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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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‘I could live on my Social Security and still save money’: This 66-year-old left Chicago for ‘calming’ Costa Rica — where he now plans to live indefinitely

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Editor’s note: This article was first published in September 2019.

A school break changed 66-year-old Martin Farber’s life forever.

In 2007, his daughter — who at the time was attending Illinois State University — decided she wanted to spend a college holiday volunteering in Costa Rica and staying with a local family, he explains. She came home raving about the experience, so, in 2008, Farber — who at the time was living in Evanston, Ill., just outside Chicago, and selling cars — took his first trip there.

“It was a big surprise to me — bumpy roads, dogs barking in the streets,” he says. “I wasn’t enamored at first.”

But as his daughter began traveling there more and eventually moved there for a year, he took additional trips to Costa Rica. It quickly grew on him — in particular, the people. “The Costa Rican people are warm, open and friendly. I felt less invisible in a strange country in a strange town where I didn’t speak the language than I did in Evanston.”

And the more time he spent there, the more it impacted him: “On one of my trips there, I thought: My daughter’s life makes more sense than mine,” he says. “There was nothing wrong with my life, but I felt that my life was out of context with who I’d become. … I would have bills and make money to pay them, but that had ceased to be satisfying,” he recalls. “I knew I needed to change my life — there was no more joy in what I was doing.”

What’s more, when he’d return from his Costa Rica trips, people noticed. “I would come back, and my friends and therapist would say: You seem better after you go,” he says with a laugh.

A view from the hot springs near Martin Farber’s home in Costa Rica.


Martin Farber

So in 2014, he packed up and moved to Orosi — a picturesque, lush small town with waterfalls and hot springs a little over an hour’s drive from San Jose — promising himself he’d stay for two years. It’s been five, and he now plans to stay in Costa Rica indefinitely. (Though Farber notes that, to him, “it’s not a retirement; it’s a chance to lead a new and different life.”)

Here’s what his life is like, from costs to health care to residency to everyday life:

The cost: While many expats spend way more living in Costa Rica, Farber says: “I could live on my Social Security and still save money.” He says “a person can live on $1,200 per month, two people on $2,000.” The key, he says, is to live more like he does and as the Costa Ricans do — in a modest home, eating local food and purchasing local goods.

Indeed, Farber himself spends just $300 a month for rent (he rents a home from a friend who moved recently and gave him a good deal), roughly $225 a month on groceries and just $50 a month total on water and electricity (the temperate climate in Orosi means you rarely need heat or air conditioning). The veteran Volkswagen
VOW,
+0.96%

 
VLKAF,
+0.98%

salesman saves money by not owning a car (those over 65 ride municipal buses for free), which can be a significant expense in Costa Rica; for his cellphone, “I pay as I go … roughly $10 may last me a couple weeks or more,” he says, adding that “many people handle there their cellphones this way. You can get them recharged anywhere.”

His major expense is travel: He goes back to the U.S. to visit his mother in Florida several times a year and lately has spent part of the summer in Chicago helping out a friend with a dealership there. He also spends a good amount of money on health care. He says that while flights can be had for as little as $350 roundtrip during offseasons, the cost can be much higher the rest of the year.

In the saddle.


Martin Farber

Health care: Farber, who has permanent resident status in Costa Rica, says he pays about $90 per month to participate in the country’s health-care system — adding that the health care he’s received has been very good. (A 2018 study of health-care quality and access in more than 190 nations ranked Costa Rica No. 62.)

When he developed a detached retina, though, he paid for the procedure out of pocket so that he didn’t have to wait for the required surgery, he says — adding that the entire procedure cost him about $5,000. “I would have had to have waited four days,” he says, if he had not paid to expedite matters. “That might have been fine, but it might not.” And he adds that the quality of care depends on where you get it in the country.

Lifestyle: Though Farber says that he “moved here with no goals and no agenda,” he’s found plenty to do. “I take Spanish lessons two days a week for two hours a day. It’s been great. I never thought I would acquire a usable language in my 60s,” he says. He also rides his bike all around the area, does some writing and belongs to a community group that undertakes projects to improve the area.

And he often simply takes in nature, which he says has been an essential part of why he feels calmer and more relaxed in Costa Rica than in the U.S. “I live at 3,000 feet but in a valley surrounded by coffee fields and lime trees and water. At night, if I open the windows, I can hear the river rushing by,” he says. “It is very calming … hundreds of trees everywhere … you know the Earth is alive.”

The historic Iglesia de San José de Orosi.


iStock

Cons: “I don’t want to overglorify. It’s not without its problems,” Farber says of Costa Rica. “There are social problems and downsides.” He notes that crime and petty theft can be a problem (“I am cautious,” he says of his approach) and seem to have increased since he moved there, and adds that he misses out on some cultural things because of where he lives. And, he says with a laugh, “I can’t order Thai food at 9 at night.” But, he adds: “These are trade-offs — in the afternoon, I get to walk in the coffee fields and see flocks of parrots.”

Residency: To qualify for Costa Rica’s pensionado visa, expats must prove that they have a pension of at least $1,000 coming in each month. (Here are the details of that program.) Once you have lived in Costa Rica for three years, you can apply for permanent residency. Farber used a lawyer to help him figure out the ins and outs of residency options; his entire path to permanent residency took about a year, he says.

The bottom line: “After five years I am still amazed and surprised that I made the decision to lead a life I never thought I would,” he says. And while he may not stay in Orosi forever — “the town doesn’t have an ambulance, [and] I don’t know what it will be like to be 80 there,” he says — he does plan to stay in Costa Rica in no small part because of the people and sense of community. “I have the feeling that life is good here,” he says. “It’s hard sometimes, but we are all in it together.”



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