Technically speaking, a pronounced August volatility spike remains in play across the global markets, as well as the widely-tracked U.S. benchmarks.
Amid the cross currents, the S&P 500 has staged a bullish reversal from major support (2,817) though the rally attempt’s durability remains an open question.
Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, +1.60% hourly chart highlights the past two weeks.
As illustrated, the S&P is traversing a volatile August backdrop.
The prevailing rally attempt has thus far been capped by the 50-day moving average, currently 2,943.
The subsequent downturn from the 50-day has been underpinned by the 2,973 support. The week-to-date low (2,873.1) has matched the inflection point.
Similarly, the Dow Jones Industrial Average DJIA, +1.57% has whipsawed amid volatile August price action.
In its case, the 200-day moving average has underpinned the August downdraft, an area better illustrated on the daily chart.
Tactically, an inflection point matches last week’s high (26,413) and is followed by the more distant 50-day moving average, currently 26,600.
Meanwhile, the Nasdaq Composite’s COMP, +2.01% backdrop is equally jagged.
Here again, its initial rally attempt has been capped by the 50-day moving average, currently 8,022.
The subsequent pullback has been underpinned by the bottom of the August gap (7,836). Monday’s session low (7,834) registered within two points.
Combined, the S&P 500 and Nasdaq Composite have observed well-defined support even amid the volatile backdrop.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq maintained major support (7,670) a level defining the late-2018, mini-crash range top. The August low registered within seven points.
The subsequent rally attempt has filled the August gap, an area also illustrated on the hourly chart.
Tactically, the 50-day moving average, currently 8,022, is followed by the top of the July gap (8,059), a level established to start the third quarter. Both areas have been tested early Tuesday, and a close higher would strengthen the bull case.
Looking elsewhere, the Dow Jones Industrial Average has rallied from the 200-day moving average.
The reversal has thus far been capped by the 50-day moving average, currently 26,600.
Within the range, the 26,250 area is followed by the post-breakdown peak (26,413). Tuesday’s early session high (26,427) has matched the latter, and the retest remains underway.
Meanwhile, the S&P 500 has also whipsawed from major support.
Recall that the August low (2,822) has registered nominally atop the 2,817 support, a level defining the late-2018, mini-crash range top. (This area corresponds with Nasdaq 7,670.)
The subsequent rally attempt initially registered consecutive closes atop the breakdown point (2,912) — constructive price action — though it was punctuated by Monday’s pullback to the 2,873 support.
The bigger picture
As detailed above, the major U.S. benchmarks continue to whipsaw amid a pronounced August volatility spike.
On a headline basis, the S&P 500 and Nasdaq Composite have spiked from major support — the S&P 2,817 and Nasdaq 7,670 areas — though the subsequent rally attempt gets mixed marks for style. Each benchmark initially filled the August gap, which is bullish, though Monday’s sharp downturn raises a question mark as to the rally attempt’s sustainability.
(Market bulls will contend that the S&P and Nasdaq both maintained well-defined support Monday — at S&P 2,873 and Nasdaq 7,836 — constructive price action.)
Moving to the small-caps, the iShares Russell 2000 ETF has whipsawed around the 200-day moving average, currently 151.10.
Slightly more broadly, the August upturn punctuates a successful test of the range bottom.
Meanwhile, the SPDR S&P MidCap 400 has rallied from its range bottom (337.30) an area roughly matching the 200-day moving average, currently 340.92.
The jagged April-through-August range is bisected by the flatlining 50-day moving average, currently 351.15, signaling a trendless, or range-bound, backdrop.
Looking elsewhere, the SPDR Trust S&P 500 continues to whipsaw amid a sustained volume spike.
Recall that the August downdraft initially traversed almost the entire April range across just two sessions. More immediately, the subsequent rally attempt has thus far been capped by the 50-day moving average, currently 293.90.
Against this backdrop, Tuesday’s early rally — fueled by China-U.S. trade progress — underscores the risk of embracing an aggressively-bearish bias.
Broadly speaking, the prevailing technicals are not consistent with a market-meltdown scenario, as detailed last week. At least not based on today’s backdrop.
Tactically, the S&P 2,898-to-2,912 area remains a useful intermediate-term bull-bear gauge. Last week’s violation of the 2,912 support marked the S&P’s biggest single-day downdraft year-to-date. A sustained posture atop this area signals a viable recovery attempt.
