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Charting a bullish February start: S&P 500 spikes from major support

Technically speaking, the U.S. benchmarks are off to a strong February start, rising in the wake of the most aggressive market downturn in about three months.

Against this backdrop, each big three benchmark has extended a reversal from major support, rallies preserving a bullish intermediate-term technical bias.

Charting a bullish February start: S&P 500 spikes from major support

Before detailing the U.S. markets’ wider view, the S&P 500’s
SPX,
+1.73%
 hourly chart highlights the past two weeks.

As illustrated, the S&P has weathered a jagged retest of major support closely matching the 50-day moving average.

Last week’s close registered less than two points from the 50-day — (the trending indicator has since “moved” slightly higher) — and the S&P has rallied respectably from support.

Monday’s session high (3,784) closely matched next resistance (3,783) and has been punctuated by Tuesday’s early follow-through. Bullish price action.

Charting a bullish February start: S&P 500 spikes from major support

Meanwhile, the Dow Jones Industrial Average
DJIA,
+1.88%
 has successfully tested last-ditch support, detailed previously.

The specific area matches the mid-November range top (29,964), also illustrated on the daily chart.

More immediately, Tuesday’s strong start places the Dow firmly back atop its 50-day moving average. Additional overhead matches the former range bottom, circa 30,790.

Charting a bullish February start: S&P 500 spikes from major support

Against this backdrop, the Nasdaq Composite
COMP,
+1.74%
has also rallied from major support.

In its case, the specific area matches the 2020 peak (12,973) detailed previously.

Last week’s low (12,985) registered slightly above support, and the index has subsequently reversed to the former range. Constructive price action.

Combined, each big three benchmark has maintained a relatively well-defined support point.

Charting a bullish February start: S&P 500 spikes from major support

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has weathered a respectable pullback from record highs.

To reiterate, the downturn has been underpinned by a notable floor matching the 2020 peak (12,973). Last week’s low registered about 12 points above support.

Tactically, the prevailing upturn preserves a comfortably bullish intermediate-term bias. (The recent downturn filled the mid-January gap, and has been punctuated by a rally to the former range from well-defined support. Bullish price action.)

Charting a bullish February start: S&P 500 spikes from major support

Looking elsewhere, the Dow Jones Industrial Average registered the most damaging late-January downturn.

This is the only big three U.S. benchmark to venture materially under its 50-day moving average.

Still, the index has maintained last-ditch support, an area matching the mid-November range top (29,964), detailed previously. Tuesday’s strong start punctuates a pronounced bullish reversal from support.

Charting a bullish February start: S&P 500 spikes from major support

Meanwhile, the S&P 500 has weathered a jagged turn-of-the-month retest of major support.

In its case, the 50-day moving average, currently 3,724, matches a familiar floor in the 3,723-to-3,726 area.

The bigger picture

Collectively, the major U.S. benchmarks seem to have weathered the strongest market downturn in about three months.

In the process, each big three benchmark has rallied respectably from notable support.

Specifically, the Nasdaq Composite has maintained the 2020 peak (12,973), the Dow Jones Industrial Average has maintained its former breakout point (29,964) and the S&P 500 has staged a jagged test of its 50-day moving average. (See the daily charts.)

Each benchmark’s intermediate-term bias has remained bullish throughout the recent downturn.

Charting a bullish February start: S&P 500 spikes from major support

Moving to the small-caps, the iShares Russell 2000 ETF
IWM,
+1.39%
 is digesting a decisive early-January breakout.

Tactically, the post-breakout low (204.66) is followed by the breakout point (201.20), areas that have underpinned the pullback.

Charting a bullish February start: S&P 500 spikes from major support

Meanwhile, the SPDR S&P MidCap 400 ETF
MDY,
+1.27%
 has pulled in slightly more aggressively from recent record highs.

Still, the downturn has been underpinned by the breakout point (425.30). Conversely, the former range bottom (434.40) remains an inflection point.

