Bull trend strengthens: S&P 500, Nasdaq extend July technical breakouts

Technically speaking, the backdrop for U.S. stocks continues to strengthen amid a generally well received batch of early second-quarter earnings reports.

Consider that the Nasdaq Composite and S&P 500 have extended their July breakouts, rising this week from major support — S&P 2,802 and Nasdaq 7,806, respectively.

Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, +0.53% hourly chart highlights the past two weeks.

As illustrated, the S&P has sustained the July break to five-month highs. Recall that last week’s close (2,801.8) matched major support at the breakout point (2,802).

Conversely, near-term overhead matches the July peak (2,817) and is followed by the bottom of the January gap (2,838).

Similarly, the Dow Jones Industrial Average has sustained a slight breakout.

Tactically, a near-term floor matches the week-to-date low (24,983), slightly under the 25,000 mark.

Conversely, the prevailing range top (25,215) is followed by inflection points at the June closing peak (25,322) and the absolute June peak (25,402).

True to recent form, the Nasdaq Composite remains the strongest major benchmark.

As illustrated, the index has sustained a slight break to record territory, notching eight straight closes above, or matching, the 7,806 breakout point.

Also consider that Monday’s session low (7,776.5) closely matched near-term support.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has sustained a modest July break to all-time highs.

Tactically, near-term overhead matches the July peak (7,867), an area that is under siege early Tuesday.

More broadly, a near- to intermediate-term target continues to project from the June low to the 8,190 area.

Looking elsewhere, the Dow industrials’ backdrop remains comparably softer.

Still, the index has escaped formerly cluttered territory, reclaiming the 50- and 200-day moving averages, as well as the 2017 peak (24,876) and the April peak (24,859). The sustained July breakout is constructive.

Meanwhile, the S&P 500 has sustained a headline technical breakout.

Put differently, the S&P has absorbed the massive early-February downdraft via an extended, nearly six-month consolidation phase, punctuated by jagged price action.

Time, and price, have contributed to repair the early-year damage.

Collectively, the U.S. benchmarks continue to respond well to the early batch of second-quarter earnings reports.

The Nasdaq Composite has sustained a break to record territory, while the S&P 500 has escaped a formerly jagged range, reaching five-month highs.

Moving to the small-caps, the iShares Russell 2000 ETF is consolidating just under record territory.

The chart illustrates a mini developing cup-and-handle pattern defined by the June and July lows. A near-term target projects to the 174 area on a rally atop the record close (169.97).

Similarly, the S&P MidCap 400 is holding tightly to its range top.

Though the MDY registered a fractional record close last week (365.62) its breakout attempt technically remains underway.

Meanwhile, the SPDR Trust S&P 500 has maintained major support.

The familiar area matches the former range top, broadly spanning from 279.48 to 280.41. (The June and March peaks, respectively.)

Against this backdrop, the S&P 500 is acting well technically.

Consider that support matches the S&P’s former range top, an area broadly spanning from 2,787 to 2,802. Last week’s low (2,789) and close (2,802) matched support.

The sustained breakout, and successful retest of support, are technically constructive.

Conversely, near-term resistance matches the July peak (2,816.8) and is followed by the January gap, spanning from 2,838 to 2,851.

More broadly, the S&P’s prevailing upturn punctuates a cup-and-handle pattern defined by the April and June lows, detailed previously. An intermediate-term target projects to the 2,890 area on follow-through.

Beyond specific levels, the S&P 500 is traversing less-charted territory, and all trends technically point higher based on today’s backdrop.

See also: S&P 500 ventures atop major resistance, slow-motion breakout attempt underway.

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 10-year Treasury note yield TNX, -0.07% has turned higher, rising in sympathy with a Japanese bond yield resurgence.

Reports that the Bank of Japan may signal a hawkish-leaning policy shift at its meeting next week sent the 10-year Japanese bond yield from 0.03% to as high as 0.09% on Monday, its biggest one-day rise in nearly two years.

Against this backdrop, the 10-year U.S. Treasury note yield has knifed to about 2.95%.

Technically, the upturn punctuates a successful test of the range bottom (2.80). The July low (2.81) matched this area.

Conversely, the former range top (2.94) remains an inflection point and is closely followed by the June peak (3.01).

More broadly, the yield is digesting its steep early-year breakout — and subsequent rise to seven-year highs — illustrated on the weekly chart. Its longer-term technical bias points higher barring a violation of the 2.62 area, a level matching the 2016 and 2017 peaks.

