By Michael Ashbaugh, MarketWatch
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Technically speaking, the major U.S. benchmarks have taken flight, registering a persistent late-year rally punctuated by shallow, and short-lived, pullbacks.
Against this backdrop, each big three U.S. benchmark has concurrently tagged record highs — and is traversing previously uncharted territory — amid still conspicuously muted December selling pressure.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +1.45% hourly chart highlights the past two weeks.
As illustrated, the S&P has extended its break to record territory.
This week’s follow-through punctuates a successful test of the breakout point (3,154). Delving slightly deeper, the S&P’s former target (3,140) matches the November close (3,141).
Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.22% has also broken out, though belatedly. Monday’s close marked its first record close since late November.
Tactically, the breakout point (28,175) is followed by a near-term floor, circa 28,035.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.77% has extended a mid-December breakout, notching three straight record closes.
Near-term support matches the top of the gap (8,789) and is followed by the breakout point (8,705) a level also detailed on the daily chart below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has taken flight, extending a break to record territory. The chart illustrates a bullish 1.2% mid-December breakout, confirming its primary uptrend.
Tactically, recall that the November breakout punctuated a double bottom defined by the August and October lows. The 8,705 area closely matched its projected target from the October low, and remains an inflection point.
More immediately, a near-term target projects from the December low to the 8,890 area, as detailed previously.
Looking elsewhere, the Dow Jones Industrial Average has cleared its range top, reaching previously uncharted territory.
This week’s follow-through punctuates a bullish continuation pattern pinned to the steep November rally. Tactically, the former range top (28,175) pivots to notable support.
Meanwhile, the S&P 500 has knifed more decisively to record highs. Like the Nasdaq, the S&P 500 has registered a 1.2% mid-December breakout, confirming its primary uptrend.
The prevailing follow-through punctuates a tight range, a flag-like pattern pinned to the early-December bullish reversal.
The bigger picture
Collectively, the U.S. benchmarks’ late-year backdrop remains firmly bullish.
On a headline basis, the S&P 500 and Nasdaq Composite have notched three straight record closes, while the Dow Jones Industrial Average has belatedly broken out, though it is vying Tuesday for a second straight record close.
Moving to the small-caps, the iShares Russell 2000 ETF /zigman2/quotes/209961116/composite IWM +4.79% has staged a bull-flag breakout, reaching 52-week highs on increased volume.
The prevailing upturn punctuates a successful test of major support (158.00).
Also recall that the late-November upturn punctuated a two standard deviation breakout, encompassing consecutive closes atop the 20-day Bollinger bands. The “expected” upside follow-through is underway.
More broadly, the small-cap benchmark is traversing less-charted territory, illustrated on the three-year chart.
Similarly, the SPDR S&P MidCap 400 ETF has reached 52-week highs amid increased volume. The prevailing upturn punctuates a successful test of gap support (366.40).
On further strength, the MDY’s record close (373.52) and absolute record peak (374.10) are increasingly within striking distance, as illustrated on the three-year chart.
Looking elsewhere, the SPDR Trust S&P 500 has rallied to all-time highs amid increased volume.