The Technical Indicator: Charting a shaky October start, S&P 500 challenging key support (2,960)

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Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.

Technically speaking, the major U.S. benchmarks kick off October against a backdrop that is not one-size-fits-all.

On a headline basis, the Nasdaq Composite has registered a bearish divergence, recently placing distance under its 50-day moving average. Meanwhile, the S&P 500 remains comparably resilient, though a retest of key support (2,960) is underway Tuesday, to start the fourth quarter.

Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, -1.03%  hourly chart highlights the past two weeks.

As illustrated, the S&P has thus far maintained notable support. On a headline basis, the downturn has been underpinned by the 50-day moving average, currently 2,948.

Separately, recall that last week’s close (2,961.8) registered slightly above the top of the September gap (2,960). The S&P has yet to close under the 2,960 area, though the latest retest is underway Tuesday.

Meanwhile, the Dow Jones Industrial Average DJIA, -1.09%  is traversing an increasingly familiar range.

Recall that last week’s low (26,705) registered slightly above the April peak (26,696) an area better illustrated on the daily chart.

Conversely, the range top (27,080) matches the July gap (27,088), an area also detailed on the daily chart.

Against this backdrop, the Nasdaq Composite COMP, -0.86%  remains the weakest major benchmark.

Consider that the September close (7,999.34) — also the third-quarter close — registered fractionally under the 8,000 mark.

But more importantly, the Nasdaq remains capped by its 50-day moving average, and major resistance (8,059), areas also detailed on the daily chart below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has violated major support.

The familiar area matches the July gap (8,059), the top of the September gap (8,061) and the 50-day moving average, currently 8,033. Viewed in isolation, the Nasdaq’s downturn raises an intermediate-term caution flag.

Looking elsewhere, the Dow Jones Industrial Average remains comparably stronger than the Nasdaq.

Still, the index is traversing a lower plateau. Recall that the range top (27,080), established last week, closely matches the July gap (27,088).

Conversely, last week’s low (26,705) roughly matched the April peak (26,696).

More broadly, the index has maintained a posture comfortably atop its 50-day moving average, currently 26,565. Delving deeper, the Dow’s intermediate-term bias remains bullish barring a violation of the August range top (26,427).

Meanwhile, the S&P 500 has also maintained next support.

Familiar floors match the September gap (2,960) and the 50-day moving average, currently 2,948. Conversely, recall that the September peak (3,022) registered just six points under the S&P’s all-time high.

The bigger picture

As detailed above, the prevailing bigger-picture backdrop is not one-size-fits-all.

To start, the S&P 500 and Dow industrials have largely absorbed the late-September downturn, maintaining next support — the S&P 2,960 and Dow 26,700 areas. Each benchmark’s intermediate-term bias remains bullish.

Meanwhile, the comparably weaker Nasdaq Composite has registered three straight closes under the 50-day moving average. Its intermediate-term bias remains bearish-leaning, pending repairs.

Moving to the small-caps, the iShares Russell 2000 ETF is pressing its marquee 200-day moving average, currently 151.34.

Monday’s close (151.34) matched the trending indicator, and an extended retest remains underway. Note that the 200-day has marked a 2019 bull-bear inflection point.

Meanwhile, the SPDR S&P MidCap 400 has thus far maintained its 50-day moving average, currently 349.05. Here again, the 50-day has marked an inflection point.

More broadly, the early-September rallies registered as directionally sharp, while the subsequent downturns, though admittedly persistent, have been comparably flat.

Looking elsewhere, the SPDR Trust S&P 500 remains comparably stronger than the small- and mid-caps.

Its prevailing pullback has thus far been underpinned by major support matching the May peak (294.95) and the 50-day moving average, currently 294.62.

The latest retest of this area is underway early Tuesday, to start October.

Placing a finer point on the S&P 500, its backdrop remains relatively straightforward.

To start, the S&P has asserted a lower plateau capped by its breakout point (2,989). Consecutive session highs last week closely matched resistance.

Still, the S&P has thus far maintained next support, an area matching the top of the September gap (2,960).

Delving deeper, the 50-day moving average, currently 2,948, is closely followed by more important support at the former range top (2,943). As detailed repeatedly, the S&P 500’s intermediate-term bias remains bullish barring a violation of this area.

