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Charting a bullish reversal, S&P 500 spikes from key support amid election overhang

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Technically speaking, U.S. stocks are off to a strong November start, rising respectably to begin the best six months seasonally — November through April.

Against this backdrop, the S&P 500 has extended a rally from major support (3,233), rising within striking distance of a key bull-bear inflection point closely matching the 50-day moving average.

Before detailing the U.S. markets’ wider view, the S&P 500’s
SPX,
+2.08%

 hourly chart highlights the past two weeks.

As illustrated, the S&P has rallied from its next notable floor.

Recall that last week’s low (3,233.9) matched support at the June peak (3,233).

More immediately, the S&P has extended its rally attempt early Tuesday. Additional overhead matches the top of the gap (3,388.7) and the February peak (3,393).

Meanwhile, the Dow Jones Industrial Average
DJIA,
+2.35%

 has survived a major technical test.

Specifically, the index has maintained its 200-day moving average, currently 26,180.

Separately, the Dow has also maintained major support, circa 26,537, with a strong November start. Both the 200-day and major support are also detailed on the daily chart.

Against this backdrop, the Nasdaq Composite
COMP,
+2.15%

is also traversing a lower plateau.

Tactically, major resistance (11,245) closely matches the bottom of the gap (11,249).

Conversely, the Nasdaq has maintained its former breakout point, a level matching the July peak (10,840), illustrated below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has maintained major support (10,840) closely matching the July peak and the August gap. The prevailing rally attempt punctuates a successful retest.

Conversely, the index has violated key technical levels, including the mid-September range top (11,245) and the 50-day moving average, currently 11,296.

Moreover, the Nasdaq failed a retest of each area to conclude last week. (See the hourly chart.)

Tactically, a sustained reversal atop the 50-day moving average would strengthen the bull case. The pending retest from underneath will likely add color.

Looking elsewhere, the Dow Jones Industrial Average remains the weakest major benchmark.

Still, the index has narrowly maintained two key technical areas. Specifically:

  • Major support spanning from 26,534 to 26,537, levels matching the August and October lows.

  • The 200-day moving average, currently 26,180.

Though the Dow briefly ventured under support to conclude last week, the strong November start punctuates a jagged retest.

Consider that Friday’s bullish reversal — a dragonfly doji, underpinned by the 200-day moving average — has been punctuated by upside follow-through to start this week.

On further strength, the June peak (27,580) is followed by the more distant 50-day moving average, currently 27,902.

Meanwhile, the S&P 500 has reversed respectably from major support.

Recall that last week’s low (3,233.9) effectively matched the June peak (3,233). A rally attempt is underway to start November.

The bigger picture

Collectively, the major U.S. benchmarks are off to a constructive November start, rising in the wake of a damaging market downdraft.

Against this backdrop, each big three U.S. benchmark survived a key technical test to conclude last week.

Specifically, the S&P 500 nailed major support (3,233), the Dow industrials maintained the 200-day moving average and the Nasdaq Composite has rallied from its former breakout point (10,840).

The quality of the prevailing rally attempt will likely add color to start November, and the best six months seasonally.

Moving to the small-caps, the iShares Russell 2000 ETF is digesting a strong-volume late-October downdraft.

Tactically, a retest of the 50-day moving average, currently 155.15, remains underway.

Similarly, the SPDR S&P MidCap 400 ETF gapped firmly lower, violating key technical levels to conclude October.

More immediately, the MDY has whipsawed at its 50-day moving average, currently 349.65.

Looking elsewhere, the SPDR Trust S&P 500 violated major support amid increased volume to conclude October.

Against this backdrop, the SPY has maintained support matching the June peak (323.41).

From current levels, overhead inflection points match the February closing peak (338.34) — (formerly the record close) — and the 50-day moving average, currently 338.86. A rally atop this area would strengthen the bull case.

Placing a finer point on the S&P 500, the index is digesting a market downdraft amid technical price action. The index is closely observing well-defined levels.

To start, last week’s low (3,233.9) punctuated a successful test of the June peak (3,233).

Also consider two recent failed technical tests from underneath. Specifically, Thursday’s session high (3,341) and Monday’s high (3,330) closely matched familiar resistance.

More immediately, the S&P 500 is starting the best six months seasonally — November through April — amid the U.S. election overhang, and in the wake of material technical damage. (Last week marked the worst week since March.)

The S&P 500 has asserted a bearish-leaning intermediate-term bias, based on today’s backdrop, though key technical tests are within view.

