Bull trend pauses: S&P 500 traverses the range

by 24USATVFeb. 23, 2021, midnight 72
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U.S. stocks are mixed early Monday, vacillating as tech stocks turn lower, pressured at least partly amid recently surging Treasury yields.

Against this backdrop, the S&P 500 and Dow industrials have maintained bullish holding patterns, asserting trading ranges underpinned by familiar support.

Before detailing the U.S. markets’ wider view, the S&P 500’s US:SPX hourly chart highlights the past two weeks.

As illustrated, the S&P is traversing a familiar range.

Tactically, the range bottom (3,885) matches consecutive weekly lows and is followed by the firmer breakout point (3,870).

Meanwhile, the Dow Jones Industrial Average US:DJIA continues to strengthen, for the near-term, versus the other major benchmarks.

Conversely, consider that the Dow tagged its latest record high Friday, though by a narrow four-point margin. Constructive price action.

Meanwhile, the Nasdaq Composite US:COMP is not pressing record highs.

Still, the index maintained its breakout point (13,729) to conclude last week.

More immediately, the Nasdaq has ventured back under its breakout point early Monday. Deeper support matches the early-February gap (13,535), an area illustrated on the daily chart below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq continues to digest a recent break to record highs.

Recall that the Nasdaq’s all-time high (14,175) — established last week — has registered slightly under its projected target in the 14,200 area. (See the Feb. 5 review.)

Conversely, the breakout point (13,729) is followed by gap support (13,535). Delving deeper, the ascending 50-day moving average, currently 13,225, has ticked slightly above the former breakout point (13,208).

Likely last-ditch support matches the 2020 peak (12,973), an area from which the prevailing upturn originates.

Looking elsewhere, the Dow Jones Industrial Average has thus far maintained first support.

The familiar area matches its breakout point (31,272), also detailed on the hourly chart.

Recall that last week’s low (31,285) and Monday’s early session low (31,286) have registered slightly above the breakout point.

More broadly, the Dow’s prevailing flag-like pattern — underpinned by first support — is technically constructive.

Tactically, recall that the range bottom (3,885) matches consecutive weekly lows, and is closely followed by the firmer breakout point (3,870).

As detailed above, the major U.S. benchmarks have asserted a mid-February holding pattern.

More directly, each index remains range-bound, maintaining relatively well-defined support.

Specific areas match the S&P’s range bottom (3,885), the Dow’s breakout point (31,272) and the Nasdaq’s breakout point (13,729). Constructive price action. (See the hourly charts.)

Moving to the small-caps, the iShares Russell 2000 ETF US:IWM continues to digest the most decisive February breakout.

Tactically, recall that trendline support is closely followed by the breakout point (216.70).

Meanwhile, the SPDR S&P MidCap 400 ETF US:MDY has also asserted a flag-like pattern.

The prevailing range is underpinned by gap support, circa 453.10, an area closely followed by the breakout point (451.50).

Similarly, the SPDR Trust S&P 500 US:SPY is consolidating an early-month breakout.

Here again, the tight prevailing range is a bullish continuation pattern.

Placing a finer point on the S&P 500, the index is traversing a relatively well-defined two-week range.

Tactically, the range bottom (3,885) matches consecutive weekly lows and is followed by the firmer breakout point (3,870).

Delving deeper, the ascending 50-day moving average, currently 3,792, is followed by the former range bottom (3,750).

Likely last-ditch support points match the 3,723 area and the late-January low (3,694). An eventual violation would mark a material “lower low” — amid other issues — raising a technical caution flag.

Pending such a move, the S&P 500’s bullish intermediate-term bias remains bullish, and firmly-grounded, based on today’s backdrop.

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 iShares MSCI Japan ETF US:EWJ is acting well technically.

Earlier this month, the shares gapped to record highs, clearing resistance matching the January peak.

The subsequent flag pattern — the orderly mid-month range — is a bullish continuation pattern.

Tactically, a notable floor spans from about 70.10 to 70.40, levels matching the breakout point and the post-breakout low. Delving deeper, the ascending 50-day moving average, currently 68.40, has marked an inflection point. The prevailing uptrend is firmly intact barring a violation.

Initially profiled Jan. 29, NetApp, Inc. US:NTAP has added 5.9% and remains well positioned. (Yield = 2.7%.)

Technically, the shares have cleared the range top, rising to tag 21-month highs on increased volume.

The prevailing upturn punctuates consecutive ranges, hinged to the steep November-through December rally. A near-term target projects to the 72.50 area.

More broadly, the shares remain well positioned on the three-year chart, rising from a continuation pattern underpinned by the late-2019 range top.

Note that the company’s quarterly results are due out Wednesday, Feb. 24.

As illustrated, the shares have extended a sharp February breakout, knifing to record highs amid a volume spike.

The prevailing upturn has registered amid concerns that the prevailing reflationary backdrop — the return to pre-virus economic conditions — could morph to a less desirable inflationary backdrop. Copper prices are highly economically-sensitive, and also partly tethered to the health of the housing market.

Though near-term extended, the nearly straightline spike is longer-term bullish, and the shares are attractive on a pullback. Tactically, near-term support, circa 75.00, is followed by the firmer breakout point (72.00).

Old Dominion Freight Line US:ODFL is a well positioned large-cap trucking name.

Technically, the shares have rallied to the range top, rising to challenge record territory. The prevailing upturn punctuates a bullish ascending triangle hinged to the September low.

Tactically, the former range top (212.50) is followed by near-term support, circa 203.90. A breakout attempt is in play barring a violation.

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

Finally, Kohl’s Corp. US:KSS — initially profiled Nov. 18 — has returned 80.6% and remains well positioned.

The shares are firmly higher early Monday, likely getting away (for now) after an activist investor group proposed board changes in an attempt to control the company’s management board.

The prevailing upturn punctuates a flag-like pattern, placing the group at 15-month highs. Tactically, the breakout point (51.50) is followed by the former range bottom (47.90). A sustained posture higher signals a firmly-bullish bias.

The table below includes names recently profiled in The Technical Indicator that remain well positioned. For the original comments, see The Technical Indicator Library.

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