The Technical Indicator: Charting October technical damage, S&P 500 whipsaws at major resistance

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Technically speaking, the major U.S. benchmarks continue to whipsaw amid a volatile October start.

Against this backdrop, the S&P 500’s intermediate-term bias remains in flux as it vacillates near a headline bull-bear inflection point (2,940). More broadly, technical damage has been inflicted, and the bigger-picture backdrop is not one-size-fits-all.

Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, -1.01%  hourly chart highlights the past two weeks.

As illustrated, the S&P has registered a sizeable early-October whipsaw.

Amid the volatility, the rally attempt has stalled at the 2,960 mark, a level matching the top of the September gap.

Separately, recall that major resistance matches the August range top (2,943) and the 50-day moving average, currently 2,938. Monday’s close (2,938.8) matched the inflection point, and selling pressure has surfaced early Tuesday.

Similarly, the Dow Jones Industrial Average DJIA, -0.72%  has struggled to sustain a rally atop notable resistance.

Here again, the index has reversed back under its 50-day moving average, currently 26,470, early Tuesday.

Slightly more broadly, recall that the Dow rallied last week from a successful test of the 200-day moving average.

Meanwhile, the Nasdaq Composite’s COMP, -1.04%  backdrop is equally jagged.

Its corresponding rally attempt has stalled near the 8,000 mark, an area matching the 50-day moving average, currently 7,992.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq’s six-month backdrop remains the weakest of the big three U.S. benchmarks.

This was the first index to break back to the former August range, and it subsequently failed a retest of the breakdown point (8,059) from underneath. The Nasdaq’s intermediate-term bias remains bearish pending a rally atop this area.

Separately, the Nasdaq successfully retested its 200-day moving average at the October low, preserving a bullish longer-term bias.

Looking elsewhere, the Dow Jones Industrial Average is off to a comparably volatile October start.

To reiterate, the index has struggled to sustain a rally atop the 50-day moving average, currently 26,470.

Delving deeper, recall that an intermediate-term inflection point matches the August range top (26,427) and the bottom of the October gap (26,438).

Here again, the Dow maintained its 200-day moving average at the October low, preserving a bullish longer-term bias.

Not surprisingly, the S&P 500 has registered an equally jagged fourth-quarter start.

Tactically, an intermediate-term inflection point matches the August range top (2,943), and the 50-day moving average, currently 2,938, levels also detailed on the hourly chart.

More broadly, consider that the S&P 500 has alternated ranges across four straight months — July, August, September and October.

The bigger picture

As detailed above, the major U.S. benchmarks continue to whipsaw amid a prolonged early-October volatility spike.

Against this backdrop, technical damage has been inflicted, and the bigger-picture backdrop is not one-size-fits-all.

On a headline basis, the Nasdaq Composite has asserted a bearish intermediate-term bias, while the Dow industrials and S&P 500 have vacillated near key inflection points — the S&P 2,940, and Dow 26,430 areas.

Moving to the small-caps, the iShares Russell 2000 ETF has maintained its range bottom.

Still, the subsequent rally attempt has been flat, fueled by decreased volume, and the small-cap benchmark remains capped by its major moving averages. Bearish price action.

Meanwhile, the SPDR S&P MidCap 400 has whipsawed at its 200-day moving average, currently 344.00.

Here again, the upturn from the October low has been punctuated by decreased volume.

Looking elsewhere, the SPDR Trust S&P 500 has reverted to the August range to start October.

Overhead inflection points match the 50-day moving average, currently 293.60, and the May peak (294.95).

Against this backdrop, the S&P 500 has more or less nailed major resistance.

As detailed repeatedly, an intermediate-term inflection point matches the August range top (2,943) and the 50-day moving average, currently 2,938.

Monday’s close (2,938.8) matched the inflection point, and respectable selling pressure has surfaced early Tuesday.

Tactically, the S&P’s backdrop supports a bearish intermediate-term bias to the extent it’s capped by the 2,940 area.

Conversely, the August gap spans from about 2,898 to 2,912 and is followed by the 2,873 support, an area that effectively underpinned last week’s downdraft. (See the hourly chart.)

Delving deeper, the 200-day moving average, currently 2,845, is followed by the 2,817 support, a level defining the late-2018, mini-crash range top. The S&P 500’s longer-term bias remains bullish barring a violation of these areas.

Also see: Charting a shaky October start, S&P 500 challenges 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.

Drilling down further, the VanEck Vectors Semiconductor ETF SMH, -1.80%  remains a pocket of relative strength.

Technically, the group is rising from a bullish ascending triangle pinned to the May low.

Within the pattern, the 50-day moving average closely matches trendline support, circa 115.50. A breakout attempt is in play barring a violation. Delving deeper, major support matches the 110 mark, an area also illustrated on the three-year chart.

Conversely, the range top matches the group’s record peak. Eventual follow-through higher opens the path to an intermediate-term target in the 132 area.

Moving to specific names, Dow 30 component Apple, Inc. AAPL, -0.19%  continues to act well technically.

As illustrated, the shares have tagged 52-week highs, reaching the 230 projected target, detailed repeatedly. (See the Sept. 9 review, and the Oct. 1 review.)

Monday’s session high (229.93) closely matched the target. Apple’s slightly more distant all-time high (233.47) — established Oct. 3, 2018 — is increasingly within view.

Tactically, a near-term floor matches the breakout point, circa 217.00, and is followed by trendline support roughly matching the 210 inflection point. Apple’s intermediate-term bias remains firmly bullish barring a violation.

TJX Companies, Inc. TJX, -0.29%  is a well positioned large-cap retailer. (Yield = 1.7%.)

Technically, the shares have staged an orderly pullback from the range top, an area matching record territory, also illustrated on the three-year chart.

Tactically, the 50-day moving average has marked an inflection point, and a breakout attempt is in play barring a violation. A near-term target projects to the 60 area on follow-through.

Profiled Aug. 29, M.D.C. Holdings, Inc. MDC, +0.48%  has returned 17.6% and remains well positioned.

The shares initially spiked three weeks ago, knifing to 12-year highs after the company reported strong preliminary quarter-to-date new orders.

The ensuing pullback has been flat, fueled by decreased volume, positioning the shares to build on the initial breakout. Tactically, the top of the gap (42.00) closely matches the range bottom, and the prevailing uptrend is firmly intact barring a violation.

Finally, PriceSmart, Inc. PSMT, -1.02%  is a well positioned discount retailer.

Late last month, the shares gapped sharply higher, rising after the Sept. 23 announcement that the company will be added to the S&P SmallCap 600 Index. (PriceSmart was subsequently added to the index on Sept. 26.)

The ensuing pullback places the shares 11% under the September peak. Tactically, the top of the gap (65.25) closely matches the breakout point, and a posture higher supports a bullish bias.

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.