U.S. stocks are on the defensive early Friday, pressured amid a sell-the-news response to President-elect Joe Biden’s $1.9 trillion stimulus proposal, and after a mixed batch of quarterly earnings reports.
The early downturn punctuates largely sideways week-to-date price action, and has thus far inflicted limited damage in the broad sweep. A healthy mid-month consolidation phase remains underway.
Before detailing the U.S. markets’ wider view, the S&P 500’s US:SPX hourly chart highlights the past two weeks.
As illustrated, the S&P continues to digest its recent break to record highs.
With Friday’s early downturn, the index has ventured under its range bottom (3,783).
Delving deeper, near-term support (3,764) is followed by the 20-day moving average, currently 3,747, and a firmer floor in the 3,723-to-3,726 area.
Meanwhile, the Dow Jones Industrial Average US:DJIA has pulled in from its range top, and Thursday’s nominal record high.
Here again, the index briefly ventured under its range bottom (30,793) early Friday.
Deeper floors are not so well-defined — at least not in the immediate zone — though inflection points rest at 30,674 (first-day-of-the-year peak, capping a bearish reversal) and 30,525.
On further weakness, the November peak (30,116) is followed by major support (29,964), an area also detailed on the daily chart.
Similarly, the Nasdaq Composite US:COMP has pulled in from its range top, as well as Thursday’s nominal record high.
(The S&P 500 was the lone big three U.S. benchmark not to tag a record high Thursday.)
Tactically, the breakout point (12,973) is closely followed by the Nasdaq’s former projected target (12,920).
Widening the view to six months adds perspective.
On this wider view, the Nasdaq continues to digest its January breakout amid still comfortably bullish price action.
Tactically, the breakout point (12,973) is followed by the ascending 20-day moving average, currently 12,902. The Nasdaq has not closed under its 20-day since Nov. 3.
Delving deeper, the former breakout point (12,607) underpinned the early-January whipsaw — (the long red bar, also detailed on the hourly chart) — and is followed by the 50-day moving average, currently 12,425.
The Nasdaq’s backdrop supports a bullish intermediate-term bias barring a violation of these areas.
Looking elsewhere, the Dow Jones Industrial Average is digesting a more aggressive breakout.
As detailed repeatedly, the initial spike marked a two standard deviation breakout, encompassing three straight closes atop the 20-day Bollinger bands.
The subsequent flattish pullback signals still muted selling pressure, even accounting for Friday’s early downturn.
Tactically, the December gap (30,283) is followed by the 50-day moving average, currently 30,996, and the mid-November range top (29,964). A sustained posture atop these areas signals a bullish intermediate-term bias.
Similarly, the S&P 500 has sustained a decisive January break to record highs.
The prevailing pullback punctuates a two standard deviation breakout, encompassing consecutive closes atop the 20-day volatility bands.
Separately, recall that the 20-day moving average, currently 3,747, has underpinned recent price action. Friday’s early session low (3,749) has registered nearby.
The bigger picture
U.S. stocks are on the defensive early Friday, pressured amid a sell-the-news response to President-elect Joe Biden’s $1.9 trillion stimulus proposal, and after a mixed batch of quarterly earnings reports.
The early downturn punctuates largely sideways week-to-date price action, and has thus far inflicted limited damage in the broad sweep. Still, the downturn is worth tracking for potential acceleration.
Moving to the small-caps, the iShares Russell 2000 ETF US:IWM has extended its strong 2021 start.
In the process, the prevailing breakout has expanded to an unusually strong 6.3% margin to start the new year.
Similarly, the SPDR S&P MidCap 400 ETF US:MDY has consolidated recent gains in still grinding-higher form.
Combined, the small- and mid-cap breakouts have registered as statistically unusual, and signal a rotational market backdrop.
Looking elsewhere, the SPDR Trust S&P 500 US:SPY is digesting a less-decisive breakout.