As detailed last week, a clear election result could lay the groundwork for a bullish shift in market structure.

Tactically, the S&P 500 has extended its rally attempt early Tuesday, rising into the October gap.

More distant overhead matches the top of the gap (3,388.7) the February peak (3,393) and the 50-day moving average, currently 3,400. Follow-through atop this area would signal waning bearish momentum, strengthening the intermediate-term bull case.

The quality of the prevailing rally attempt, and the next several sessions, will likely add color.

Also see: Charting market cross currents, S&P 500 violates the breakout point.

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 iShares Europe ETF has broken down technically, pressured amid renewed economic lockdowns across parts of the region.

In the process, the shares have violated the 200-day moving average, plunging to four-month lows. The downturn punctuates a modified head-and-shoulders top defined by the July, August and October peaks.

Tactically, the breakdown point (40.70) closely matches the 200-day moving average, currently 40.60. A rally atop this area would place the brakes on bearish momentum.

Meanwhile, the iShares MSCI Emerging Markets ETF
EEM,
+0.46%

 remains relatively resilient. (Yield = 2.6%.)

To be sure, the shares have pulled in to the range, from two-year highs, pressured amid increased volume.

Still, the downturn has been underpinned by the 50-day moving average, currently 44.84, placing the shares just 2.3% under the October peak.

More broadly, the shares remain well positioned on the three-year chart, rising from a continuation pattern hinged to the massive early-2020 V-shaped reversal.

Initially profiled July 15, Costco Wholesale Corp.
COST,
+2.30%

 has returned 11.1% and remains well positioned.

As illustrated, the shares have staged an orderly pullback from record highs, reaching an attractive entry 5.6% under the October peak.

Tactically, the breakout point (363.00) is followed by the 50-day moving average, currently 356.40, and slightly deeper trendline support. The prevailing uptrend is intact barring a violation.

Public since April 2019, Pinterest, Inc.
PINS,
+2.43%

 is a well positioned large-cap name.

Late last month, the shares gapped to record highs, rising after the company’s strong third-quarter results.

The subsequent pullback has been fueled by decreased volume, placing the shares 18.1% under the October peak.

Tactically, the post-breakout low (56.30) is followed by an inflection point matching the mid-October peak (53.90). A sustained posture higher signals a firmly-bullish bias.

Sony Corp.
SNE,
+1.24%

 is a large-cap Tokyo-based name coming to life.

The shares concluded October with a trendline breakout, knifing to 20-year highs after the company’s second-quarter results and upwardly revised full-year outlook.

The strong-volume spike marks a bullish two standard deviation breakout, encompassing four straight closes atop the 20-day Bollinger bands.

Though near-term extended, and due to consolidate, the shares are attractive on a pullback. Tactically, the breakout point (84.10) is followed by near-term support, circa 82.50.

Finally, 8×8, Inc.
EGHT,
+1.93%

 is a mid-cap developer of video, voice and chat software solutions.

Technically, the shares have recently gapped to five-month highs, rising after the company’s quarterly results.

The subsequent pullback places the shares at an attractive entry near the breakout point (17.00) and 6.8% under the October peak. Tactically, the prevailing rally attempt is intact barring a violation of the 200-day moving average, currently 16.54.

Also notice the pending golden cross, or bullish 50-day/200-day moving average crossover.

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

Exact Sciences Corp.

EXAS

Nov. 2

Universal Display Corp.

OLED

Nov. 2

Logitech International S.A.

LOGI

Oct. 27

Dentsply Sirona, Inc.

XRAY

Oct. 27

Maxim Integrated Products, Inc.

MXIM

Oct. 21

Jazz Pharmaceuticals, plc

JAZZ

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

Skyworks Solutions, Inc.

SWKS

Oct. 14

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

Gap, Inc.

GPS

Oct. 6

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

Datadog, Inc.

DDOG

Sept. 23

Scientific Games Corp.

SGMS

Sept. 23

Maxar Technologies, Inc.

MAXR

Sept. 18

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

Elanco Animal Health, Inc.

ELAN

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

McDonald’s Corp.

MCD

Aug. 7

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

Best Buy Co., Inc.

BBY

July 22

Materials Select Sector SPDR

XLB

July 20

Caterpillar, Inc.

CAT

July 20

Progressive Corp.

PGR

July 17

Livongo Health, Inc.

LVGO

July 17

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

Big Lots, Inc.

