Charting a slow-motion breakout, S&P 500 edges to all-time high

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

As illustrated, the S&P has rallied to its range top, tagging a nominal record high.

Friday’s early follow-through punctuates a potentially more decisive breakout. The session close, also the weekly close, will likely add color.

Slightly more broadly, the prevailing upturn punctuates follow-through atop the breakdown point — the 3,826-to-3,830 area — detailed repeatedly. Recall that consecutive session closes matched former resistance.

Meanwhile, the Dow Jones Industrial Average
US:DJIA
 has not broken out.

The index remains capped by its range top, an area matching record highs better illustrated on the daily chart.

Still, the Dow’s late-week follow-through punctuates a bullish V-shaped reversal from major support (29,964). Constructive price action.

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

As illustrated, the index has cleared its range top, reaching previously uncharted territory at all-time highs.

Here again, the prevailing V-shaped reversal punctuates a successful test of major support (12,973) also illustrated below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has extended its uptrend, reaching record territory. The prevailing upturn originates from support matching the 2020 peak (12,973), detailed repeatedly.

Tactically, a near-term target continues to project to the 14,200 area on follow-through.

Looking elsewhere, the Dow Jones Industrial Average has not reached record territory.

Still, the index has staged a directionally sharp bullish reversal, placing distance atop its breakdown point (30,283) and the 50-day moving average.

The Dow’s record close (31,188.38) and absolute record peak (31,272.22) are firmly within view.

More broadly, the prevailing upturn punctuates a successful test of last-ditch support — detailed previously — an area matching the mid-November range top (29,964). The January close registered about 18 points above support.

Meanwhile, the S&P 500 has narrowly tagged record highs.

Here again, the prevailing upturn originates from major support. Last week’s close registered within two points of the 50-day moving average, and has been punctuated by a pronounced bullish reversal.

The bigger picture

Collectively, the U.S. benchmarks’ bigger-picture technical backdrop remains comfortably bullish.

Consider that the big three U.S. benchmarks are pacing their best week in three months, rising in the wake of last week’s worst single-day downdraft across about the same span.

The strong February start punctuates successful tests of major support across each of the three major benchmarks. (See the daily charts.)

Moving to the small-caps, the iShares Russell 2000 ETF
US:IWM
 has extended to its latest record high.

The upturn punctuates grinding-higher follow-through hinged to the steep early-November vaccine-fueled gap higher. (See the Nov. 9 strong-volume spike.)

Meanwhile, the SPDR S&P MidCap 400 ETF
US:MDY
 has not reached record territory.

Still, the MDY has rallied to its former range, rising from a successful test of its breakout point (425.30). Bullish price action.

Looking elsewhere, the SPDR Trust S&P 500
US:SPY
 has tagged a nominal record high.

Market bears may justifiably contend that the prevailing upturn has been fueled by lackluster volume.

Conversely, market bulls will note that the prior pullback marked an event-fueled downdraft — (amid the short-covering drama) — punctuated by conspicuously tame selling pressure as it applies to the internals.

Combine the price action with the recent internals, and the backdrop remains comfortably bullish.

Placing a finer point on the S&P 500, the index has tagged a nominal record high.

The prevailing upturn punctuates follow-through atop the breakdown point (3,830), an area matching consecutive session closes.

More broadly, the prevailing upturn punctuates a bullish V-shaped reversal from major support.

The specific area matches the late-December breakout point (3,823) and the 50-day moving average. (Recall that the January close registered within two points of the 50-day moving average.)

On further strength, a near-term target projects from the S&P’s recent whipsaw to the 4,010 area, about 3.6% above current levels.

Beyond technical levels, the S&P 500 has extended its uptrend, and its intermediate-term bias remains bullish based on today’s backdrop.

Friday’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 30-year Treasury note yield
XX:TYX
 has broken out, reaching nearly 52-week highs, the highest level since Feb. 20, 2020.

The upturn places the marquee 2.0% within view.

Tactically, the former range top (1.90) pivots to support an area closely matching the late-2019 low. (Also the yield’s 2020 breakdown point, illustrated on the two-year chart.)

Delving deeper, the yield’s former breakout point closely matches the January gap (1.77) and the ascending 50-day moving average, currently 1.75. The 50-day has underpinned the prevailing uptrend, and a posture higher signals a bullish intermediate-term bias.

Elsewhere, the 10-year Treasury note yield has not registered February follow-through, though it continues to consolidate a technically consequential early-2021 breakout.

Fundamentally, the steepening yield curve is consistent with expectations for stronger economic growth and potentially pending higher inflation.

Moving to specific names, Cisco Systems, Inc.
US:CSCO
 is a large-cap name coming to life. (Yield = 3.1%.)

As illustrated, the shares have knifed to five-month highs, traversing a less-charted patch amid the August gap. The prevailing upturn punctuates a tight two-month range, effectively underpinned by gap support.

More broadly, the shares are well positioned on the three-year chart, rising to challenge the mid-2019 range top (48.45) and the 100-week moving average. Follow-through higher would punctuate a massive double bottom, opening the path to a potentially consequential breakout.

Tactically, a sustained posture above the former range top (46.00) signals a comfortably bullish bias.

Note that the company’s quarterly results are due out Feb. 9.

Profiled Dec. 21, Ballard Power Systems, Inc.
US:BLDP
 has returned 80.1% and remains well positioned.

The shares initially spiked about three weeks ago, gapping higher after the company announced an order to power Scotland’s first fuel-cell powered train.

The subsequent range is a bullish continuation pattern punctuated by this week’s lift to challenge 19-year highs. Tactically, a breakout attempt is in play barring a violation of near-term support, circa 33.70.

KeyCorp
US:KEY
 is a well positioned large-cap regional bank. (Yield = 3.9%.)

Fundamentally, the regional banks benefit from rising yields — detailed previously — in the form of an improved rate spread, the difference between the rate at which a bank borrows, and the rate it subsequently lends to customers.

Technically, the prevailing upturn punctuates a successful test of the breakout point, an area closely matching the 50-day moving average.

The pending test of the range top — the 18.93-to-19.22 area — should be a useful bull-bear gauge. An intermediate-term target projects to the 21 area on follow-through.

Finally, Datadog, Inc.
US:DDOG
 — public since September 2019 — is a well positioned large-cap name.

As illustrated, the shares have tagged three-month highs, edging atop resistance matching the December and January peaks. The upturn punctuates a bullish ascending triangle.

On further strength, more distant inflection points match the record high (118.13, established Oct. 13) and a projected target in the 120 area.

Note that the company’s quarterly results are due out Nov. 11.

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.