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4-plus month Accelerated Uptrend Channels

Many major US indexes including S&P 500 Index (SPX), Dow Jones Industrial Average (INDU), and NASDAQ Composite Index (COMPQ) have accelerated uptrend channels since October 2019 lows. These technical patterns are often bullish continuation formation. As a rule, a convincing surge above the top of the parallel uptrend channel line confirms a major breakout and signals the start of the acceleration of the existing uptrend. Enclosed below are the key technical levels for the 3 major US stock indexes:


S&P 500 Index (SPX):


A 4-plus month uptrend channel between 3,265 and 3,430. A recent breakout above 3,338-3,348 (2/11/20) hints of +123-133 points or SPX targets to 3,430 (top of its Oct 2019 uptrend channel) and then 3,461-3,481. A breakout above 3,430 suggests +165-points or a SPX target to 3,595 or just below the projected technical intermediate-term target of 3,655-3,742 based on 2-year broadening base and/or 2-year head/shoulders bottom breakout late-last year.


Key initial support rises to 3,338-3,354 (extension of its 2/11/20 breakout), 3,304-3,314 (2/5/20 gap up and internal trendline), 3,260-3,290 (2/4/20 gap, bottom of Oct 2019 channel, and 50-day ma), and 3,214.68 (1/31/20 low). Violation of 3,214.68 warns of a deeper correction to 3,035-3,070 (12/3/19 low and 200-day ma).


Dow Jones Industrial Average (INDU):


Although INDU has not been the relative strength leader it still retains a bullish 4-plus uptrend channel between 25,824 and 29,975. The ability to stay above its recent 2/12/20 short-term breakout above 29,374-29,408 suggests +1,204-1,238.5 or INDU near-term targets to 29,975 (top of channel), and above this to 30,612-30,647, medium-term. A channel breakout above 29,975 also suggests +4,151-points or INDU target to 34,126, intermediate-term.


Key initial support moves up to 28,905-29,291 (2/5/20 gap up, 2/10/20 low, and internal trend line), 28,513-28,724 (bottom of channel and 50-day ma), and then 28,169.53 (1/31/20 reaction low). Violation of 28,169.53 opens the door for a deeper correction to 27,170.50-27,325 (12/3/19 low and 200-day ma).


NASDAQ Composite Index (COMPQ):


COMPQ remains in a 4-plus uptrend channel between 9,379 and 9,793. The recent 2/5/20 breakout above 9,451.43 renders a technical target to 9,815 or just above the top of the 4-plus month uptrend channel (9,793). The ability to surge above 9,793-9,815 confirms a channel breakout and suggests +414 points rendering next COMPQ target to 10,207.


On the downside, key initial support is 9,451-9,551 (2/5/20 breakout and internal trendline), 9,300-9,379 (2/4/20 gap up and bottom of channel), and then 9,088-9,162 (1/27/20 and 50-day ma). Violation of 9,088 warns of a deeper correction to 8,342-8,435 (12/3/19 low and 200-day ma).



Source: Courtesy of StockCharts.com


Source: Courtesy of StockCharts.com

Source: Courtesy of StockCharts.com


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