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Charting a bullish backdrop as the S&P 500’s wild 2020 ride concludes

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Technically speaking, the major U.S. benchmarks have pulled in from recent record highs amid still largely bullish year-end price action.

Against this backdrop, the S&P 500 has maintained major support (3,646) rising respectably from its second successful retest in as many weeks.

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 has pulled in to its range from record highs.

Tactically, major support matches the breakout point (3,646), and is closely followed by the range bottom (3,633).

Monday’s session low (3,636) roughly matched the range bottom. The S&P subsequently registered a bullish reversal to close near session highs.

Meanwhile, the Dow Jones Industrial Average
US:DJIA
 remains range-bound.

Still, the index has held relatively tightly to its record high (30,343) in the broad sweep.

Here again, the Dow registered a bullish reversal Monday, closing 461 points off the session low.

Against this backdrop, the Nasdaq Composite
US:COMP
is digesting a recent break to record territory.

In the process, the index has registered four straight closes atop its breakout point (12,607), an area defining its first notable floor, also detailed below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has sustained a break to record territory. Consider that 10 of the prior 18 closes have marked record closes going back to late November.

Tactically, first support matches the breakout point (12,607), an area that underpinned Monday’s bullish reversal. Delving deeper, the prevailing upturn punctuates a successful test of the November peak (12,244).

On further strength, a near-term target continues to project to the 12,920 area.

Looking elsewhere, the Dow Jones Industrial Average has sustained a less decisive breakout.

Still, the tight December range is a bullish continuation pattern. Recall that a near-term target projects to the 30,700 mark.

Conversely, the 20-day moving average, currently 30,038, is followed by the former breakout point (29,964).

The Dow has not closed under its 20-day moving average — a widely-tracked near-term trending indicator — since Nov. 4.

Meanwhile, the S&P 500 has pulled in to its former range.

Tactically, recall that the November peak (3,645.99) almost precisely matches the early-December gap (3,645.87).

Monday’s bullish reversal from support punctuated the second recent successful retest. Constructive price action.

The bigger picture

As detailed above, the major U.S. benchmarks are acting well technically.

Though each index has pulled in from its latest record close — established Thursday — the downturn has inflicted limited damage in the broad sweep.

Each benchmark’s intermediate-term bias remains bullish, based on today’s backdrop.

Moving to the small-caps, the iShares Russell 2000 ETF has sustained its latest break to record territory.

Tactically, a near-term floor (191.50) is followed by support matching the November peak, circa 185.40.

Similarly, the SPDR S&P MidCap 400 ETF has sustained its break to a higher plateau.

The prevailing grinding-higher rally is hinged to the initially decisive early-November breakout. Bullish price action.

Looking elsewhere, the SPDR Trust S&P 500 has sustained a less aggressive December breakout.

Still, the prevailing range has been underpinned by its first notable floor at the breakout point (364.40).

Placing a finer point on the S&P 500, the index has pulled in to its former range from record highs.

Tactically, recall that last week’s low (3,645.8) matched the November peak (3,646).

More immediately, Monday’s session low (3,636) registered slightly above the range bottom (3,633) to punctuate a second straight Monday retest of this general area.

More broadly, the S&P’s prevailing downturn from record highs has inflicted limited damage in the broad sweep.

Tactically, the breakout point (3,646) is followed by support in the 3,588-to-3,594 area, detailed previously.

Delving deeper, the ascending 50-day moving average, currently 3,555, is closely followed by the October peak (3,550).

Beyond technical levels, the S&P 500’s latest consolidation phase remains underway. The index is traversing a relatively well-defined December range.

Against this backdrop, the year-end price action will be punctuated by consecutive holiday-shortened weeks — amid likely decreased volume — reducing the chances of a material trend shift.

Broadly speaking, the S&P 500’s intermediate-term bias remains bullish barring a violation of the areas detailed. Last-ditch support currently holds in the 3,550 area.

