Yield = 2.5%.)

As illustrated, the shares have sustained the November breakout, rising to challenge record territory. The December upturn punctuates a successful test of the range bottom (74.50). A near-term projects to the 86 area on follow-through.

More broadly, the shares are well positioned on the four-year chart, challenging major resistance matching the 2018 peak (79.70). The prevailing upturn punctuates a massive V-shaped reversal from the early-2020 low.

Finally, Patterson Companies, Inc. /zigman2/quotes/205416678/composite PDCO +1.09%  is a mid-cap developer of dental and animal health products. (Yield = 3.2%.)

Earlier this month, the shares knifed to two-year highs, rising after the company’s second-quarter results.

The subsequent flag pattern has formed amid decreased volume, positioning the shares to build on the initial spike. Tactically, the post-breakout low (31.47) is followed by the breakout point, a level closely matching the top of the gap (29.25). A posture higher signals a bullish bias.

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* (Click symbol for chart.) Date Profiled
Zscaler, Inc. ZS Dec. 7
Fortinet, Inc. FTNT Dec. 7
Kulicke and Soffa Industries, Inc. KLIC Dec. 7
Honeywell International, Inc. HON Dec. 7
Dillard’s, Inc. DDS Dec. 4
Caleres, Inc. CAL Dec. 4
Spotify Technology S.A. SPOT Dec. 3
Align Technology, Inc. ALGN Dec. 3
Valero Energy Corp. VLO Dec. 3
GameStop Corp. GME Dec. 2
Analog Devices, Inc. ADI Dec. 2
Cirrus Logic, Inc. CRUS Dec. 1
Sonos, Inc. SONO Dec. 1
Dollar Tree, Inc. DLTR Dec. 1
Nuance Communications, Inc. NUAN Nov. 30
Northern Trust Corp. NTRS Nov. 30
American Airlines Group, Inc. AAL Nov. 30
Microchip Technology, Inc. MCHP Nov. 24
Coca-Cola Co. KO Nov. 24
SPDR S&P Homebuilders ETF XHB Nov. 24
Zillow Group, Inc. ZG Nov. 23
Yeti Holdings, Inc. YETI Nov. 23
Carvana Co. CVNA Nov. 23
Palo Alto Networks, Inc. PANW Nov. 20
Bank of America Corp. BAC Nov. 20
Eaton Corp. ETN Nov. 20
SPDR S&P Oil & Gas Exploration and Production ETF XOP Nov. 20
MetLife, Inc. MET Nov. 19
Hilton Worldwide Holdings, Inc. HLT Nov. 19
American Express Co. AXP Nov. 18
Kohl’s Corp. KSS Nov. 18
FleetCor Technologies FLT Nov. 18
Applied Materials, Inc. AMAT Nov. 17
Delta Air Lines, Inc. DAL Nov. 17
Consumer Staples Select Sector SPDR XLP Nov. 17
Ross Stores, Inc. ROST Nov. 16
Boeing Co. BA Nov. 16
RingCentral, Inc. RNG Nov. 13
Urban Outfitters, Inc. URBN Nov. 13
Regions Financial Corp. RF Nov. 13
iShares Europe ETF IEV Nov. 13
Flex, Inc. FLEX Nov. 9
Snap, Inc. SNAP Nov. 9
Norfolk Southern Corp. NSC Nov. 9
Materials Select Sector SPDR XLB Nov. 6
Communications Services Select Sector SPDR XLC Nov. 5
Health Care Select Sector SPDR XLV Nov. 5
Alphabet, Inc. GOOGL Nov. 5
Uber Technologies, Inc. UBER Nov. 5
Keysight Technologies, Inc. KEYS Nov. 4
Harley-Davidson, Inc. HOG Nov. 4
Garmin, Ltd. GRMN Nov. 4
Pinterest, Inc. PINS Nov. 3
Sony Corp. SNE Nov. 3
8x8, Inc. EGHT Nov. 3
Exact Sciences Corp. EXAS Nov. 2
Universal Display Corp. OLED Nov. 2
Dentsply Sirona, Inc. XRAY Oct. 27
Maxim Integrated Products, Inc. MXIM Oct. 21
The Travelers Companies, Inc. TRV Oct. 21
Micron Technology, Inc. MU Oct. 20
Vulcan Materials Co. VMC Oct. 19
Utilities Select Sector SPDR XLU Oct. 19
ON Semiconductor Corp. ON Oct. 16
Ford Motor Co. F Oct. 15
Texas Instruments, Inc. TXN Oct. 15
First Solar, Inc. FSLR Oct. 13
Nevro Corp. NVRO Oct. 12
Teradyne, Inc. TER Oct. 12
SPDR S&P Homebuilders ETF XHB Oct. 9
Shake Shack, Inc. SHAK Oct. 9
SPDR S&P Biotech ETF XBI Oct. 8
Alexion Pharmaceuticals, Inc. ALXN Oct. 8
Twilio, Inc. TWLO Oct. 8
Cloudflare, Inc. NET Oct. 7
