Bull trend absorbs shot across bow, Dow industrials maintain trendline support

Technically speaking, the bull trend for U.S. stocks has absorbed a respectable mid-month downturn — at least so far — amid Turkey-fueled uncertainty and related currency volatility.

In the process, the Dow Jones Industrial Average has maintained key trendline support, while the S&P 500 has weathered a less aggressive pullback from six-month highs.

Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, +0.67% hourly chart highlights the past two weeks.

As illustrated, the S&P has pulled in respectably from six-month highs, though limited damage has thus far been inflicted.

Tactically, a near-term floor (2,817) is followed by the much firmer 2,802 breakout point.

Meanwhile, the Dow Jones Industrial Average has pulled in more aggressively from five-month highs.

Still, the index has initially maintained its range bottom (25,150), an area matching trendline support, illustrated on the daily chart. The quality of its rally from support should be a useful bull-bear gauge.

Against this backdrop, the Nasdaq Composite remains the strongest big three U.S. benchmark.

Its pullback from near-record territory has been comparably flat, and underpinned by major support matching the June peak (7,806), also illustrated below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq topped last week 10 points under record territory and has pulled in from the range top.

To reiterate, an inflection point matches the June peak (7,806) and is followed by more important trendline support, a level closely tracking the 50-day moving average, currently 7,732. The Nasdaq’s intermediate-term bias points higher barring a violation.

Looking elsewhere, the Dow Jones Industrial Average has pulled in respectably from five-month highs.

Still, the downturn has been punctuated by a successful test of trendline support (25,150) an area closely matching the August low (25,120) — at least so far. The Dow’s intermediate-term bias remains bullish barring a violation.

Delving slightly deeper, the 50-day moving average, currently 24,997, is rising toward the trendline.

Meanwhile, the S&P 500 has staged a less aggressive pullback from six-month highs.

Recall that the breakout point marks major support, an area broadly spanning from 2,787 to 2,802. The ascending 50-day moving average, currently 2,788, matches this floor.

Collectively, the big three U.S. benchmarks have thus far weathered a respectable mid-August downturn.

In the process, the Nasdaq Composite has maintained its first notable support (7,806) while the Dow industrials’ pullback has been underpinned by trendline support. Constructive price action, at least so far.

Moving to the small-caps, the iShares Russell 2000 ETF continues to hug trendline resistance roughly matching the 50-day moving average.

More broadly, the chart illustrates a developing double bottom — the “W” formation — defined by the June and July lows. The bullish pattern is currently capped by the small-cap benchmark’s record close (169.97) and absolute record peak (170.20).

Meanwhile, the SPDR S&P MidCap 400 has pulled in to trendline support from last week’s fleeting record high.

The MDY’s record close (366.69) closely matches the July peak (366.71) and remains an overhead inflection point.

Conversely, the trendline, circa 360.00, is followed by support (357.70) closely matching the August low. An eventual violation would mark a “lower low” raising a caution flag.

Looking elsewhere, the SPDR Trust S&P 500 SPY, +0.63% has pulled in from six-month highs amid increased volume.

As detailed previously, the SPY’s former breakout point — the 284.01-to-284.37 area — pivots to resistance. Three consecutive session highs have matched resistance (including Tuesday’s early high) and the retest remains underway.

An eventual close higher likely opens the path to the August peak (286.01).

Against this backdrop, the S&P 500 has reversed from six-month highs amid still relatively contained technical damage. Despite the mid-August volume uptick, bearish momentum, as measured by market breadth, has registered as lackluster.

Tactically, initial resistance matches the July peak (2,848) and the pending retest from underneath should be a useful bull-bear gauge.

Conversely, familiar support broadly spans from 2,787 to 2,802, an area also currently matching the 50-day moving average. The S&P 500’s intermediate-term bias remains bullish barring a violation.

See also: Charting a bullish technical tilt: S&P 500, Nasdaq rise within view of record territory.

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 Emerging Markets ETF EEM, +0.49% has turned sharply lower, pressured amid Turkey-fueled collateral damage, including currency cross currents.

The downdraft punctuates a failed test of trendline resistance — closely tracking the 50-day moving average — amid increased volume.

Tactically, the trendline is closely followed by the breakdown point (45.10) and an eventual close higher would raise the flag to a trend shift. The prevailing backdrop continues to support a bearish bias pending such a move.

Moving to U.S. sectors, the Consumer Staples Select Sector SPDR XLP, +0.55% is acting well technically. (Yield = 3.0%.)

