Some Charts are Bucking Resistance

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This article is not a recommendation and is intended for educational purposes only.

Some charts are bucking potential resistance as the market squeezes into an ever tighter range.

While the S&P 500 ($SPX.X) barely moved yesterday, banks rose more than 1 percent and transports rose almost 1 percent. Benchmarks tracking both may be at some key levels, as well.

Let’s start with the KBW Bank Index ($BKX), which chopped sideways for more than a month following a mid-March selloff. Customers drawing a trendline along its peaks will find that $BKX is trying to break that downward momentum. It’s happening the same week inflation numbers and Treasury-bond auctions have the potential to drive interest rates higher, which would be considered positive for the banks.

KBW Bank Index ($BKX), with falling trendline

The Dow Jones Transportation Average ($DJT) managed to close slightly above its 50-day moving average — another popular directional indicator. It joins other big indexes like the Nasdaq-100 ($NDX.X) and Russell 2000 (@RTY) above their 50-day moving averages. Meanwhile the S&P 500 and Dow Jones Industrial Average ($INDU) remain slightly below theirs.

Then there’s software, which has outperformed the broader market by a huge margin in the last year. The Dow Jones US Software Index ($DJUSSW) is also breaking an apparent trendline along the March and April peaks. One company in the the group, Salesforce.com (CRM), hit a new record high yesterday after seeming to break a similar pattern. Others like Adobe Systems (ADBE), Nutanix (NTNX) and Splunk (SPLK) may be escaping from bullish triangles. Will Microsoft (MSFT) follow?

Dow Jones US Software Index ($DJUSSW), with potential trendline breakout

Square (SQ), another closely followed tech stock, may be taking out a similar “bullish flag” pattern as CRM. The payments processor has also managed to claw back above its 50-day moving average.

In conclusion, this isn’t a recommendation and everyone needs to do their own homework. But just because the broader market is stuck in a range doesn’t mean every stock is asleep.

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