Beyond technical levels, a prevailing “watch out” is that an early-month downdraft surfaces to start October, a la the damaging December, May and August market downdrafts. The next several sessions will likely add color.

Also see: Charting a delayed breakout attempt, S&P 500 hesitates near record territory.

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 SPDR Gold Shares ETF’s GLD, +0.73%  backdrop has taken a tenuous technical turn.

As illustrated, the shares have tagged nearly two-month lows, violating trendline support closely tracking the 50-day moving average.

The downturn signals an intermediate-term trend shift, also resolving a smallish head-and-shoulders top, a pattern defined by the mid-August peak and September peaks.

Tactically, the breakdown point pivots to resistance (140.00), an area roughly matching the trendline. A swift reversal atop resistance would neutralize the prevailing downturn. Conversely, deeper support matches the August breakout point, circa 136.50.

Much more broadly, consider that major support matches the ascending 200-day moving average, currently 128.25, and the June gap (130.19). The GLD’s longer-term bias remains bullish barring a violation of this area.

Similarly, the United States Oil Fund’s USO, -1.81%  prevailing downturn has inflicted damage. The fund tracks the price of West Texas Intermediate (WTI) light, sweet crude oil.

On a headline basis, the shares have staged a round-trip back to the mid-September low, prices prevailing immediately before an attack on Saudi Arabia temporarily halted about one half of the country’s oil production. (Also about 5% global daily oil production.)

Production has since been restored, perhaps more quickly than expected, pressuring prices.

Technically, the USO has violated its 50- and 200-day moving averages, as well as trendline support pinned to the April peak. Major resistance broadly spans from about 11.50 to 11.80, and a posture under this area signals a bearish intermediate-term bias. The pending retest from underneath will likely add color.

Moving to specific names, Dow 30 component Apple, Inc. AAPL, +0.43%  is acting well technically.

The shares initially spiked three weeks ago, gapping to 11-month highs after the company introduced several new products.

The subsequent pullback has been orderly, underpinned by support — the 216.70-to-217.70 area, detailed previously — levels closely matching the September gap. (See the Sept. 12 review.)

Tactically, a near-term target continues to project to the 230 area, and is increasingly within view.

Conversely, trendline support matches the 210 breakout point, and Apple’s intermediate-term bias remains firmly bullish barring a violation.

Ross Stores, Inc. ROST, -0.09%  is a well positioned large-cap retailer.

As illustrated, the shares have rallied to resistance, rising to challenge all-time highs.

The upturn comes from a tight September range — a coiled spring — laying the groundwork for a potentially decisive breakout. A near-term target projects to the 114 area on follow-through.

Conversely, trendline support is rising toward the former range top, circa 107.00, and a breakout attempt is in play barring a violation.

Tiffany & Co. TIF, -1.12%  is a large-cap specialty retailer showing signs of life. (Yield = 2.5%.)

Technically, the shares staged a steep early-September spike, clearing trendline resistance and the major moving averages.

The subsequent pullback places the shares at an attractive entry 6.9% under the September peak. Tactically, the 50-day moving average, currently 89.30, closely matches trendline support, and the rally attempt is intact barring a violation.

Finally, Seattle Genetics, Inc. SGEN, +0.74%  is a large-cap biotech name taking flight.

As illustrated, the shares have knifed to all-time highs, rising after the company reported positive trial results for its bladder cancer treatment.

Though near-term extended, the strong-volume spike is longer-term bullish, and the shares are attractive on a pullback.. Notable support matches the breakout point, circa 81.00.

More broadly, the shares are well positioned on the two-year chart, rising from an ascending triangle pinned to the December 2018 low.

Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.