As illustrated, the group has recently knifed to four-month highs, clearing major resistance matching the 200-day moving average. The subsequent pullback has been orderly, placing the group at an attractive entry near the breakout point and 2.5% under the August peak.

Also notice the pending golden cross — or 50-day/200-day moving average crossover — a bullish signal, indicating that the intermediate-term uptrend has overtaken the primary trend.

More broadly, the group’s resurgence is consistent with a rotational, and still broadly strengthening, U.S. sub-sector backdrop.

Moving to specific names, T-Mobile US, Inc. TMUS, +1.00% is a well positioned large-cap name.

Earlier this month, the shares knifed atop trendline resistance, rising amid speculation that the company’s proposed buyout of Sprint Corp. is likely to gain regulatory approval.

The subsequent flag-like pattern signals muted selling pressure, laying the groundwork for upside follow-through. Tactically, a breakout attempt is in play barring a violation of near-term support, circa 64.00.

Celgene Corp. CELG, +0.42% is a large-cap biotech name coming to life.

Technically, the shares are challenging a five-month range top matching the 200-day moving average, currently 92.15. As always, the 200-day is a widely-tracked longer-term trending indicator, and a breakout would raise the flag to a primary trend shift.

Underlying the upturn, Celgene’s relative strength index (not illustrated) has recently notched 15-month highs, improving the chances of eventual follow-through.

Tactically, the prevailing rally attempt is underpinned by trendline support (89.50) and a breakout attempt is in play barring a violation.

Five9, Inc. FIVN, +2.86% is a mid-cap developer of cloud contact center software solutions.

As illustrated, the shares have recently gapped to record territory, rising after the company’s second-quarter results. The subsequent pullback has been comparably flat, fueled by decreased volume.

Though still near-term extended, the top of the gap closely matches the breakout point (39.10) and a pullback toward support would offer an attractive entry.

Emerson Electric Co. EMR, +1.81% is a well positioned large-cap name. (Yield = 2.6%.)

Earlier this month, the shares knifed to resistance, rising to challenge record territory after the company’s quarterly results.

The subsequent flat selling pressure near the range top improves the chances of eventual follow-through. Tactically, a breakout attempt is underway barring a violation of trendline support closely matching the top of the gap (72.10).

More broadly, the shares are well positioned on the three-year chart, rising from a continuation pattern pinned to the steep late-2017 rally.

The table below includes names recently profiled in The Technical Indicator that remain well positioned. For the original comments, see The Technical Indicator Library.

