Charts to Watch: SPX, ARM, DE

Nicole (0:00)

Kevin Horner, Senior Manager, Trading Services, Charles Schwab, taking a look at the S&P 500 So, this is the first upday of the week. We had four down days, it was looking like a down arrow for the week, which it still is. We're down about 0.7% versus this morning, I mean, we were down 1.64%, so much improved on the week with today's action. What do you think about this chart?

Kevin Horner (0:24)

Well, going back to when we last spoke, Wednesday, we were talking about the potential to get a bounce right off of this 50-day moving average, and Wednesday's low wasn't the actual low.

If this is, in fact, a co-hold, a close above the high of our low day in this pullback today, then what we may have is confirmation at the 7,600 level, coincident with the 50-day moving average there. Yesterday, we traded below it, we were below it on a closing basis, but it looked like a doji for us. Yesterday's open came in at 75, excuse me, opened at 75,94 and then our close at 75,91. So it was a day where Bulls and Bears, neither one really won the day. Maybe Bulls could say that they did based on today's follow through, our gap above the high of yesterday, could be a validation of support here. But if nothing else, Nicole, what you and I have been talking about on Watchlist Hits for the better part of the last month here is the potential to test that 76,20, those former highs, prior resistance, potential new support, all of that allowing the 50 day to catch up with the trend action here. I think it re-strengthens that 7,600 level, so important for us from a support standpoint.

Nicole (1:39)

All right. Some of the weakness coming from Seagate, Sandisk, United Health, Palo Alto, Dow, Chemical CBOE. Let's talk about ARM Holdings. This one's a winner this month. What stands out on this chart?

Kevin Horner (1:52)

Well, I've been watching these volume-weighted average price levels here. I've got a couple of them working on this chart. We're looking at the volume-weighted average price from the beginning of the year. So the year-to-date volume-weighted average price, also the VWAP from the lows of the chart here in the last 12 months, as well as the one off of the peak. And what it's showing us is some interesting structure here. You've got price below the 303 level. That's the down-sloping average VWAP off of the peak, the highest close we've seen.

And then what we've also got is a strengthening of the support in that 232 to 245 zone, again, coincident with prior highs, prior resistance becoming once again, potential new support. And I think the takeaway on this chart is the strength of support at that 232 to 245 level. The instances we've been down there have been holding very well. Our volume has been light, so we're not yet seeing the turning point where bulls are going to become enthused by what they've got on this chart. But you do have a bullish divergence with the RSI one, I might refer to as casual in nature at this point. It is clearly providing an indication maybe that support is set and that bulls might start to feel more confident, but we're gonna wanna see volume coming in above that downsloping 50 period line in my volume pane here, which basically tells us if we can get volume above that 50 period moving average, we're likely to see it become institutional buyers more so than the average retailer who may be participating down here.

Nicole (3:36)

All right, last but not least, let's take a look at Deere, which actually hit all time highs earlier this month. Now, what catches your eye?

Kevin Horner (3:43)

Well, of course, I mean, it's tough to really dislike a chart where we've got stock trading near all-time highs. And today, what we saw was an attempted breakout of a bull flag. I think this one is really intriguing from a number of key levels. The first is the breakout above 662 that gave us the bull flag, the pullback of a standard proper nature with lighter volume. That's what I've called out below. We had a nice volume spike for three to four days when we took out the 662 level, building our flagpole.

And then as we've consolidated, pull back to the 10-day moving average at 677 today, we've done so on volume that has been less than the 50-day moving average of volume. Additionally, we had that RSI move to all-time highs, or at least highs in overbought condition, I should say, when we made the all-time highs, that validated the breakout for a lot of traders. Now, we don't know if this is going to hold up at this level. If it doesn't, we'll watch the 625 down below. That's certainly a deeper pullback zone, the 50-day moving average. But if you're a trader in a longer-term window, the other aspect that stands out is that volume-weighted average price, once again, from the annual basis, or not the 52 weeks, but rather the beginning of the year, that's that light blue dashed line, and that's down there at 588 or so. We've tested that twice in just the last few months and have moved off of it very well. So there's a number of key areas for potential support in the near term here, but ultimately a really beautiful looking chart on Deere, especially if it can hold that 10-day moving average over the coming days and weeks.