Delving deeper, important longer-term support broadly spans from 2,795 to 2,817, levels matching the 200-day moving average and the mini-crash range top. Generally speaking, the S&P 500’s longer-term bias remains bullish pending a close lower. As always, it’s not just what the markets do, it’s how they do it.
See also: Charting a damaging August downdraft, S&P 500 violates 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 10-year Treasury note yield TNX, +2.87% is digesting an aggressive August downdraft.
Recall that the July close (2.02) closely matched a headline inflection point at the 2017 low (2.03). The yield has subsequently plunged as much as 43 basis points, reaching nearly three-year lows.
Tactically, the downdraft places the yield’s record closing low (1.366) and absolute record low (1.336) — established July 2016 — firmly within striking distance.
Conversely, the former range bottom (1.94) is followed by the breakdown point (2.03). A close higher would place the brakes on bearish momentum.
More broadly, the August plunge has confirmed the primary downtrend. The yield’s longer-term bias remains bearish, as detailed repeatedly.
Meanwhile, the United States Oil Fund USO, +4.49% has survived a major technical test. The fund tracks the price of West Texas Intermediate (WTI) light, sweet crude oil.
Specifically, the shares have rallied from the range bottom, punctuating a successful test of major support, circa 10.50.
Still, the prevailing upturn has been fueled by decreased volume — the earmarks of a corrective bounce — and major resistance rests just overhead.
Tactically, the breakdown point (11.50) is followed by the 200-day moving average (11.85) and trendline resistance, circa 12.10. The USO’s intermediate- to longer-term bias remains bearish pending a close atop these areas.
More broadly, the August backdrop has been punctuated by plunging yields and easing crude-oil prices. The tandem downturns are conventionally consistent with a pending global economic slowdown.
Looking elsewhere, the SPDR Gold Shares ETF GLD, -0.85% continues to take flight.
In the process, the GLD has reached another six-year high, its best levels since April 2013. The mid-year breakout has been punctuated by volume spikes, signaling that bullish momentum is intact.
More broadly, gold has cleared a multi-year trendline, illustrated on the 10-year chart, reaching much less-charted territory. The chart likely illustrates a consequential mid-year breakout, as detailed repeatedly.
Tactically, gap support (139.00) is followed by floors around 136.50 and 134.90. The prevailing uptrend is firmly intact barring a violation.
Concluding with one U.S. sector, the VanEck Vectors Semiconductor ETF SMH, +2.85% has apparently survived a major technical test.
Specifically, the group has maintained its former breakout point (110.00), a level matching the late-2018 range top illustrated on the four-year chart.
Against this backdrop, the group is sharply higher early Tuesday, likely punctuating a shaky, but successful, test of major support. Tactically, near-term resistance (113.50) is followed by additional overhead, circa 115.10. (Also see the July 9 review.)
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 | Date Profiled |
| SBA Communications Corp. | SBAC | Aug. 12 |
| Zimmer Biomet Holdings, Inc. | ZBH | Aug. 12 |
| Activision Blizzard, Inc. | ATVI | Aug. 12 |
| L3Harris Technologies, Inc. | LHX | Aug. 12 |
| iShares U.S. Real Estate ETF | IYR | Aug. 9 |
| Akamai Technologies, Inc. | AKAM | Aug. 8 |
| Extreme Networks, Inc. | EXTR | Aug. 8 |
