Need to Know: This group of stocks is flagging a rebound, and that’s good news for the S&P 500, says technical analyst


Stock futures are higher while oil on the backfoot as markets keep one eye on hawkish Fed talk and another on the brutal battle for Ukraine.

Some of that positivity may come from the fact investors look ready to choose higher rates over higher inflation, with the former seen as less toxic for companies in the longer run, said Ipek Ozkardeskaya, senior analyst at Swissquote. 

While everything can change in a minute, investors might be wondering what it will take for the S&P 500 to build on last week’s 6% rally. Our call of the day, from MKM Partners’ chief market technician, JC O’Hara, advises watching for signs of stabilization in areas that were first hit in the leg downward.

And biotech is fitting that theme, he said. “The S&P 1500 Biotech group of stocks is bouncing exactly where it should.” He zeroes in on two charts, from Ionis Pharmaceuticals IONS, -0.94% and Moderna MRNA, -1.98%, the latter which is holding a vaccine day presentation for investors on Thursday.

It’s not just biotech. “There are more and more pharmaceutical charts breaking out to new highs in a tape that saw plenty of bear market moves from individual names,” said O’Hara, as he flagged bullish charts from Bristol Myers Squibb BMY, +0.04%, Corcept Therapeutics CORT, -1.36%, Harmony Biosciences HRMY, +0.20%, Innoviva INVA, -2.47%, Johnson & Johnson JNJ, +0.57%, Eli Lilly LLY, +0.70%, and Pacira BioSciences PCRX, -0.38%.

O’Hara also likes European pharmaceutical stocks. “While geopolitical concerns remain front and center in Europe, pharma seems to be a good place to put capital to work.”

He sees bullish charts on the following names: ALK-Abello ALK.B, -1.62%, AstraZeneca AZN, +0.40%, Bayer BAYN, +0.87%, GlaxoSmithKline GSK, -0.42%, Ipsen IPN, -0.32%, Novartis NVS, -0.82%, Novo Nordisk NVO, -1.15%, Roche ROG, -1.50%, Sanofi SNY, -2.19% and UCB UCB, +0.29%.

As for that 6% S&P 500 rally last week, O’Hara said the most positive takeaway was a close above the key 4,400 level.

“The magnitude of the move was impressive, but the levels broken above are what we need to focus on,” said O’Hara, who noted other “bullish action,” such as the Russell 2000 RUT, -0.97% and Nasdaq 100 indexes COMP, -0.40% breaking above intermediate downtrends. And the Stoxx Europe 600 regained a level seen the day Russian launched its attack on Ukraine.

The buzz

Ukraine forces claim to have recaptured a key suburb in Kyiv, while the battle for Mariupol rages on and strategists say a stalemate situation is building. President Vladimir Zelensky says he’s ready to discuss a deal for a Russian cease-fire.

Accounts, yachts, private jets, properties in London, Italy and France worth more than $17 billion have been connected to Russian officials with close ties to President Vladimir Putin, plus dozens of oligarchs.

Nike NKE, -0.80% reported stronger-than-expected earnings and sales, lifting shares in premarket, and bucking worries about slumping China sales.

Chinese e-commerce giant Alibaba BABA, -4.35% boosted its buyback program to $25 billion.

The Okta  OKTA, -2.92% authentication company said it’s investigating images appearing to show a hack of its internal system. That hack is believed to be Brazil-based, though the U.S. has warned at least 100 companies to brace for Russian cyberattacks.

The data calendar is empty but we’ve got more Fed speakers ahead — New York Fed President John Williams, San Francisco President Mary Daly and Cleveland President Loretta Mester.

The markets

Stock futures ES00, +0.36% YM00, +0.50% NQ00, +0.33% are drifting lower, and oil prices CL00, -0.52% NQ00, +0.33% head for a fourth straight session of gains. Treasury yields TMUBMUSD10Y, 2.340% are moving up, along with gold GC00, -0.06% and the dollar DXY, +0.15%.

Equities were mixed in Asia NIK, +1.48% 000300, -0.08% and are lower in Europe SXXP, +0.47%.

The tickers

These were the top-searched tickers on MarketWatch as of 6 a.m. Eastern.

Random reads

Russia didn’t embrace Arnold Schwarzenegger’s video message about the Ukraine war.

The founder of the World Central Kitchen makes a plea for instant translated messages from WhatsApp.

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