Also see: Charting a (bullish) holding pattern: S&P 500, Nasdaq nail major support.

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 Silver Trust
US:SLV
 — profiled last week — continues to show signs of life.

Technically, the shares have extended a recent trendline breakout, rising to challenge three-month highs. The chart illustrates a double bottom defined by the September and November lows.

Underlying the upturn, the SLV’s relative strength index (not illustrated) has tagged its best levels since early August, improving the chances of eventual follow-through.

Tactically, gap support (23.65) is followed by the mid-month breakout point (22.80). The prevailing rally attempt is intact barring a violation.

More broadly, the SLV is well positioned on the 10-year chart, positioned to build on the massive early-2020 breakout.

JPMorgan Chase & Co.
US:JPM
 is a well positioned Dow 30 component. (Yield = 2.9%.)

The shares initially spiked six weeks ago, gapping sharply higher amid vaccine-fueled optimism. More immediately, the relatively tight December range is a bullish continuation pattern.

Tactically, the prevailing upturn has been fueled by increased volume, improving the chances of eventual follow-through. A near-term target projects to the 128.50 area.

Conversely, the prevailing range bottom (118.10) marks well-defined support. A sustained posture higher signals a bullish bias.

Coupa Software, Inc.
US:COUP
 is a well positioned large-cap name.

As illustrated, the shares have recently knifed to record territory, clearing resistance matching the September peak. The upturn punctuates a successful test of the 50-day moving average.

Tactically, the breakout point (353.50) is followed by the former range top (337.95). The prevailing rally attempt is firmly-intact barring a violation.

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

Initially profiled Aug. 20, Canadian Solar, Inc.
US:CSIQ
 has returned 80.4% and remains well positioned.

Technically, the shares have staged a strong-volume breakout, reaching 12-year highs.

The upturn punctuates a 10-week range underpinned by support matching the September peak. An intermediate-term target projects to the 55 area.

Conversely, well-defined support matches the breakout point (45.70). The prevailing uptrend is firmly-intact barring a violation.

Finally, PagSeguro Digital Ltd.
US:PAGS
 is a large-cap Brazil-based provider of financial technology solutions.

Earlier this month, the shares knifed to record highs, rising from an early-December flag-like pattern.

Though still near-term extended, the nearly straightline strong-volume spike is longer-term bullish, and the shares are attractive on a pullback. Tactically, the post-breakout low (52.10) is followed by the former range top, circa 49.00.

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

Ballard Power Systems, Inc.

BLDP

Dec. 21

LivePerson, Inc.

LPSN

Dec. 21

United Therapeutics Corp.

UTHR

Dec. 21

Shopify, Inc.

SHOP

Dec. 18

CyberArk Software Ltd.

CYBR

Dec. 18

Fleetcor Technologies, Inc.

FLT

Dec. 18

Apellis Pharmaceuticals, Inc.

APLS

Dec. 18

iShares Silver Trust

SLV

Dec. 17

Calix, Inc.

CALX

Dec. 17

Elastic N.V.

ESTC

Dec. 17

Cerner Corp.

CERN

Dec. 17

Universal Health Services, Inc.

UHS

Dec. 16

Tenet Healthcare Corp.

THC

Dec. 16

Sunnova Energy International, Inc.

NOVA

Dec. 16

Xilinx, Inc.

XLNX

Dec. 15

Netflix, Inc.

NFLX

Dec. 15

Toyota Motor Co.

TM

Dec. 15

Williams-Sonoma, Inc.

WSM

Dec. 15

iShares Nasdaq Biotechnology ETF

IBB

Dec. 15

SDPR S&P Regional Banking ETF

KRE

Dec. 14

Atlassian Corp.

TEAM

Dec. 14

Etsy, Inc.

ETSY

Dec. 14

Surface Oncology, Inc.

SURF

Dec. 14

Autodesk, Inc.

ADSK

Dec. 9

Monster Beverage Corp.