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
Emerson Electric Co. EMR Sept. 30
PPG Industries, Inc. PPG Sept. 30
V.F. Corp. VFC Sept. 30
Taiwan Semiconductor Manufacturing Co. TSM Sept. 27
Whirlpool Corp. WHR Sept. 27
RH RH Sept. 27
CDW Corp. CDW Sept. 27
Sony Corp. SNE Sept. 26
AT&T, Inc. T Sept. 26
Nike, Inc. NKE Sept. 26
Toll Brothers, Inc. TOL Sept.25
Synaptics, Inc. SYNA Sept.25
Group 1 Automotive, Inc. GPI Sept.25
Proofpoint, Inc. PFPT Sept. 24
Apache Corp. APA Sept. 24
Teledoc Health, Inc. TDOC Sept. 23
Simon Property Group, Inc. SPG Sept. 23
iShares Japan ETF EWJ Sept. 20
Eaton Corp. ETN Sept. 20
Ambarella, Inc. AMBA Sept. 19
Intel Corp. INTC Sept. 18
Keysight Technologies, Inc. KEYS Sept. 18
Packaging Corp. of America PKG Sept. 18
JPMorgan Chase & Co. JPM Sept. 16
Guidewire Software, Inc. GWRE Sept. 16
Energy Select Sector SPDR XLE Sept. 16
SPDR Oil and Gas Exploration & Production ETF XOP Sept. 13
National Oilwell Varco, Inc. NOV Sept. 13
iShares Japan ETF EWJ Sept. 13
Industrial Select Sector SPDR XLI Sept. 12
Boeing Co. BA Sept. 12
Nevro Corp. NVRO Sept. 12
VanEck Vectors Semiconductor ETF SMH Sept. 11
Five Below, Inc. FIVE Sept. 11
Kansas City Southern KSU Sept. 10
Zumiez, Inc. ZUMZ Sept. 9
Integra LifeSciences Holdings Corp. IART Sept. 9
Bitauto Holdings Ltd. BITA Sept. 6
CVS Corp. CVS Sept. 5
Seagate Technology STX Sept. 4
Universal Health Services, Inc. UHS Sept. 4
Estee Lauder Co., Inc. EL Sept. 4
Lam Research Corp. LRCX Sept. 3
Lowe’s Companies, Inc. LOW Aug. 29
M.D.C. Holdings, Inc. MDC Aug. 29
PepsiCo, Inc. PEP Aug. 28
Urban Outfitters, Inc. URBN Aug. 28
iShares U.S. Home Construction ETF ITB Aug. 27
CyrusOne, Inc. CONE Aug. 27
Western Digital Corp. WDC Aug. 23
VanEck Vectors Retail ETF RTH Aug. 22
Apple, Inc. AAPL Aug. 21
SPDR S&P Homebuilders ETF XHB Aug. 21
Reliance Steel & Aluminum Co. RS Aug. 21
KLA Corp. KLAC Aug. 20
XPO Logistics, Inc. XPO Aug. 20
Itron, Inc. ITRI Aug. 19
Cirrus Logic CRUS Aug. 16
Builders FirstSource, Inc. BLDR Aug. 16
Kellogg Co. K Aug. 13
L3Harris Technologies, Inc. LHX Aug. 12
Akamai Technologies, Inc. AKAM Aug. 8
D.R. Horton, Inc. DHI July 31
Teradyne, Inc. TER July 30
United Parcel Service, Inc. UPS July 29
Franco-Nevada Corp. FNV July 18
Texas Instruments, Inc. TXN July 15
J.B. Hunt Transport Services, Inc. JBHT July 15
Owens Corning OC July 11
Twitter, Inc. TWTR July 10
Inphi Corp. IPHI July 8
Shake Shack, Inc. SHAK June 28
FMC Corp. FMC June 27
Home Depot, Inc. HD June 19
Lululemon Athletica, Inc. LULU June 19
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
Coca-Cola Co. KO June 6
Dollar General Corp. DG June 5
SolarEdge Technologies, Inc. SEDG May 16
Johnson Controls International JCI May 10
Take-Two Interactive Software, Inc. TTWO May 2
Jacobs Engineering Group, Inc. JEC May 2
Consumer Staples Select Sector SPDR XLP Mar. 28
iShares U.S. Real Estate ETF IYR Mar. 13
Costco Wholesale Corp. COST Mar. 6
Vulcan Materials Co. VMC Mar. 1
Walmart, Inc. WMT Feb. 22
Microsoft Corp. MSFT Feb. 22
Procter & Gamble Co. PG Feb. 8
Applied Materials, Inc. AMAT Jan. 25
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