The Technical Indicator: Charting the S&P 500’s approach of the 4,000 mark

Before detailing the U.S. markets’ wider view, the S&P 500’s
SPX,
-0.49%
 hourly chart highlights the past two weeks.

As illustrated, the S&P has rallied to the range top, rising to challenge record highs.

The prevailing upturn punctuates last week’s retest of the 50-day moving average.

More immediately, the Feb. peak (3,950) remains an inflection point, and is followed by the 3,915 support.

Similarly, the Dow Jones Industrial Average
DJIA,
-0.41%
 has extended its rally attempt, rising to challenge record territory.

Here again, the prevailing upturn punctuates a bullish reversal from two-week lows.

Tactically, near-term inflection points in the 32,500 and 32,800 areas remain in play.

Perhaps not surprisingly, the Nasdaq Composite
COMP,
-0.42%
remains the weakest major benchmark.

As illustrated, the index is not challenging record highs.

Instead, the index is vying to simply maintain major support matching the 2020 peak (12,973), an area also illustrated below. A potentially consequential retest remains underway.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has registered an extended test of major support (12,973).

The specific area matches the 2020 peak (12,973) a level that also marked the early-March breakdown point. (Recall the initial violation of the 2020 peak punctuated a head-and-shoulders top, a bearish pattern that was subsequently neutralized by the swift reversal back to the range, fueled by two 7-to-1 up days.)

Tactically, a sustained violation of support would signal a bearish intermediate-term bias.

Delving deeper, significant support (12,607) closely matches the March closing low (12,609). (See for instance, the Jan. 11 review.)

Looking elsewhere, the Dow Jones Industrial Average remains the strongest major benchmark.

Recall that last week’s low (32,071) registered above the breakout point (32,009) to punctuate a successful retest.

The Dow has subsequently knifed from support, notching consecutive record closes.

More broadly, the index has registered directionally sharp March rallies, and a comparably flattish intervening pullback. Bullish momentum is intact.

Meanwhile, the S&P 500 has staged a bullish reversal from its 50-day moving average.

The prevailing upturn places the marquee 4,000 mark within striking distance.

The bigger picture

Broadly speaking, the prevailing backdrop is largely bullish, though it is not one-size-fits-all.

On a headline basis, the S&P 500 and Dow industrials continue to press record territory.

Meanwhile, the Nasdaq Composite remains far from record highs, as it vies to simply maintain major support (12,973). A potentially consequential retest of this area remains underway.

Moving to the small-caps, the iShares Russell 2000 ETF
IWM,
+1.44%
 has thus far weathered a respectable pullback from recent record highs.

Still, the small-cap benchmark has asserted a posture under its 50-day moving average (220.65) and the former range bottom (216.70).

Deeper inflection points match the March closing low (213.19) and absolute March low (207.21). An eventual violation would mark a “lower low” — and punctuate a modified double top — raising an intermediate-term caution flag.

Meanwhile, the SPDR S&P MidCap 400 ETF
MDY,
+0.67%
 remains incrementally stronger.

As illustrated, the MDY has maintained a posture comfortably atop its 50-day moving average, outpacing the small-caps.

Separately, the prevailing bullish reversal has been punctuated by a rally atop the former breakout point.

Looking elsewhere, the SPDR Trust S&P 500
SPY,
-0.52%
 has also reclaimed its breakdown point, an area matching the February peak.

The strong-volume bullish reversal punctuates a successful test of the 50-day moving average.

Placing a finer point on the S&P 500, the index has rallied toward its range top, rising to challenge record highs.

The prevailing upturn punctuates a jagged test of major support (3,870) and the 50-day moving average, currently 3,881.

Within the range, the Feb. peak (3,950) remains an inflection point.

More broadly, the prevailing bullish reversal places record highs under siege.

The S&P 500’s record close (3,974.54) and absolute record peak (3,983.87) rest just overhead, and are closely followed by the marquee 4,000 mark.

Also recall that near- to intermediate-term targets technically project to the 4,050 and 4,085 areas, detailed previously.

More broadly, the S&P 500’s successful retest of the 50-day moving average — combined with the prevailing series of “higher highs” and “higher lows” — signal a firmly-intact intermediate-term uptrend. The S&P 500’s path of least resistance continues to point higher.

Also see: Bull trend intact: S&P 500 retests the breakdown point.

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 Materials Select Sector SPDR
XLB,
-0.37%
 is acting well technically. (Yield = 1.7%.)

As illustrated, the group has tagged a nominal record high. The prevailing upturn punctuates a tight mid-March range, as well as an extended February test of the 50-day moving average.

Tactically, the 50-day moving average, currently 75.35, is rising toward the range bottom (75.80). The prevailing rally attempt is firmly-intact barring a violation.

Initially profiled March 2, Dow 30 component Boeing Co.
BA,
+0.31%
 has returned 11.6% and remains well positioned.

Earlier this month, the shares knifed to 52-week highs, clearing resistance matching the December peak. The subsequent pullback has been fueled by decreased volume, placing the shares 11.2% under the March peak.

Tactically, the breakout point, circa 240, is followed by the post-breakout low (231.70). A sustained posture higher signals a firmly-bullish bias.

Target Corp.
TGT,
+0.69%
 is a large-cap retailer coming to life. (Yield = 1.4%.)

Technically, the shares have knifed atop trendline resistance, rising to challenge record territory.

The prevailing upturn has been fueled by tandem volume spikes — and subsequent sideways price action — laying the groundwork for a potential breakout.

Slightly more broadly, the shares are rising from a year-to-date range hinged to the steep early-January rally. An intermediate-term target projects to the 222 area on follow-through.

F5 Networks, Inc.
FFIV,
-1.37%
 is a well positioned large-cap networking name.

As illustrated, the shares are challenging a three-month range top matching record highs. The prevailing range is underpinned by gap support. (See the early-January gap and subsequent retest.)

Tactically, near-term support (204.60) is followed by the 50-day moving average, a recent bull-bear inflection point. A breakout attempt is in play barring a violation.

More broadly, the shares are well positioned on the three-year chart, rising from a continuation pattern hinged to the steep late-2020 rally.

Finally, Ternium S.A.
TX,
+3.47%
 is a well positioned large-cap Luxembourg-based steel producer. (Yield = 5.5%.)

The shares started March with a strong-volume breakout, reaching 34-month highs. The subsequent orderly range is a bullish continuation pattern.

More immediately, the prevailing upturn has been fueled by increased volume, improving the chances of more decisive follow-through. Tactically, a near-term floor matches the former range top (34.50). A breakout attempt is in play barring a violation.

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.