Charting a bullish February start: S&P 500 spikes from major support

Looking elsewhere, the SPDR Trust S&P 500
SPY,
+1.75%
 has absorbed a strong-volume pullback to major support.

But also recall that the downturn registered as internally lackluster, selling pressure inconsistent with a major trend shift.

Charting a bullish February start: S&P 500 spikes from major support

Placing a finer point on the S&P 500, the index has maintained familiar support.

The specific area matches the December gap (3,723) and the 50-day moving average, currently 3,724.

The prevailing rally to the former range signals bullish momentum is intact. (Consider that the breakdown point (3,750) would be expected to draw selling pressure if market bears were setting the technical tone.)

Charting a bullish February start: S&P 500 spikes from major support

More broadly, the prevailing upturn punctuates a bullish reversal from the 50-day moving average.

Delving deeper, the post-breakout low (3,662) — also the January low — is closely followed by major support at 3,646. (The November peak (3,645.99) and early-December gap (3,645.87) closely matched.)

Tactically, the S&P 3,646 area marks likely last-ditch support. An eventual violation would raise an intermediate-term caution flag. (This area corresponds to the Dow industrials’ recent successful test of the mid-November range top.)

Beyond technical levels, the S&P 500’s intermediate-term bias remains bullish, based on today’s backdrop.

Also see: Charting a market whipsaw: Nasdaq, Dow industrials hold key 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.

Charting a bullish February start: S&P 500 spikes from major support

Drilling down further, the SPDR S&P Biotech ETF
XBI,
+1.48%
 is acting well technically.

As illustrated, the group effectively flatlined amid the recent market downturn, before rising to tag a nominal record high.

The prevailing upturn has been fueled by a volume uptick to punctuate a late-January flag-like pattern.

Tactically, trendline support closely matches the former range bottom, circa 150. A sustained posture higher signals a firmly-bullish bias.

Charting a bullish February start: S&P 500 spikes from major support

Meanwhile, the SPDR S&P Regional Banking ETF
KRE,
+2.79%
 is also technically well positioned. (Yield = 2.8%.)

The group started the year with a breakout, gapping to two-year highs. The upturn punctuated an unusually tight December range.

More immediately, the prevailing pullback has been underpinned by the top of the gap (54.00), placing the group 8.1% under the January peak.

Tactically, trendline support roughly tracks the 50-day moving average and is followed by the breakout point (51.70). The prevailing uptrend is intact barring a violation.

Charting a bullish February start: S&P 500 spikes from major support

Initially profiled Jan. 8 — amid the break atop trendline resistance — Teledoc Health, Inc.
TDOC,
+2.09%
 has returned 15.4% and remains well positioned.

Late last month, the shares knifed to record highs, rising amid a nearly straightline strong-volume spike.

The subsequent pullback has been comparably flat, fueled by decreased volume, placing the shares 11.6% under the January peak. Tactically, the August peak (253.00) marks an inflection point and is followed by the firmer breakout point (235.00).

More broadly, the shares are well positioned on the three-year chart, digesting a break from the prolonged late-2020 range.

Charting a bullish February start: S&P 500 spikes from major support

Eagle Materials, Inc.
EXP,
+0.20%
 is a mid-cap producer of heavy-construction and light-building materials.

Technically, the shares started January with a breakout, gapping to three-year highs amid a volume spike. The subsequent range is a bullish continuation pattern, underpinned by the top of the gap (106.80).

More immediately, the prevailing upturn has been fueled by increased volume — following the company’s better-than-expected third-quarter results, released Thursday — placing the range top under siege. A near-term target projects to the 122 area on follow-through.

Charting a bullish February start: S&P 500 spikes from major support

Finally, Toll Brothers, Inc.
TOL,
+2.05%
 is a well positioned large-cap homebuilder.

As illustrated, the shares have recently knifed to 15-year highs, clearing resistance matching the October and December peaks.

The subsequent flattish pullback places the shares near the breakout point, and 6.5% under the January peak.