Still, the prevailing bull flag has formed amid decreased volume — near record highs — and is a bullish continuation pattern.
Placing a finer point on the S&P 500, the index has asserted a six-session holding pattern.
But against this backdrop, the S&P has ventured under its range bottom (3,783) early Friday.
Tactically, modest near-term support (3,764) is followed by a firmer floor in the 3,723-to-3,726 area.
Widening to the six-month view, the prevailing “expected” pullback punctuates a an unusually strong two standard deviation breakout, encompassing consecutive closes atop the 20-day Bollinger bands.
Put differently, a healthy consolidation phase remains underway, amid a still comfortably bullish intermediate-term backdrop.
Tactically, the 20-day moving average, currently 3,747, is followed by notable support in the 3,723-to-3,726 area.
The 20-day moving average has effectively defined the recent trend, and Friday’s early session low (3,749) registered nearby.
Delving deeper, the S&P’s 50-day moving average, currently 3,667, is followed by the former breakout point (3,646), a level precisely matching the early-December gap and the mid-November range top.
As always, it’s not just what an index does, it’s how it does it. But broadly speaking, the S&P 500’s intermediate-term bias remains bullish barring a violation of these areas.
Friday’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 Materials Select Sector SPDR US:XLB is acting well technically. (Yield = 1.6%.)
Earlier this month, the group knifed to record highs, clearing well-defined resistance amid a volume spike. The breakout punctuates a tight December range — a coiled spring — laying the groundwork for decisive follow-through.
More immediately, the prevailing bull flag has formed amid decreased volume, signaling still muted selling pressure.
Tactically, the post-breakout low (75.10) is followed by gap support (74.02) and the breakout point (72.30). The prevailing uptrend is firmly-intact barring a violation.
Initially profiled May 12, Qualcomm, Inc. US:QCOM has returned 99.9% and remains well positioned. (Yield = 1.6%.)
As illustrated, the shares have cleared the range top, tagging all-time highs amid a volume uptick. The modest breakout builds on the steep early-November gap higher.
Conversely, the breakout point (158.00) is followed by the ascending 50-day moving average (149.30), a level that has effectively defined the uptrend. The prevailing rally attempt is intact barring a violation.
Alaska Air Group, Inc. US:ALK is a well positioned large-cap name.
The shares initially spiked nine weeks ago, gapping atop the 50- and 200-day moving averages amid vaccine-fueled optimism.
The subsequent orderly range — a bullish continuation pattern — has been punctuated by Thursday’s strong-volume follow-through. An intermediate-term target projects to the 59 area.
Conversely, the breakout point (53.75) pivots to support. A sustained posture higher signals a comfortably bullish bias.
Initially profiled Dec. 23, Sunrun, Inc. US:RUN has returned 27.3% and remains well positioned.
Earlier this month, the shares knifed to all-time highs, rising after the Georgia Senate runoff elections resulted in a potential pending policy tailwind.
The subsequent pullback has been comparably flat, placing the shares near gap support (86.00) and 13.5% under the January peak.
Finally, Chevron Corp. is a large-cap oil and gas name coming to life. (Yield = 5.5%.)
Technically, the shares have rallied to the range top, rising to challenge seven-month highs.
The prevailing upturn punctuates a cup-and-handle defined by the October and December lows. An intermediate-term target projects to the 107 area on follow-through.
Separately, the prevailing breakout attempt originates from a successful test of the major moving averages to preserve a bullish a bullish bias. The January upturn dovetails with a golden cross, or bullish 50-day/200-day moving average crossover.
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 |
| Zebra Technologies Corp. | ZBRA | Jan. 14 |
| Juniper Networks, Inc. | JNPR | Jan. 14 |
| Fate Therapeutics, Inc. | FATE | Jan. 14 |
| SolarEdge Technologies, Inc. | SEDG | Jan. 12 |
| 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 |
| 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 |
| 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 |
| 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 |
| 8x8, 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 |
| 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 |
| 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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