MNST

Dec. 9

Cimarex Energy Co.

XEC

Dec. 9

Plug Power, Inc.

PLUG

Dec. 9

F5 Networks, Inc.

FFIV

Dec. 8

Emerson Electric Co.

EMR

Dec. 8

Patterson Companies, Inc.

PDCO

Dec. 8

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

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

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

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

8×8, 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

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

Twilio, Inc.

TWLO

Oct. 8

Cloudflare, Inc.

NET

Oct. 7

Ceridian HCM Holding, Inc.

CDAY

Oct. 7

RSailPoint Technology Holdings, Inc.

SAIL

Oct. 1

Martin Marietta Materials, Inc.

MLM

Sept. 30

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

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

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.



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These money and investing tips can help you stay upright against the market’s headwinds

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Opinion: I took advantage of the 2020 RMD rule but now my 1099-R looks wrong — what should I do?

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Q: I took advantage of the 2020 RMD rule and returned what I had taken from my IRA thinking there would be no taxes. I just got a 1099-R showing the full RMD. That can’t be right. How do I correct it?

—Pauline

A.: Pauline,

If the 1099-R is incorrect, you will need to contact the firm that issued the statement to get it corrected. However, the 1099-R is probably correct.

Read: Are there new RMD rules this year?

Under the law, the firm issuing the 1099-R has no responsibility for reporting how much of a distribution is taxable. That responsibility rests on your shoulders as a taxpayer. The issuing firm need only report what was paid out of the IRA on 1099-R.

Not sure where to retire? Let us help you find the right spot

That does not mean you will pay any tax. Any funds returned to the IRA by Aug. 31, 2020 is considered a rollover and is not taxable. Normally, Required Minimum Distributions (RMD) are not eligible for rollover, but IRS guidance after enactment of the CARES Act that waived RMD for 2020 changed that. The guidance stated the normal 60-day time limit for rollovers would not apply and instead instituted a fixed deadline of Aug. 31, 2020 to return such distributions and avoid taxation.

Read: It’s not too late to save on your 2020 tax bill — here’s how

I get similar questions about 1099-Rs every year. The reporting of the gross distribution looks like an error but in most cases, it is correct and the person receiving it simply hasn’t learned how it is accounted for yet.

Here’s how the accounting typically works.

As with any gross amount reported on Form 1099-R, you declare the amount that is not taxable when you file your 2020 tax return. What I hear most tax preparers would do in your situation is put the gross distribution amount from 1099-R on line 4a as per the normal procedure. Then, they would place a zero in 4b of your Form 1040, and put a note on the return near those lines that it was “returned to the IRA under the CARES Act,” “CARES Act rollover,” “CARES Act,” or simply “Rollover.”

Read: These are the best new ideas in retirement

If you did not return all of distribution by the deadline, the portion that was not returned would be taxable. You would put that number on line 4b.

Read: 5 things to do if you inherit a Roth IRA

As I mentioned a moment ago, the discrepancy between the gross distribution reported and what should actually be taxable comes up in other situations. Three of the most common are other rollovers, Qualified Charitable Distributions (QCD), and distributions from accounts that had received after-tax contributions.

In all those cases, the reporting process looks like what I described above. You put the gross distribution on line 4a and the taxable portion on Line 4b. Then note why the numbers are different with “rollover,” “QCD,” or “See Form 8606” on the 1040. Form 8606 is the form used to determine the taxable amount of an IRA distribution when nondeductible contributions have been made to any of one’s IRA accounts.

If you have a question for Dan, please email him with ‘MarketWatch Q&A’ on the subject line.

Dan Moisand’s comments are for informational purposes only and are not a substitute for personalized advice. Consult your adviser about what is best for you. Some questions are edited for brevity.



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Video: Why Mike Novogratz sees bitcoin reaching $500,000 by 2024

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Galaxy Digital’s Mike Novogratz explains the outlook for crypto as Coinbase goes public.





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