The Technical Indicator: Charting the approach of Dow 30,000 as bullish sector rotation persists

Against this backdrop, the S&P 500 and Dow industrials have concurrently registered record closes, to start this week, amid still healthy market rotation and expanding sector participation.

Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, -0.23%  hourly chart highlights the past two weeks.

As illustrated, the S&P has extended its November rally, tagging a record close.

Tactically, Tuesday’s early session low (3,588.7) has matched support at the September peak (3,588), a level formerly marking the S&P’s all-time high.

More broadly, the prevailing upturn punctuates last week’s flag-like pattern, hinged to the steep early-November rally.

Similarly, the Dow Jones Industrial Average DJIA, -0.43%  has extended its November rally.

In its case, the blue-chip benchmark has registered a record close (29,950) as well as an absolute record peak (29,964).

The marquee 30,000 mark is firmly within view.

True to recent form, the Nasdaq Composite COMP, +0.08% remains in divergence mode.

This is the lone big three U.S. benchmark not to register a record close Monday.

Nonetheless, the index has maintained major support — the 11,450-to-11,460 area — and continues to generally hold its range top. Constructive price action.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has weathered last week’s downdraft from the range top.

Recall that the downturn has been underpinned by major support (11,460).

More immediately, the prevailing upturn places within view a retest of major resistance. Overhead inflection points match the October peak (11,965), the Nasdaq’s record close (12,056) and the November peak (12,108). (Also see the September peak (12,074), formerly the Nasdaq’s all-time high.)

Looking elsewhere, the Dow Jones Industrial Average has rallied to record highs.

The prevailing upturn punctuates a mid-November flag-like pattern, the tight range effectively underpinned by gap support (29,127).

To reiterate, the 30,000 mark is firmly within striking distance.

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

Meanwhile, the S&P 500 has rallied to register a record close.

The prevailing follow-through punctuates a flag-like pattern hinged to the steep early-November rally. Recall the October peak (3,550) remains an inflection point.

The bigger picture

Collectively, the bigger-picture backdrop continues to strengthen amid unusually strong November price action.

On a headline basis, the S&P 500 and Dow industrials have concurrently registered record closes.

Meanwhile, the Nasdaq Composite has not broken out, pressured at least partly as a source of funds deployed elsewhere. Very generally, the stay-at-home trade favored the technology sector, and recent vaccine progress has contributed to rotation elsewhere.

Against this backdrop, each big three U.S. benchmark’s intermediate-term bias remains bullish.

Moving to the small-caps, the iShares Russell 2000 ETF has extended a November breakout.

In the process, the small-cap benchmark has notched consecutive record closes, eclipsing its former record close (173.02), established August 2018.

Similarly, the SPDR S&P MidCap 400 ETF has registered consecutive record closes.

More broadly, the small- and mid-cap benchmarks are rising from tandem flag-like patterns hinged to the steep early-November rallies. Bullish price action.

Looking elsewhere, the SPDR Trust S&P 500 has tagged a record close amid a less-decisive breakout.

The prevailing upturn punctuates a double bottom defined by the September and October lows.

Placing a finer point on the S&P 500, the index is building on last Monday’s vaccine-fueled breakout, six sessions ago.

The ensuing pullback filled the gap, and the S&P has subsequently rallied to notch consecutive record closes. Bullish price action.

More broadly, the S&P 500 is rising from a flag-like pattern hinged to the steep early-November spike from major support (3,233).

The bull flag punctuates a double bottom — the W formation — defined by the September and October lows.

Against this backdrop, the S&P is traversing truly less-charted territory, capped only by its absolute record peak (3,646).

Tactically, the September peak (3,588) marks its first notable floor. Tuesday’s early session low (3,588.7) has matched the inflection point.

Beyond technical levels, the bigger-picture backdrop continues to strengthen amid healthy market rotation and expanding sector participation. The S&P 500’s path of least resistance points higher pending signs of a bearish pulse.

Also see: Charting market rotation: S&P 500, Dow industrials challenge record highs.

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 MSCI Japan ETF EWJ, -0.31%  has taken flight. (Yield = 2.0%.)

Specifically, the shares have knifed to 22-month highs, rising amid a massive two standard deviation breakout, encompassing four straight closes atop the 20-day Bollinger bands.

The subsequent flag pattern — the tight one-week range — positions the shares to build on the decisive breakout.

More broadly, the shares are pressing a truly longer-term range top, illustrated on the 24-year chart. Follow-through atop the 2018 peak (64.72) would place the shares at 20-year highs. The November peak (64.45) has registered nearby.

Moving to U.S. sectors, the SPDR S&P Retail ETF XRT, +0.19%  is challenging record highs.

In fact, the group has edged atop resistance matching the October peak, rising to notch a record close. The prevailing upturn punctuates a tight range, laying the groundwork for potentially more decisive follow-through.

Tactically, the group’s former range bottom (53.25) remains an inflection point. A breakout attempt is in play barring a violation.

More broadly, the group remains well positioned on the three-year chart, rising from a continuation pattern hinged to the massive early-2020 V-shaped reversal.

Meanwhile, the Consumer Staples Select Sector SPDR XLP, -0.29%  has reached record territory. (Yield = 2.5%.)

The prevailing upturn punctuates a double bottom defined by the September and October lows. An intermediate-term target projects to the 72.00 area on follow-through.

Conversely, the breakout point (66.80) pivots to support. A posture higher signals a firmly-bullish bias.

Moving to specific names, Applied Materials, Inc. AMAT, -0.22%  is a well positioned large-cap chip equipment name.

As illustrated, the shares have tagged a record close, rising after the company’s quarterly results, released late last week. The prevailing upturn builds on the steep early-November spike to all-time highs.

Tactically, the breakout point (69.90) pivots to support and is closely followed by the post-breakout low (69.10).

More broadly, the shares are well positioned on the four-year chart, rising to record territory from a multi-year cup-and-handle pattern.

Initially profiled July 13, SunPower Corp. SPWR, +3.54%  has returned 226% and remains well positioned.

Earlier this month, the shares knifed to five-year highs, clearing the October peak amid a volume spike. The ensuing pullback has been comparably flat, fueled by decreased volume, placing the shares 9.5% under the November peak.

Tactically, the breakout point (18.20) pivots to well-defined support. The prevailing uptrend is firmly-intact barring a violation.

Finally, Delta Air Lines, Inc. DAL, -0.78%  is a large-cap carrier coming to life.

Technically, the shares have recently knifed to six-month highs, gapping atop the 200-day moving average amid a vaccine-fueled rally.

Though still near-term extended, the strong-volume spike signals a trend shift. Tactically, the October peak (34.04) matches the post-breakout low (34.02) and marks well-defined support.

Also notice the recent golden cross — or bullish 50-day/200-day moving average crossover — signaling that the intermediate-term uptrend has overtaken the longer-term trend.

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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.