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 $BKX is trying to break that downward momentum. It’s happening the same week inflation numbers and Treasury-bond auctions have the potential to drive interest rates higher, which would be considered positive for the banks.
The Dow Jones Transportation Average ($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?
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.