Charting the approach of S&P 2,000

Against this backdrop, the U.S. markets’ bigger-picture technicals continue to support the bull case. The charts below add color:

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

As illustrated, the S&P has pulled back to its range from all-time highs.

Initial support now holds at 1,967 (this week’s low) and is followed by a more important floor at the July low of 1,952.

Meanwhile, the Dow industrials’ near-term backdrop is weaker.

The index briefly whipsawed under notable support before reversing to its range by Monday’s close.

Looking ahead, the 16,970 area remains an inflection point, and is followed by resistance spanning from 17,133 (last week’s high) to the Dow’s record peak of 17,151.

And the Nasdaq Composite has also pulled in from recent highs.

In its case, the 4,450 area marks an inflection point, and is followed by significant resistance at the July peak of 4,485.

Widening the view to six months adds perspective.

On this wider view, two technical levels stand out:

• Nasdaq resistance at the July peak of 4,485.93. The index topped last week at 4,485.50.

• Support at the July low of 4,351.

The Nasdaq’s 50-day moving average currently rests at 4,347 — matching support at the July low — and its path of least resistance points higher barring a violation of this area.

Moving to the Dow Jones Industrial Average, its six-month backdrop remains bullish.

Consider that its 50-day moving average currently rests at 16,867, and the Dow rallied from this area Monday.

The blue-chip benchmark hasn’t notched three consecutive closes under the 50-day since February, and its path of least resistance points higher barring a violation of this area.

Similarly, the S&P 500’s wider view remains constructive.

As illustrated, the index topped last week at 1,991 — marking an all-time high — and the immediate pullback from record territory has been shallow.

The bigger picture

As detailed above, the U.S. benchmarks’ price action remains characteristically sluggish, but largely constructive.

Still, to the extent there’s a market headwind, the chart below adds color:

Consider that the iShares Russell 2000 ETF
US:IWM,
a small-cap market gauge, continues to lag behind its larger-cap counterparts.

In fact, the Russell 2000 violated its major moving averages earlier this month, and has subsequently observed the breakdown point as resistance.

This is bearish price action, and viewed in isolation, the small-caps’ path of least resistance technically points lower.

But scaling up in size, the SPDR S&P MidCap 400’s
US:MDY
 backdrop is stronger.

In its case, the mid-cap benchmark has drawn buyers at its breakout point, a level currently matching the 50-day moving average. Separately, the MDY’s six-month trendline is rising to meet support, and the group’s path of least resistance points higher barring a violation of this area.

And returning to the more widely-tracked S&P 500, its six-month backdrop is firmly bullish.

As detailed previously, significant support rests at the July low of 1,952, a level matching the 50-day moving average, currently 1,950.

Notice that its 50-day has marked a useful trending indicator since April, and the S&P’s path of least resistance technically points higher barring a violation of this area. Looking ahead, the S&P’s next technical test rests at the 2,000 mark, and its eventual response to this area should be a useful bull-bear gauge.

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 Emerging Markets ETF
US:EEM
 is acting well technically. (Yield = 1.6%.)

As illustrated, the shares have established a steady six-month uptrend that closely tracks the 50-day moving average.

The trend is punctuated by last week’s gap to 52-week highs, and its narrow one-week range points to limited selling pressure, positioning the shares to extend recent gains.

Initially profiled April 24, Apple, Inc.
US:AAPL
  has returned 22% and remains well positioned.

Late last week, the shares staged a strong-volume rally, rising after the company reported solid third-quarter results.

Since then, it’s extended to 52-week highs, placing Apple within striking distance of its all-time high of $100.72 established September 2012.

From current levels, initial support holds at the breakout point, and is followed by a firmer floor at the cross section of the July low and the 50-day moving average.

EMC Corp.
US:EMC
 is a large-cap data storage name coming to life.

Earlier this month, the shares knifed to two-year highs, rising after activist investor Elliott Management Corp. reported a $1 billion stake in the company along with plans to encourage a breakup of EMC.

Though near-term extended, its strong-volume spike is longer-term bullish, and a pullback toward the breakout point would offer an attractive entry. EMC is also well positioned on the monthly chart.

Scripps Networks Interactive, Inc.
US:SNI
 is a well positioned large-cap name.

As illustrated, the shares have recently knifed from a bullish cup and handle, rising to six-month highs.

By comparison, the ensuing pullback has been orderly — driven by lighter volume — placing the shares at an attractive entry near the breakout point, and 3.7% under the July peak.

Initially profiled June 18, NetEase, Inc.
US:NTES
 has returned 12.6% and remains well positioned. (Yield = 1.7%.)

Earlier this month, the shares knifed from the 50-day moving average, rising to all-time highs.

It’s subsequently established a bullish flag — defined by the breakout point — and its narrow one-week range positions the shares to extend their gains.

Air Products & Chemicals, Inc.
US:APD
 is a well positioned large-cap name. (Yield = 2.4%.)

Technically speaking, the shares have recently rallied to record territory, rising after the company’s strong third-quarter results.

The ensuing pullback has been flat, punctuated by lighter volume, positioning the shares to build on last week’s spike. The risk/reward can be favorable from current levels with a stop at the breakout point.

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.