Charts to Watch: SPX, MA, BLK

Nicole (0:00)

It's time now for Charts to Watch, showing me right now Rachel Dashiell, Head of Technical Research and Strategy, Schwab Center for Financial Research. Good afternoon. So look at this, a bounce back for some of these tech names which often drive this S&P 500

It is on a positive note after that sell off last week. What say you about some of the levels, Rachel?

Rachel Dashiell (0:22)

Yeah, it looks positive on the price side, Nicole, but there are still a little bit of hesitations here in the market, specifically a little bit of a low volume with some of the price strength today. So just talking about the S&P 500, we have a break in the New York term trend, but it's still holding this long-term trend line support from summer lows. Now, price is forming an inside day, which is typically a pause and potentially a reversal. And so this volatility squeeze in prices is actually showing up underneath the index, which could be mean reverting in nature from a volatility standpoint. So we could be looking for a little bit of an expansion here. And like I said before, this pause is occurring on much lower than average volume here, which I would say isn't extremely convincing for technicians that we would see follow through in a possible reversal tomorrow. So I wouldn't be surprised if we actually this week tested the 200 day sitting right below current prices around 7600 Now, if we test that, can't hold it, we're going to be looking lower to summertime consolidation lows near 7300

Now, the last thing I want to mention is these insights on the S&P and others will actually be published today in a new article on Technical Analysis Weekly on schwab.com.

Nicole (1:42)

And we'll look for that. I'm glad you did mention that, Rachel. Let's turn our attention over to Mastercard, which hit a new all-time high last Friday. Shares have been higher throughout this month, double digits in percentage terms. So what stands out in the technicals?

Rachel Dashiell (1:57)

Yes. So financials actually have been beaten down quite a bit with the interest rate volatility, but there is still some alpha left in the sector. So Mastercard just broke that neckline of resistance of a year long inverse head and shoulders formation. We see momentum confirm that price move with those overbought readings in RSI, which is a lot of times just a condition of an ongoing uptrend. So we could see a pullback here to the breakout level near 600

If that holds, that can give buyers who missed that initial breakout a opportunity to reenter into what appears to be a strong bullish trend reversal. Now, on the flip side of that, if we do see weakness here and 600 doesn't hold, we may see a quick reversal down to that right shoulder near 550

Nicole (2:49)

All right, last but not least, we are in the thick of earnings season now, really kicking it off. BlackRock on the upswing after its earnings. Let's take a look at that. What caught you eye on this chart here?

Rachel Dashiell (3:02)

Yeah, so BlackRock is another one of the names that is showing very increasing relative strength, so potentially capital inflows to these names, and it's forming a similar formation of that inverse head and shoulders pattern, but it just hasn't broken resistance yet, like we saw in the last Mastercard chart.

That neckline resistance of that potential inverse head and shoulders is near 1,186. And now we did see just recently this right shoulder formed a coil that resulted in this volatility compression, which we can actually see down below with the Bollinger bandwidth. And it's really reaching some of the tightest levels seen all year. And so really from that level, we can see volatility is expanding to the upside. And so it looks like this may continue here. So old resistance of that coil near 1,100 will act as new near-term support. And as far as the upside, if price can really find its way above this longer-term bullish reversal pattern, investors may actually be looking for a measured move of roughly $270 past that longer-term neckline near yearly highs.

Nicole (4:19)

All right, Rachel Dashiell, thank you. Schwab Center for Financial Research, really appreciate it.