Charts to Watch: SPX, AMD, CAT

**SPEAKER_1** (0:00)
And it's time now for Charts to Watch. Kevin Horner, Senior Manager, Trading Services, Charles Schwab is with me now. So I was checking the S&P a short time ago, it was right around the unchanged line for the week, right? Even though we had such a busy week. So what are you watching when it comes to the levels on this index?

**Kevin Horner** (0:16)
Yeah, it's been actually a great week, Nicole. If we think about it from the standpoint of what today, this week's low price action validates for us, it validated an area of horizontal support, coincident with the prior highs we had been working to break through at 76.2 early in June. Once we got through those, we made that push into 7,800, and then we come back for what many traders suggest is the standard throwback to the area of former resistance, now potential support. And so the action we got on Tuesday that really, or excuse me, Wednesday, that really validated that test was carried forward yesterday. And then I think you just get a little bit of a breather to close the week ahead of the long weekend, obviously.
So I think a trader is going to be monitoring this support range between the 50-day moving average at 75.9 and those prior highs at 76.20. It's about a 30-point range. Certainly, we could find some support in there if we drop to that level once more. But I think that's what we've done, is just validate short-run support areas under which traders would get more defensive.

**SPEAKER_1** (1:20)
Yeah, some support, a little bit of a trend up over the three months over summer, up about 4% over three months. What about AMD? It's up today, up over 120% year to date. So what stands out in the technicals here on AMD?

**Kevin Horner** (1:35)
Well, first of all, it made a fantastic move as we know. If we look at the lows from March and we see the big push we made from March bottoms all the way to the peak we found here in late June, it was up about 195%.
So we shouldn't be all that angry with a pullback, even though it was about 25% to the trough of late. Now the recent action though seems to validate this support in the ballpark of 450 to 455 Now, whether or not we have held support or will maintain this support, I think traders are looking at the candle we created yesterday, a nice hammer candle at support, follow through day to day with a potential, maybe likely cajole to close above the high of the low day in this most recent retreat. But you can see, we've ran ourselves right into the 20 day moving average in orange, so I wouldn't suggest that we are out of the woods, so to speak. And really clearly, we're looking for a broken downtrend here. We don't yet have it, but I brought it up because it sure looks like horizontal support has been well defined. And as a trader, if you're looking for an area where you would look to move on or sell a little bit, get defensive, it would be under the most recent lows, perhaps. And then if we can recapture on the other end of things, that 500 point level, that's right around the 50 day moving average, that would give bulls a heck of a lot more confidence here.

**SPEAKER_1** (2:59)
Okay, last but not least, Caterpillar, which is down nearly 25% from its all time high that it hit in late June. What caught your eye here on the chart?

**Kevin Horner** (3:10)
Same thing to a certain extent, big pullback, but right to an area that you would consider to be likely supportive in nature. In this case, we're watching a couple of things, 200 period moving average right beneath us, 773 And then we have the linear regression channel drawn in here as well, coincident with that 200 day moving average. So we see a confluence of value or confluence of support at around 770 We bounce off of that level today. Again, horizontal support could be consistent there as well at 770 So you've got a number of key factors playing in here. But this was a major winner, as you said, Nicole, off 25% from the peak. And yet we've had a great year. It's up 41% year to date. Wonderful spot for bulls in a longer term timeframe, who might be looking to expose some dollars to the industrial space and caterpillars specifically, perhaps.

**SPEAKER_1** (4:04)
All right. Well, we have a lot to continue to watch. And next week, of course, we have CPI, PPI, Adobe, Oracle, just to name a few things that will be on our minds for next week and some of this action. So thank you, Kevin Horner. It's great to see you. Senior Manager will be talking to him again next week and looking at some of these charts, trading services, Charles Schwab. Thank you, Kevin.