The Technical Indicator: Charting a bullish technical tilt, Nasdaq ventures atop major resistance (8,060)

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Technically speaking, the major U.S. benchmarks have weathered an October market whipsaw, rising amid potentially consequential mid-month price action.

Against this backdrop, the S&P 500 has sustained its break to a higher plateau — atop the 2,940 area — while the Nasdaq Composite has belatedly cleared its corresponding resistance (8,060), venturing higher early Tuesday.

Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, +1.14%  hourly chart highlights the past two weeks.

As illustrated, the S&P has gapped atop major resistance matching the August range top (2,943) and the September gap (2,960). The latter pivots to first support.

Conversely, additional overhead matches the former breakdown point (2,989). The October peak (2,993), established Friday, registered nominally higher, and the prevailing pullback from this area has been flat. Constructive price action.

Similarly, the Dow Jones Industrial Average DJIA, +1.00%  has reclaimed key levels.

Consider that the top of last week’s gap (26,694) matched the April peak (26,696) an inflection point also detailed on the daily chart.

Here again, the initial selling pressure near the range top has registered as flat.

Against this backdrop, the Nasdaq Composite COMP, +1.30%  has reached a headline technical test.

Recall that last week’s close (8,057) matched major resistance (8,059), an intermediate-term inflection point, detailed repeatedly. An extended retest remains underway.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has gapped atop the 50-day moving average, rising to nail next resistance.

To reiterate, the July gap (8,059) closely matches the September gap (8,061) and marks a bull-bear inflection point. A close higher would mark an escape from the former August range, signaling a bullish intermediate-term bias. (Also see the Oct. 8 review.)

More broadly, the prevailing upturn punctuates a successful test of the 200-day moving average at the October low.

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

To reiterate, the top of last week’s gap (26,694) matched an inflection point at the April peak (26,696). The gap to a higher plateau is constructive.

The prevailing upturn builds on the Dow’s break atop the 50-day moving average and the August range top (26,427), signaling a bullish intermediate-term bias.

On further strength, additional overhead matches the July gap (27,088).

Similarly, the S&P 500 has knifed to a higher plateau.

Last week’s trade-fueled spike places the index above the August range top (2,943) and the September gap (2,960).

The bigger picture

Collectively, the major U.S. benchmarks have absorbed the early-October market downdraft.

On a headline basis, the S&P 500 and Dow industrials have reclaimed major resistance — levels matching the former August range top — while the Nasdaq Composite has nailed its corresponding resistance (8,060).

The Nasdaq has ventured atop the 8,060 area with Tuesday’s strong start, though as always, it’s the close that matters.

Moving to the small-caps, the iShares Russell 2000 ETF remains the weakest widely-tracked U.S. benchmark.

Still, the prevailing upturn places the 50-day moving average (150.57) and 200-day moving average (152.10) under siege. A close atop the trending indicators would mark technical progress.

Meanwhile, the SPDR S&P MidCap 400 has gapped atop its 50- and 200-day moving averages.

Recall that the 50-day moving average, currently 346.75, has marked a 2019 inflection point.

Looking elsewhere, the SPDR Trust S&P 500 SPY, +1.15%  has reached a higher plateau, rising atop major resistance matching the May peak (294.95).

More broadly, the SPY has flip-flopped ranges since July. Before October, the prior three ranges spanned almost precisely one month each.

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

To start, the index has reclaimed its 50-day moving average, currently 2,939, as well as major resistance matching the August range top (2,943) and the September gap (2,960).

From current levels, additional overhead matches the former breakdown point (2,989) and is followed by an inflection point, circa 3,007.

On further strength, the September peak (3,022) roughly matches the S&P’s record close (3,025.9) and absolute record peak (3,028), both established July 26. The pending retest from underneath should be a useful bull-bear gauge.

More broadly, the S&P 500’s escape from the former August range signals a bullish intermediate-term bias, to the extent it is sustained. The response to third-quarter earnings reports, set to begin this week, will also add color.

Also see: Charting October technical damage, S&P 500 whipsaws at major resistance.

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 iShares China Large-Cap ETF FXI, +0.97%  has come to life, rising amid optimism over China-U.S. trade talks.

As illustrated, the shares have recently averted a return to the August range, exhibiting relative strength versus the major U.S. benchmarks in this respect. The prevailing upturn preserves a bullish island reversal, defined by the August range, and related gaps.

More immediately, the shares have rallied atop trendline resistance (41.00) raising the flag to a trend shift. The upturn resolves a modified head-and-shoulders bottom defined by the May, August and September lows. (Combined, the FXI is rising from tandem high-reliability reversal patterns.)

Additional overhead matches the 200-day moving average, currently 41.87, and the September peak (41.97). A close atop this area would mark a “higher high” more firmly signaling a trend shift.

Moving to U.S. sectors, the iShares Transportation Average ETF IYT, +1.48%  is traversing a familiar range.

In fact, the range is so well-defined that the 50- and 200-day moving averages closely match, and almost precisely bisect it.

More broadly, the July and September peaks punctuated failed tests of the range top (failed breakout attempts), while the August and October lows have marked successful tests of the range bottom.

Tactically, the 185 area matches the group’s breakdown point as well as the major moving averages. A sustained break higher strengthens the bull case, likely opening the path to the next test of the range top. The next several sessions, and the response to key earnings reports, should add color.

Moving to specific names, Jabil Inc. JBL, +1.84%  is a well positioned large-cap contract manufacturer.

Late last month, the shares knifed to 13-year highs, rising after the company’s strong fourth-quarter results.

The ensuing pullback has been orderly, fueled by decreased volume, positioning the shares to build on the September spike. Tactically, a near-term floor matches the post-breakout low (34.10) and a posture higher supports a firmly bullish bias.

Skyworks Solutions, Inc. SWKS, +2.00%  is a large-cap semiconductor name, and an Apple, Inc. supplier. (Yield = 2.0%.)

Technically, the shares have recently gapped atop trendline resistance, reaching two-month highs after an analyst upgrade.

The rally punctuates a symmetrical triangle bisected by the major moving averages. Tactically, the top of the gap (83.60) closely matches the trendline, and the rally attempt is intact barring a violation.

Finally, Beazer Homes USA, Inc. BZH, +1.11%  is a small-cap homebuilder positioned to rise.

The shares started October with a bull-flag breakout, rising to 52-week highs. By comparison, the subsequent pullback has been flat, fueled by decreased volume, positioning the shares to extend the uptrend.

Tactically, the 20-day moving average has defined the trend, and is followed by the deeper breakout point (14.30). The uptrend is firmly intact barring a violation.

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.