S&P 500 vies for technical breakout

Most notably, the S&P 500 Index is challenging its all-time high — S&P 1,985.59 — and a break from this area would confirm its primary uptrend. 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 is traversing its range.

The range top — the July peak of 1,985 — marks the S&P’s all-time high, and this week’s upturn positions the index for a potential breakout.

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

In its case, the blue-chip benchmark has maintained support at its former breakout point of 16,970, an area better illustrated on the daily chart.

And the Nasdaq Composite’s near-term view remains jagged, but constructive.

Recall that the index bottomed last week at 4,352, matching a significant technical floor at the July low.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has survived its second test of the breakout point — support at the July low — and its path of least resistance points firmly higher barring a violation of this area.

Similarly, the Dow Jones Industrial Average has maintained support at its former breakout point of 16,970.

Consider that last week’s “Russia-induced” low held at 16,966, and the Dow bottomed Monday at 16,974. Bullish price action.

And the S&P 500’s wider view rounds out the major benchmarks.

As detailed previously, the July lows now rest at 1,952 and 1,955, and this area marks increasingly significant support.

The bigger picture

Technically speaking, the major U.S. benchmarks have absorbed last week’s geopolitically-driven volatility.

In fact, the summer price action remains distinctly technical.

Returning to the Nasdaq, it’s nailed support at the July low of 4,351.

With this week’s upturn, two hurdles stand out:

• Initial resistance at its two-week range top, around 4,450.

• Resistance at the Nasdaq’s 14-year high of 4,485.93.

Similarly, the Dow Jones Industrial Average has maintained its former breakout point of 16,970.

Looking ahead, technical overhead falls out as follows:

• Dow resistance at its all-time closing high of 17,138.

• Resistance at the Dow’s absolute all-time high of 17,151.

And the S&P 500 Index faces the U.S. markets’ headline technical test. Specifically:

• The S&P’s all-time closing high rests at 1,985.44.

• The S&P’s absolute all-time highs holds at 1,985.59.

Against this backdrop, the S&P has established a well-defined two-week range. The range encompasses last week’s “Russia-induced” whipsaw as well as the markets’ response to the early second-quarter earnings reports. And technically, trading ranges are more frequently exited in the direction in which they were entered. In this case, that would point to an eventual break higher.

So all told, the bigger-picture technicals remain bullish. Each benchmark has maintained well-defined support, and remains within striking distance of less-charted territory.

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 Brazil ETF
US:EWZ
 is acting well technically. (Yield = 3.2%.)

As illustrated, the shares have knifed from a bullish cup and handle defined by the June and July lows.

Moreover, recent strength has been driven by a sustained volume increase, improving the chances of incremental follow-through. First support now rests at the breakout point, just above 50.

Profiled March 28, Schlumberger Limited
US:SLB
 has returned 15.9% and remains well positioned.

The shares initially spiked four weeks ago, rising to all-time highs after management issued stronger-than-expected long-term profit guidance.

By comparison, the ensuing pullback has been orderly, placing the shares at a high risk/reward entry near the breakout point, and 5% under the July peak. Schlumberger is also well positioned on the monthly chart.

Newfield Exploration Co.
US:NFX
 is a large-cap oil and gas name positioned to rise.

Late last week, the shares gapped sharply higher, rising on management’s upwardly revised full-year production outlook.

The subsequent selling pressure has been limited — punctuated by lighter volume — and its tight three-session range positions the shares for a potential breakout.

Nextstar Broadcasting Group, Inc.
US:NXST
 is a well positioned mid-cap name.

Technically speaking, the shares have recently rallied to six-month highs, rising after the U.S. Supreme Court ruled that online TV provider Aereo was illegal.

The July pullback has been comparably flat, placing the shares at an attractive entry near the breakout point.

Initially profiled April 8, Pixelworks, Inc.
US:PXLW
 has returned 65.8% and remains well positioned.

Earlier this month, the shares knifed sharply higher, rising on speculation that the company is working with Apple, Inc. to develop an upcoming TV.

Since then, it’s challenged resistance at the March peak, and this week’s upturn positions the shares for a potential breakout.

Endeavor Silver Corp.
US:EXK
 is a small-cap miner positioned to rise.

As illustrated, the shares are challenging well-defined resistance at 52-week highs.

Moreover, recent strength has been driven by a sustained volume increase, improving the chances of an eventual breakout. The shares are also well positioned on the weekly chart.

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.