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Charting a decisive 2021 breakout: U.S. benchmarks clear 20-day volatility bands

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Technically speaking, the major U.S. benchmarks have asserted a near-term holding pattern, pulling in modestly from all-time highs.

Still, the slight downturn punctuates previously aggressive January breakouts amid a still comfortably bullish bigger-picture backdrop.

Before detailing the U.S. markets’ wider view, the S&P 500’s
SPX,
-0.11%

 hourly chart highlights the past two weeks.

As illustrated, the S&P is digesting its latest break to all-time highs. The flattish initial pullback signals still muted selling pressure near record territory.

Tactically, initial support (3,783) is followed by an inflection point, circa 3,764.

Meanwhile, the Dow Jones Industrial Average
DJIA,
+0.03%

 has also sustained its January breakout, notching three straight closes atop the 31,000 mark.

The prevailing bull flag — the tight four-session range, near record highs — is a bullish continuation pattern.

Slightly more broadly, the breakout punctuates a successful test of major support (29,964) on the year’s first session.

Against this backdrop, the Nasdaq Composite
COMP,
+0.08%

has registered three straight closes atop the 13,000 mark.

To reiterate, the breakout point (12,973) marks a notable floor, and is followed by the Nasdaq’s former projected target (12,920).

Delving deeper, the prevailing upturn punctuates a successful first-day-of-the year test of major support (12,607).

Widening the view to six months adds perspective.

On this wider view, the Nasdaq is digesting its January break to record territory. Recall that the initial spike marked a 1.8% breakout, confirming the Nasdaq’s primary uptrend.

Tactically, the breakout point (12,973) pivots to support.

Delving deeper, the prevailing upturn originates from the 20-day moving average — a widely-tracked near-term trending indicator — and the former breakout point (12,607).

Looking elsewhere, the Dow Jones Industrial Average has sustained a more decisive break to record highs.

Consider that Monday’s modest downturn snapped a stretch of three straight closes atop the 20-day Bollinger bands to conclude a statistically unusual two standard deviation breakout.

As always, consecutive closes atop the Bollinger bands signal a tension between time horizons.

For the near-term, the index is extended — and due to consolidate — following a break outside the range encompassing two standard deviations of its trailing 20-day price volatility.

But more importantly, the decisive upside spike signals extreme bullish momentum, a backdrop likely to precede longer-term upside follow-through.

Meanwhile, the S&P 500 has also taken flight.

Its January breakout has encompassed two straight closes atop the 20-day volatility bands amid an unusually strong January breakout.

The bigger picture

Collectively, the major U.S. benchmarks are off to a bullish 2021 start.

On a headline basis, each big three U.S. benchmark has knifed to all-time highs — previously uncharted territory — rising from a successful early-January test of the 20-day moving average.

As always, the 20-day moving average is a widely-tracked near-term trending indicator.

Moreover, the subsequent rally from the 20-day moving average has been fueled by statistically unusual bullish momentum. Each big three benchmark has staged a two standard deviation breakout.

(On a granular note, the Dow Jones Industrial Average notched three straight closes atop the 20-day volatility bands, the S&P 500 registered two straight closes atop the 20-day bands, and the Nasdaq Composite managed a less reliable, but still bullish, lone close atop the bands.)

Moving to the small-caps, the iShares Russell 2000 ETF
IWM,
+1.36%

 is digesting an unusually strong January spike.

Recall that its nearly 3.5% breakout confirms the primary uptrend.

More immediately, the prevailing pullback has been flat, fueled by decreased volume, likely laying the groundwork for longer-term follow-through.

Similarly, the SPDR S&P MidCap 400 ETF
MDY,
+0.94%

 has taken flight, knifing to record highs.

Combined, the decisive small- and mid-cap breakouts are consistent with a bullish rotational market backdrop.

Looking elsewhere, the SPDR Trust S&P 500
SPY,
-0.10%

 has broken out less decisively, rising about 1.2% atop the 2020 peak.

Still, the breakout is nominally respectable, and sufficient to confirm the primary uptrend.

Placing a finer point on the S&P 500, the index has sustained its latest break to all-time highs.

To reiterate, initial support (3,783) is followed by an inflection point, circa 3,764.

Delving deeper, the 3,723-to-3,726 area marks the S&P’s first significant floor.

Widening to the six-month view, the S&P 500 has knifed to what will likely mark a higher plateau, atop the December peak. The prevailing upturn originates from the 20-day moving average.

Against this backdrop, the prevailing breakout has encompassed consecutive closes atop the 20-day Bollinger bands, signaling statistically unusual bullish momentum.

Though still near-term extended — and a consolidation phase remains underway — the S&P 500’s intermediate-term outlook remains comfortably bullish.