Meanwhile, the Japanese yen has turned higher, also rising amid reports that a hawkish-leaning Bank of Japan policy shift may be pending.

In the process, the Invesco CurrencyShares Japanese Yen ETF FXY, +0.10% has reached a headline technical test.

Consider that the breakdown point (86.10) marks significant resistance, an area closely followed by the four-month downtrend. A sustained break higher would place the brakes on bearish momentum, likely signaling an intermediate-term trend shift.

The yen’s response to next week’s Bank of Japan policy meeting should add color.

Moving to U.S. sectors, the Financial Select Sector SPDR XLF, +0.72% has sustained the breakout initially flagged last week.

Specifically, the group has cleared trendline resistance, as well as the 50- and 200-day moving averages, raising the flag to a trend shift.

Additional overhead matches the June peak (28.27). An eventual close higher would mark a “higher high” confirming the trend shift.

More broadly, the group’s resurgence strengthens the U.S. sub-sector backdrop, and by extension, the broad-market bull case.

Profiled last week, Bank of America Corp. BAC, +0.50% has extended the July breakout. (Yield = 1.6%.)

This week’s rally punctuates a successful test of trendline support (29.50), nearly to the decimal. The prevailing rally attempt remains intact barring a violation of this area.

Conversely, additional overhead closely matches a four month range top and the bottom of the mid-March gap (31.50).

Finally, Northern Trust Corp. NTRS, +1.13% is a well positioned large-cap regional bank. (Yield = 1.6%.)

As illustrated, the shares have recently gapped sharply higher, rising amid a volume spike after the company’s second-quarter results.

The range top matches record territory, circa 111, and recent muted selling pressure near resistance positions the shares for a potential breakout. An intermediate-term target projects to the 120 area on follow-through.

Northern Trust is also well positioned on the three-year chart.

The table below includes names recently profiled in The Technical Indicator that remain well positioned. For the original comments, see The Technical Indicator Library.