CompanySymbolDate Profiled
Acacia Communications, Inc. ACIAAug. 13
Zebra Technologies Corp. ZBRAAug. 13
Unit Corp. UNTAug. 13
Best Buy Co., Inc. BBYAug. 10
Avnet, Inc. AVTAug. 10
Clorox Co. CLXAug. 10
Bristol-Myers Squibb Co. BMYAug. 9
United Technologies Corp. UTXAug. 9
Itron, Inc. ITRIAug. 9
Teladoc, Inc. TDOCAug. 9
Paycom Software, Inc. PAYCAug. 8
Zendesk, Inc. ZENAug. 8
Eaton Corp. ETNAug. 8
Kansas City Southern KSUAug. 8
Financial Select Sector SPDR XLFAug. 8
iShares Transportation Average ETF IYTAug. 7
Xilinx, Inc. XLNXAug. 7
Applied Materials AMATAug. 7
Integrated Device Technology, Inc. IDTIAug. 7
Myriad Genetics, Inc. MYGNAug. 7
Health Care Select Sector SPDR XLVAug. 6
American Tower Corp. AMTAug. 6
Cognex Corp. CGNXAug. 6
Phillips 66 PSXAug. 6
KLA-Tencor Corp. KLACAug. 3
Global Payments, Inc. GPNAug. 3
SM Energy Co. SMAug. 3
Venom Energy Partners VNOMAug. 2
Flir Systems, Inc. FLIRAug. 2
Yext, Inc. YEXTAug. 1
SunTrust Banks, Inc. STIJuly 30
Andeavor ANDVJuly 30
Lattice Semiconductor Corp. LSCCJuly 30
Amgen, Inc. AMGNJuly 27
Mosaic Co. MOSJuly 27
Valero Energy Corp. VLOJuly 26
Pfizer, Inc. PFEJuly 25
Financial Select Sector SPDR XLFJuly 24
Northern Trust Corp. NTRSJuly 24
SS&C Technologies Holdings, Inc. SSNCJuly 23
Arconic, Inc. ARNCJuly 23
Taiwan Semiconductor Manufacturing Co. TSMJuly 20
Bank of America Corp. BACJuly 20
JPMorgan Chase and Co. JPMJuly 19
Cummins, Inc. CMIJuly 19
Citrix Systems, Inc. CTXSJuly 18
Corning, Inc. GLWJuly 18
Kulicke and Soffa Industries, Inc. KLICJuly 18
Five Below, Inc. FIVEJuly 17
Sony Corp. SNEJuly 16
Celgene Corp. CELGJuly 16
Walmart, Inc. WMTJuly 16
National Oilwell Varco, Inc. NOVJuly 13
Visa, inc. VJuly 12
Walt Disney Co. DISJuly 12
Paychex, Inc. PAYXJuly 11
RH RHJuly 11
Coca-Cola Co. KOJuly 10
Seattle Genetics, Inc. SGENJuly 9
Johnson & Johnson JNJJuly 5
Kroger Co. KRJuly 5
Silicon Motion Technology Corp. SIMOJuly 3
CyrusOne, Inc. CONEJuly 3
FleetCor Technologies, Inc. FLTJuly 2
Tandem Diabetes Care, Inc. TNDMJuly 2
Oceaneering International, Inc. OIIJune 29
NII Holdings, Inc. NIHDJune 29
BioMarin Pharmaceutical, Inc. BMRNJune 27
Church & Dwight Co., Inc. CHDJune 27
CF Industries Holdings, Inc. CFJune 25
Procter & Gamble Co. PGJune 22
Semtech Corp. SMTCJune 22
Merck & Co., Inc. MRKJune 21
Alphabet, Inc. GOOGLJune 15
Allergan AGNJune 15
Pepsico, Inc. PEPJune 14
Mosaic Co. MOSJune 13
Consumer Staples Select Sector SPDR XLPJune 13
Roku, Inc. ROKUJune 12
Analog Devices, Inc. ADIJune 12
Viking Therapeutics, Inc. VKTXJune 12
Medicines Co. MDCOJune 11
Health Care Select Sector SPDR XLVJune 8
Monster Beverage Corp. MNSTJune 7
VMWare, Inc. VMWJune 6
SPDR S&P Biotech ETF XBIJune 5
Kohl’s Corp. KSSJune 5
Union Pacific Corp. UNPMay 21
Twilio, Inc. TWLOMay 21
Energy Select Sector SDPR XLEMay 18
SPDR S&P Retail ETF XRTMay 15
Lowe’s Companies, Inc. LOWMay 14
Texas Instruments, Inc. TXNMay 11
PowerShares QQQ Trust QQQMay 10
SPDR S&P Oil and Gas Exploration & Production ETF XOPMay 9
Coupa Software, Inc. COUPMay 8
Apple, Inc. AAPLMay 7
Norfolk Southern Corp. NSCMay 2
Advanced Micro Devices, Inc. AMDMay 1
UnitedHealth Group, Inc. UNHApr. 30
Nike, Inc. NKEApr. 30
DSW, Inc. DSWApr. 30
Home Depot, Inc. HDApr. 27
Costco Wholesale Corp. COSTApr. 26
CSX Corp. CSXApr. 26
EOG Resources, Inc. EOGApr. 11
NetApp, Inc. NTAPApr. 9
Domino’s Pizza, Inc. DPZMar. 21
Burlington Stores, Inc. BURLMar. 14
TJX Companies, Inc. TJXMar. 6
Chart Industries, Inc. GTLSMar. 6
Macy’s, Inc. MMar. 5
LivePerson, Inc. LPSNFeb. 28
VeriSign, Inc. VRSNFeb. 26
ServiceNow, Inc. NOWFeb. 21
Adobe Systems, Inc. ADBEFeb. 16
Salesforce.com, Inc. CRMFeb. 12
Fortinet, Inc. FTNTJan 19
Sarepta Therapeutics, Inc. SRPTJan. 3
MSCI, Inc. MSCINov. 20
Motorola Solutions, Inc. MSINov. 14
Lululemon Athletica, Inc. LULUOct. 24
HubSpot, Inc. HUBSOct. 4
Nvidia Corp. NVDASept. 27
Bottomline Technologies, Inc. EPAYJuly 13
GrubHub, Inc. GRUBMay 4
Square, Inc. SQMar. 3
Microsoft Corp. MSFTAug. 5

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