Also see: Charting a bull-trend whipsaw, S&P 500 absorbs pullback from 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 10-year Treasury note yield
TNX,
+3.53%

 has taken flight to start 2021, staging a likely consequential technical breakout.

In the process, the yield has extended its spike atop the marquee 1.00% mark

Tactically, the breakout confirms the yield’s late-2020 uptrend, detailed previously. The upturn punctuates an orderly December range, as well as a bullish triangle hinged to the late-November low.

More broadly, the upturn punctuates a massive double bottom, defined by the April and August lows. (See the one-year chart.) The rally above the former range top (0.97) has indeed produced swift upside follow-through.

On further strength, the March peak (1.27) remains a potential upside target, and is closely followed by the 2016 low (1.34). (Also see the Nov. 9 review and Dec. 3 review.)

Looking elsewhere, the United States Oil Fund
USO,
+1.79%

 has also staged a January breakout. The fund tracks daily changes in the spot price of light, sweet crude oil.

The shares initially spiked about two months ago, gapping atop trendline resistance amid optimism that vaccine progress will promote global economic growth. The subsequent grinding-higher follow-through places the shares at eight-month highs.

Tactically, near-term support (33.50) is followed by the former breakout point (31.00) an area toward which the 50-day moving average is rising. The 50-day has marked a bull-bear inflection point, and a sustained posture higher signals a bullish bias.

More broadly, rising oil prices and interest rates (yields) would conventionally present a broad-market headwind. But against the prevailing backdrop, the resurgence more likely signals a reflation trade, an expected return toward pre-virus economic conditions.

Initially profiled July 23, Advanced Micro Devices, Inc.
AMD,
-1.51%

 has returned 57.4% and remains well positioned.

As illustrated, the shares have rallied to the range top, rising to challenge all-time highs. (Monday’s close (97.25) marked a record close, by a narrow 13-cent margin.)

The upturn punctuates a relatively tight six-week range, laying the groundwork for a potentially decisive breakout. A near-term target projects to the 104 area on follow-through.

More broadly, recall that the late-2020 range is hinged to massive July breakout. (See the one-year chart.) The prevailing rally attempt is intact barring a violation of the range bottom (88.70).

Cisco Systems, Inc.
CSCO,
-0.07%

 is a large-cap name setting up well for the near-term. (Yield = 3.3%.)

Technically, the shares have rallied to challenge four-month highs amid a January upturn. A near-term target projects to the 47 area on follow-through.

Conversely, notable support, circa 43.70, closely matches the August gap. A sustained posture higher signals a bullish bias.

Also notice the pending golden cross — or bullish 50-day/200-day moving average crossover — signaling that the intermediate-term uptrend has overtaken the longer-term trend.

Finally, SolarEdge Technologies, Inc.
SEDG,
-0.46%

 is a well positioned Israel-based large-cap name.

Earlier this month, the shares knifed to record highs, rising amid a volume spike after the Georgia runoff Senate elections.

The ensuing pullback has been orderly, fueled by decreased volume, placing the shares near the breakout point (335.50) and 7.1% under the January peak.

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

Chegg, Inc.

CHGG

Jan. 11

Ambarella, Inc.

AMBA

Jan. 11

Macy’s, Inc.

M

Jan. 11

Nexstar Media Group, Inc.

NXST

Jan. 11

iShares Transportation Average ETF

IYT

Jan. 11

Energy Select Sector SPDR

XLE

Jan. 8

Teledoc Health, Inc.

TDOC

Jan. 8

Dollar Tree, Inc.

DLTR

Jan. 8

Skyworks Solutions, Inc.

SWKS

Jan. 7

DexCom, Inc.

DXCM

Jan. 7

Financial Select Sector SPDR

XLF

Jan. 7

Devon Energy Corp.

DVN

Jan. 6

Alcoa Corp.

AA

Jan. 6

FireEye, Inc.

FEYE

Jan. 5

Check Point Software Technologies

CHKP

Jan. 4

Synaptics, Inc.

SYNA

Jan. 4

Ceridian HCM Holding, Inc.

CDAY

Jan. 4

Lumentum Holdings, Inc.

LITE

Dec. 23

Sunrun, Inc.

RUN

Dec. 23

ShockWave Medical, Inc.

SWAV

Dec. 23

JPMorgan Chase & Co.

JPM

Dec. 22

Coupa Software, Inc.

COUP

Dec. 22

PagSeguro Digital Ltd.

PAGS

Dec. 22

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

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

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

Zillow Group, Inc.

ZG

Nov. 23

Yeti Holdings, Inc.

YETI

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

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

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

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

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

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

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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‘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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