| D.R. Horton, Inc. | DHI | July 31 |
| eHealth, Inc. | EHTH | July 31 |
| Vulcan Materials Co. | VMC | July 31 |
| Teradyne, Inc. | TER | July 30 |
| Polaris Industries, Inc. | PII | July 30 |
| SSR Mining, Inc. | SSRM | July 30 |
| United Parcel Service, Inc. | UPS | July 29 |
| Abbott Laboratories | ABT | July 26 |
| Humana, Inc. | HUM | July 22 |
| DexCom, Inc. | DXCM | July 19 |
| Agnico Eagle Mines Ltd. | AEM | July 18 |
| Franco-Nevada Corp. | FNV | July 18 |
| Pan American Silver Corp. | PAAS | July 17 |
| Neurocrine Biosciences, Inc. | NBIX | July 17 |
| LivePerson, Inc. | LPSN | July 16 |
| Texas Instruments, Inc. | TXN | July 15 |
| Packaging Corp. of America | PKG | July 15 |
| J.B. Hunt Transport Services, Inc. | JBHT | July 15 |
| Delta Air Lines, Inc. | DAL | July 12 |
| Owens Corning | OC | July 11 |
| Twitter, Inc. | TWTR | July 10 |
| Micron Technology, Inc. | MU | July 10 |
| Inphi Corp. | IPHI | July 8 |
| Teledoc Health, Inc. | TDOC | July 1 |
| Shake Shack, Inc. | SHAK | June 28 |
| FMC Corp. | FMC | June 27 |
| SunPower Corp. | SPWR | June 26 |
| Williams-Sonoma, Inc. | WSM | June 25 |
| Spotify Technology | SPOT | June 24 |
| VanEck Vectors Gold Miners ETF | GDX | June 21 |
| iShares Silver Trust | SLV | June 20 |
| Home Depot, Inc. | HD | June 19 |
| Lululemon Athletica, Inc. | LULU | June 19 |
| SPDR Gold Shares ETF | GLD | June 18 |
| Synopsys, Inc. | SNPS | June 17 |
| Verisk Analytics, Inc. | VRSK | June 17 |
| Medtronic plc | MDT | June 14 |
| Ross Stores, Inc. | ROST | June 14 |
| Kirkland Lake Gold Ltd. | KL | June 13 |
| Dunkin Brands Group, Inc. | DNKN | June 12 |
| Ciena Corp. | CIEN | June 11 |
| Wix.com Ltd. | WIX | June 10 |
| Ecolab, Inc. | ECL | June 10 |
| Catalent, Inc. | CTLT | June 7 |
| Coca-Cola Co. | KO | June 6 |
| Dollar General Corp. | DG | June 5 |
| Repligen Corp. | RGEN | June 5 |
| Avalara, Inc. | AVLR | May 23 |
| Copa Holdings, S.A. | CPA | May 21 |
| Atlassian Corp. | TEAM | May 16 |
| SolarEdge Technologies, Inc. | SEDG | May 16 |
| Roku, Inc. | ROKU | May 15 |
| Johnson Controls International | JCI | May 10 |
| Take-Two Interactive Software, Inc. | TTWO | May 2 |
| Jacobs Engineering Group, Inc. | JEC | May 2 |
| JetBlue Airways Corp. | JBLU | Apr. 30 |
| American Express Co. | AXP | Apr. 24 |
| Church & Dwight Co., Inc. | CHD | Mar. 29 |
| Consumer Staples Select Sector SPDR | XLP | Mar. 28 |
| Shopify, Inc. | SHOP | Mar. 27 |
| Kimberly-Clark Corp. | KMB | Mar. 15 |
| iShares U.S. Real Estate ETF | IYR | Mar. 13 |
| Air Products & Chemicals, Inc. | APD | Mar. 11 |
| Costco Wholesale Corp. | COST | Mar. 6 |
| Marvell Technology Group Ltd. | MRVL | Mar. 1 |
| Universal Display Corp. | OLED | Mar. 1 |
| Vulcan Materials Co. | VMC | Mar. 1 |
| Walmart, Inc. | WMT | Feb. 22 |
| Microsoft Corp. | MSFT | Feb. 22 |
| Motorola Solutions, Inc. | MSI | Feb. 15 |
| First Solar, Inc. | FSLR | Feb. 15 |
| Procter & Gamble Co. | PG | Feb. 8 |
| Exact Sciences Corp. | EXAS | Jan. 28 |
| Applied Materials, Inc. | AMAT | Jan. 25 |
| SBA Communications Corp. | SBAC | Jan. 24 |
| Paycom Software, Inc. | PAYC | Jan. 23 |
| Advanced Micro Devices, Inc. | AMD | Jan. 22 |
| Coupa Software, Inc. | COUP | Jan. 16 |
| Veeva Systems, Inc. | VEEV | Jan. 16 |
| Okta, Inc. | OKTA | Jan. 9 |
| Alteryx, Inc. | AYX | Jan. 8 |
| IAC/InterActivecorp | IAC | Jan. 7 |
| Starbucks Corp. | SBUX | Nov. 5 |
| American Tower Corp. | AMT | Nov. 5 |
| Utilities Select Sector SPDR | XLU | Oct. 25 |
| McDonald’s Corp. | MCD | Oct. 24 |
| Yum! Brands, Inc. | YUM | Oct. 18 |