Argus Daily Technical Analysis: S&P 500 in No Man’s Land

Joanna Kong
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The stock market continues to bounce around like a rubber ball in a small room. The S&P 500 remains in no man's land between its 50-day moving average at 2,946 and its 200-day at 2,799, which has not been tested during the current pullback. With Monday's rally, we are back in a zone of pretty good short-term resistance marked by overhead supply in the 2,940 region from the two most-recent highs. In addition to the 50-day just above, the 21-day and 34-day exponential averages (EMA) sit right near current prices. The positive is that the index took out trendline resistance off the highs since August 1, breaking the downtrend. The "500" also jumped back above its five-day and 13-day EMA, but more upside is needed to see a bullish crossover of these averages. In addition, to complete the current and potential double-bottom reversal pattern, the index needs to break above recent highs near 2,940. If we can complete that, the S&P 500 could see a measured move of over 100 points to marginal all-time highs. But if the index breaks recent lows near 2,820 and then the 200-day, it would open the possibility for some nasty action on the downside. The NASDAQ 100 (QQQ) ran into overhead supply on Monday in the 188/189 zone. The QQQ's also hit the 50-day simple average (SMA) and 21-day EMA. The five largest components of the QQQ's (MSFT, AAPL, AMZN, FB, GOOG/GOOGL), which make up about 45% of the index, are mixed, as only three out of five are above their 50-day average. All are above their 200-day SMA's, so there are no long-term worries here. (Mark Arbeter, CMT)

Moody`s Corp. (MCO)

Moody's provides credit ratings on 11,000 corporate issuers and 18,000 public finance issuers in 120 countries. Its analytics division provides clients with financial analysis and risk-management services. We expect Moody's to benefit from the secular trends of global GDP growth and debt-market disintermediation. MCO broke out to all-time highs at the end of July, following better-than-expected quarterly results. The breakout occurred on very heavy volume, a bullish sign. The stock then pulled back to test its breakout area and 21-day EMA before moving to new highs again. Prior to the breakout, the stock had been in a three-month consolidation (which worked off an extreme overbought condition mostly in time) and generally had held above its 50-day simple average. According to Investors.com, MCO has very high Composite, Relative Strength (RS), and Group RS ratings. Chart support sits at $199 and we would put a stop-loss just below that area. We would take profits in the $240 region.

Dunkin Brands Group Inc (DNKN)

Dunkin' is among the top franchisors of quick-service restaurants offering coffee, baked goods and ice cream. Dunkin' Brands franchises restaurants and has about 18,900 locations in 57 countries. DNKN operates stand-alone restaurants, many with drive-thru windows, as well as kiosks in malls and locations at convenience/gas stations. DNKN broke out to all-time highs in early June from a very large sideways consolidation that goes all the way back to the summer of 2018. Since peaking in mid-June, the stock has drifted sideways, garnering support from its 21-day EMA and 50-day SMA. The shares attempted another breakout last week, but pulled back. The recent pause has worked off an overbought condition in mostly time, which is bullish. The stock may be tracing out a bullish flag pattern. According to Investors.com, DNKN has high Composite, Relative Strength (RS), Group RS, and EPS ratings. We would put a stop-loss just below support at $77. We would take profits in the $90 region if near-term resistance is conquered.

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