Ceridian HCM Holding, Inc. CDAY Oct. 7
Motorola Solutions, Inc. MSI Oct. 6
RSailPoint Technology Holdings, Inc. SAIL Oct. 1
Martin Marietta Materials, Inc. MLM Sept. 30
Whirlpool Corp. WHR Sept. 29
Abercrombie & Fitch Co. ANF Sept. 29
Blueprint Medicines Co. BPMC Sept. 28
Zendesk, Inc. ZEN Sept. 23
Scientific Games Corp. SGMS Sept. 23
Crocs, Inc. CROX Sept. 14
Five Below, Inc. FIVE Sept. 10
Eastman Chemical Co. EMN Sept. 10
International Paper Co. IP Sept. 3
Anaplan, Inc. PLAN Sept. 2
Celanese Corp. CE Aug. 26
Westlake Chemical Corp. WLK Aug. 25
Deere & Co. DE Aug. 24
Expedia Group, Inc. EXPE Aug. 24
Johnson Controls International JCI Aug. 21
Canadian Solar, Inc. CSIQ Aug. 20
General Motors Co. GM Aug. 20
Starbucks Corp. SBUX Aug. 18
Builders FirstSource, Inc. BLDR Aug. 18
Steel Dynamics, Inc. STLD Aug. 17
Brinker International, Inc. EAT Aug. 13
Enphase Energy, Inc. ENPH Aug. 13
Nucor Corp. NUE Aug. 11
Freeport McMoRan, Inc. FCX Aug. 10
Natera, Inc. NTRA Aug. 10
Industrial Select Sector SPDR XLI Aug. 6
Penn National Gaming, Inc. PENN July 30
Procter & Gamble Co. PG July 29
SPDR S&P Metals & Mining ETF XME July 28
iShares MSCI South Korea ETF EWY July 28
Advanced Micro Devices, Inc. AMD July 23
Materials Select Sector SPDR XLB July 20
Caterpillar, Inc. CAT July 20
Roku, Inc. ROKU July 16
Cognizant Technology Solutions, Inc. CTSH July 16
Costco Wholesale Corp. COST July 15
Consumer Discretionary Select Sector SPDR XLY July 13
SunPower Corp. SPWR July 13
Walmart, Inc. WMT July 8
Danaher Corp. DHR June 24
Fiverr International, Ltd. FVRR June 19
HubSpot, Inc. HUBS June 8
Square, Inc. SQ June 8
FedEx Corp. FDX June 3
SPDR S&P Retail ETF XRT June 3
iShares MSCI Japan ETF EWJ May 29
Synopsis, Inc. SNPS May 27
Agilent Technologies, Inc. A May 15
Qualcomm, Inc. QCOM May 12
Facebook, Inc. FB May 7
Dollar General Corp. DG Apr. 28
ServiceNow, Inc. NOW Apr. 27
Five9, Inc. FIVN Apr. 24
Chewy, Inc. CHWY Apr. 24
Tesla, Inc. TSLA Apr. 23
VanEck Vectors Semiconductor ETF SMH Apr. 17
Veeva Systems, Inc. VEEV Apr. 17
Okta, Inc. OKTA Apr. 16
Target Corp. TGT Apr. 16
Invesco QQQ Trust QQQ Apr. 14
Apple, Inc. AAPL Mar. 27
Nvidia Corp. NVDA Mar. 27
iShares MSCI Emerging Markets ETF EEM Mar. 19
Microsoft Corp. MSFT Feb. 22
* Click each symbol for current chart.
/zigman2/quotes/209901640/composite
US : U.S.: NYSE Arca
$ 411.49
+2.97 +0.73%
Volume: 61.10M
April 9, 2021 4:00p
loading...
/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 133.00
+2.64 +2.02%
Volume: 106.69M
April 9, 2021 4:00p
P/E Ratio
35.95
Dividend Yield
0.62%
Market Cap
$2232.73 billion
Rev. per Employee
$1.86M
loading...
/zigman2/quotes/209237881/composite
US : U.S.: Nasdaq
$ 210.42
-1.13 -0.53%
Volume: 396,676
April 9, 2021 4:00p
P/E Ratio
43.74
Dividend Yield
N/A
Market Cap
$12.97 billion
Rev. per Employee
$384,813
loading...
/zigman2/quotes/208922889/composite
US : U.S.: NYSE
$ 48.47
-0.94 -1.90%
Volume: 2.54M
April 9, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.46 billion
Rev. per Employee
$262,019
loading...
/zigman2/quotes/200181610/composite
US : U.S.: NYSE
$ 91.94
+0.90 +0.99%
Volume: 3.26M
April 9, 2021 4:02p
P/E Ratio
26.62
Dividend Yield
2.20%
Market Cap
$55.17 billion
Rev. per Employee
$201,078
loading...
/zigman2/quotes/205416678/composite
US : U.S.: Nasdaq
$ 32.50
+0.35 +1.09%
Volume: 512,941
April 9, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
3.20%
Market Cap
$3.14 billion
Rev. per Employee
$703,848
loading...

Michael Ashbaugh is a columnist for MarketWatch and editor of "The Technical Indicator" newsletter.

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