CompanySymbolDate Profiled
Sanofi SNYJuly 23
Stanley Black & Decker, Inc. SWKJuly 23
SS&C Technologies Holdings, Inc. SSNCJuly 23
Arconic, Inc. ARNCJuly 23
Taiwan Semiconductor Manufacturing Co. TSMJuly 20
Take-Two Interactive Software, Inc. TTWOJuly 20
Bank of America Corp. BACJuly 20
JPMorgan Chase and Co. JPMJuly 19
Activision Blizzard, Inc. ATVIJuly 19
Cummins, Inc. CMIJuly 19
U.S. Steel Corp. XJuly 19
Citrix Systems, Inc. CTXSJuly 18
Corning, Inc. GLWJuly 18
Kulicke and Soffa Industries, Inc. KLICJuly 18
Five Below, Inc. FIVEJuly 17
Sony Corp. SNEJuly 16
Celgene Corp. CELGJuly 16
Walmart, Inc. WMTJuly 16
National Oilwell Varco, Inc. NOVJuly 13
Visa, inc. VJuly 12
Walt Disney Co. DISJuly 12
Paychex, Inc. PAYXJuly 11
Transocean, Ltd. RIGJuly 11
G-III Apparel Group, Ltd. GIIIJuly 11
RH RHJuly 11
Coca-Cola Co. KOJuly 10
3M Co. MMMJuly 10
NetEase, Inc. NTESJuly 9
Seattle Genetics, Inc. SGENJuly 9
Johnson & Johnson JNJJuly 5
Kroger Co. KRJuly 5
Silicon Motion Technology Corp. SIMOJuly 3
CyrusOne, Inc. CONEJuly 3
FleetCor Technologies, Inc. FLTJuly 2
Tandem Diabetes Care, Inc. TNDMJuly 2
Diamond Offshore Drilling, Inc. DOJuly 2
Oceaneering International, Inc. OIIJune 29
PTC, Inc. PTCJune 29
NII Holdings, Inc. NIHDJune 29
Cirrus Logic, Inc. CRUSJune 27
BioMarin Pharmaceutical, Inc. BMRNJune 27
Canada Goose Holdings, Inc. GOOSJune 27
Church & Dwight Co., Inc. CHDJune 27
CF Industries Holdings, Inc. CFJune 25
Procter & Gamble Co. PGJune 22
Semtech Corp. SMTCJune 22
Lands’ End, Inc. LEJune 21
Merck & Co., Inc. MRKJune 21
Williams-Sonoma, Inc. WSMJune 20
Spark Therapeutics, Inc. ONCEJune 20
Vishay Intertechnology, Inc. VSHJune 18
Dillard’s, Inc. DDSJune 18
Alphabet, Inc. GOOGLJune 15
Allergan AGNJune 15
Pepsico, Inc. PEPJune 14
Glu Mobile, Inc. GLUUJune 14
Mosaic Co. MOSJune 13
Consumer Staples Select Sector SPDR XLPJune 13
Roku, Inc. ROKUJune 12
Analog Devices, Inc. ADIJune 12
Viking Therapeutics, Inc. VKTXJune 12
Medicines Co. MDCOJune 11
Health Care Select Sector SPDR XLVJune 8
Monster Beverage Corp. MNSTJune 7
VMWare, Inc. VMWJune 6
SPDR S&P Biotech ETF XBIJune 5
Twitter, Inc. TWTRJune 5
Kohl’s Corp. KSSJune 5
Immunomedics, Inc. IMMUMay 24
Supernus Pharmaceuticals, Inc. SUPNMay 23
Electronic Arts, Inc. EAMay 22
Momo, Inc. MOMOMay 22
Union Pacific Corp. UNPMay 21
Twilio, Inc. TWLOMay 21
Intercept Pharmaceuticals, Inc. ICPTMay 21
Energy Select Sector SDPR XLEMay 18
Range Resources Corp. RRCMay 17
SPDR S&P Metals & Mining ETF XMEMay 17
SPDR S&P Retail ETF XRTMay 15
Lowe’s Companies, Inc. LOWMay 14
Texas Instruments, Inc. TXNMay 11
PowerShares QQQ Trust QQQMay 10
Facebook, Inc. FBMay 9
Electronics for Imaging, Inc. EFIIMay 9
SPDR S&P Oil and Gas Exploration & Production ETF XOPMay 9
Coupa Software, Inc. COUPMay 8
Apple, Inc. AAPLMay 7
PDC Energy, Inc. PDCEMay 7
Under Armour, Inc. UAMay 2
Norfolk Southern Corp. NSCMay 2
Advanced Micro Devices, Inc. AMDMay 1
UnitedHealth Group, Inc. UNHApr. 30
Nike, Inc. NKEApr. 30
DSW, Inc. DSWApr. 30
Home Depot, Inc. HDApr. 27
Noble Energy, Inc. NBLApr. 27
Costco Wholesale Corp. COSTApr. 26
CSX Corp. CSXApr. 26
Wingstop, Inc. WINGApr. 19
EOG Resources, Inc. EOGApr. 11
Autodesk, Inc. ADSKApr. 10
NetApp, Inc. NTAPApr. 9
Domino’s Pizza, Inc. DPZMar. 21
Veeva Systems, Inc. VEEVMar. 15
Burlington Stores, Inc. BURLMar. 14
Baozun, Inc. BZUNMar. 9
AxoGen, Inc. AXGNMar. 8
TJX Companies, Inc. TJXMar. 6
Chart Industries, Inc. GTLSMar. 6
Macy’s, Inc. MMar. 5
Five9, Inc. FIVNMar. 5
LivePerson, Inc. LPSNFeb. 28
VeriSign, Inc. VRSNFeb. 26
Shutterfly, Inc. SFLYFeb. 22
ServiceNow, Inc. NOWFeb. 21
Palo Alto Networks, Inc. PANWFeb. 16
Adobe Systems, Inc. ADBEFeb. 16
Salesforce.com, Inc. CRMFeb. 12
Fortinet, Inc. FTNTJan 19
Arrowhead Pharmaceuticals Corp. ARWRJan. 11
Sarepta Therapeutics, Inc. SRPTJan. 3
MSCI, Inc. MSCINov. 20
Motorola Solutions, Inc. MSINov. 14
Lululemon Athletica, Inc. LULUOct. 24
HubSpot, Inc. HUBSOct. 4
XPO Logistics, Inc. XPOOct. 2
Nvidia Corp. NVDASept. 27
Bottomline Technologies, Inc. EPAYJuly 13
GrubHub, Inc. GRUBMay 4
Square, Inc. SQMar. 3
Netflix, Inc. NFLXOct. 4
Microsoft Corp. MSFTAug. 5

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