BIG

July 1

Tandem Diabetes Care, Inc.

TNDM

July 1

Danaher Corp.

DHR

June 24

Fiverr International, Ltd.

FVRR

June 19

Etsy, Inc.

ETSY

June 17

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

SolarEdge Technologies, Inc.

SEDG

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

Zscaler, Inc.

ZS

Apr. 3

Apple, Inc.

AAPL

Mar. 27

Nvidia Corp.

NVDA

Mar. 27

Zoom Video Communications, Inc.

ZM

Mar. 19

iShares MSCI Emerging Markets ETF

EEM

Mar. 19

SPDR Gold Shares ETF

GLD

Jan. 2

Microsoft Corp.

MSFT

Feb. 22

* Click each symbol for current chart.



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Video: SEC's Hester Peirce on why the U.S. is behind the curve on crypto

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S.E.C. Commissioner Hester Peirce on the outlook for crypto regulation, and whether this will finally be the year we see a Bitcoin ETF.





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My husband doesn’t get along with my son. I brought most of the wealth into our marriage. How do I split my estate?

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Dear Quentin,

How do couples typically handle their estates in a second marriage? My husband and I have been married for seven years, and it is the second marriage for both of us. I have one adult child from my previous marriage; he has no children.

I brought the majority of our wealth to our marriage, including almost $1 million in my 401(k) and a nice home that is almost paid off; otherwise, we have no debt. My husband and I bought a second home together. We work hard to fund our new 401(k)s, and own a successful business together.

I am turning 65 this year, so estate planning is long overdue. My husband is five years younger than me, and we are both in very good health. We have two issues facing us: I see our retirement as living very comfortably on the monthly income generated by our 401(k)s, pension, Social Security, etc., and leaving whatever may be left to my son.


‘The other issue is that my husband no longer gets along with my dear son at all, and feels no obligation to get along with him.’

I am not interested in scrimping, but I want to be able to have enough money to last us until age 90 (or beyond) by not touching the principal. My husband is more interested in dipping deep into our savings, and living it up in retirement while we are young enough to enjoy it.

The other issue is that my husband no longer gets along with my dear son at all, and feels no obligation to get along with him, to the point that neither one wants anything to do with the other. As far as he is concerned, my son doesn’t meet his expectations, and so deserves nothing from me and certainly nothing from him.

I want my estate planning to be fair to both my new husband and my son. How do people typically handle this type of quandary? I think that I need to create some type of trust to pass on my share of our estate to my son. My pre-marriage assets involved my son as I pursued my graduate degree through night school and worked long hours throughout his childhood.

Second Wife

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com.

Dear Second Wife,

Don’t allow your husband’s feelings toward your son to influence your estate planning.

Your relationships with your husband and your son and your own plans for retirement are all fair game when making decisions about your estate, but your husband and son’s fractured relationship is their business, not yours. You worked hard for this money, and your son is your legal heir. Any effort by your husband to spend all of your savings and fritter away any inheritance that you intended to leave to your son should be resisted at all costs.

You have worked too hard your entire life to compromise your plans for a comfortable retirement where you have money set aside for long-term medical care insurance, unforeseen emergencies and/or your son. If you jointly own your home, you can leave your half to your son in your will, and specify it can only be sold after your husband passes away.

If you own the home, you can give your husband a life estate. Your son would pay capital-gains tax on the value of your home when he sells it, and not when you bought it. You could also make your son the beneficiary on your life-insurance policy, and/or gift him a certain amount of money per year to see how he manages and spends that money.

Figure out what is fair to yourself first before moving on to what is fair to your husband and your son. It’s OK to put your needs first. I caution against your dipping into savings at a rate that is beyond your own risk tolerance.

Ultimately, you are entitled to leave all other separate property to your son when you die — and, along with a financial adviser, set up a trust with that in mind for you, your husband and your son. Not necessarily in that order.

The Moneyist: ‘I cut his hair because he won’t pay for a haircut’: My multimillionaire husband is 90. I’ve looked after him for 41 years, but he won’t help my son

Hello there, MarketWatchers. Check out the Moneyist private Facebook
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 group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.



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These money and investing tips can help you make a place for crypto in your portfolio

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Don’t miss these top money and investing features:

These money and investing stories, popular with MarketWatch readers over the past week, can give you a better understanding of bitcoin and other cyrptocurrency, and help you figure out if digital currency has a place in your portfolio alongside stocks, bonds and other traditional assets.

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