On a granular note, Monday’s session low (49.51) almost precisely matched the December peak (49.52) and has been punctuated by a bullish reversal. The prevailing rally attempt is intact barring a violation of this area.

More broadly, the shares are well positioned on the three-year chart, building on the massive 2020 V-shaped reversal. An intermediate-term target projects to the 58 area.

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

Netgear, Inc.

NTGR

Feb. 1

Avis Budget Group, Inc.

CAR

Feb. 1

Capital One Financial Corp.

COF

Jan. 29

NetApp, Inc.

NTAP

Jan. 29

Aptiv, plc

APTV

Jan. 29

Rio Tinto Group

RIO

Jan. 26

Sorrento Therapeutics, Inc.

SRNE

Jan. 26

Netflix, Inc.

NFLX

Jan. 25

Cummins, Inc.

CMI

Jan. 25

Invesco Solar ETF

TAN

Jan. 22

Magna International, Inc.

MGA

Jan. 22

M.D.C. Holdings, Inc.

MDC

Jan. 22

Electronic Arts, Inc.

EA

Jan. 21

Zebra Technologies Corp.

ZBRA

Jan. 14

Juniper Networks, Inc.

JNPR

Jan. 14

Chegg, Inc.

CHGG

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

Skyworks Solutions, Inc.

SWKS

Jan. 7

Financial Select Sector SPDR

XLF

Jan. 7

FireEye, Inc.

FEYE

Jan. 5

Check Point Software Technologies

CHKP

Jan. 4

Synaptics, Inc.

SYNA

Jan. 4

Sunrun, Inc.

RUN

Dec. 23

ShockWave Medical, Inc.

SWAV

Dec. 23

JPMorgan Chase & Co.

JPM

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

Calix, Inc.

CALX

Dec. 17

Elastic N.V.

ESTC

Dec. 17

Cerner Corp.

CERN

Dec. 17

Tenet Healthcare Corp.

THC

Dec. 16

Williams-Sonoma, Inc.

WSM

Dec. 15

iShares Nasdaq Biotechnology ETF

IBB

Dec. 15

SDPR S&P Regional Banking ETF

KRE

Dec. 14

Etsy, Inc.

ETSY

Dec. 14

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

Dillard’s, Inc.

DDS

Dec. 4

Spotify Technology S.A.

SPOT

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

American Airlines Group, Inc.

AAL

Nov. 30

Zillow Group, Inc.

ZG

Nov. 23

Bank of America Corp.

BAC

Nov. 20

SPDR S&P Oil & Gas Exploration and Production ETF

XOP

Nov. 20

MetLife, Inc.

MET

Nov. 19

Kohl’s Corp.

KSS

Nov. 18

Applied Materials, Inc.

AMAT

Nov. 17

RingCentral, Inc.

RNG

Nov. 13

Regions Financial Corp.

RF

Nov. 13

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

Keysight Technologies, Inc.

KEYS

Nov. 4

Harley-Davidson, Inc.

HOG

Nov. 4

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

First Solar, Inc.

FSLR

Oct. 13

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

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

Deere & Co.

DE

Aug. 24

Johnson Controls International

JCI

Aug. 21

Canadian Solar, Inc.

CSIQ

Aug. 20

General Motors Co.

GM

Aug. 20

Builders FirstSource, Inc.

BLDR

Aug. 18

Enphase Energy, Inc.

ENPH

Aug. 13

Freeport McMoRan, Inc.

FCX

Aug. 10

Industrial Select Sector SPDR

XLI

Aug. 6

Penn National Gaming, Inc.

PENN

July 30

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

Consumer Discretionary Select Sector SPDR

XLY

July 13

SunPower Corp.

SPWR

July 13

Danaher Corp.

DHR

June 24

Fiverr International, Ltd.

FVRR

June 19

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

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

iShares MSCI Emerging Markets ETF

EEM

Mar. 19

Microsoft Corp.

MSFT

Feb. 22

* Click each symbol for current chart.

 

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