By Michael Ashbaugh, MarketWatch
Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.
Technically speaking, the U.S. benchmarks’ already-bullish backdrop has strengthened amid a decisive November breakout.
In the process, each big three benchmark has concurrently tagged all-time highs — and is traversing previously uncharted territory, capped by no true resistance — opening the path to potentially material longer-term follow-through.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +1.60% hourly chart highlights the past two weeks.
As illustrated, the S&P 500 is off to a strong November start, breaking decisively to record highs.
The prevailing upturn punctuates a late-October retest of the breakout point (3,028) an area also matching the September peak (3,022). Bullish price action.
Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.34% has also turned firmly higher to start November.
The breakout punctuates a flag-like pattern — defined by last week’s range — placing the index in record territory. Near-term inflection points match this week’s gap, at 27,347 and 27,402.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +2.26% has also taken flight, extending a break to record territory.
Tactically, notable support spans from 8,335 to 8,339 levels matching the October and July peaks, also detailed below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has staged a bull-flag breakout, knifing to all-time highs.
Consider that last week’s tight range was underpinned by the September peak (8,243) price action mirroring that of the S&P 500. The successful test of first support, and decisive follow-through, are technically bullish.
Tactically, Monday’s close (8,433) closely matched a near-term target, circa 8,430, detailed previously. A more distant intermediate-term target projects from the October low to the 8,700 mark.
Looking elsewhere, the Dow Jones Industrial Average has belatedly broken out, reaching record territory this week.
Tactically, the 27,400 area pivots to support, levels matching the July peak (27,398) and the top of this week’s gap (27,402).
Meanwhile, the S&P 500 started last week with a rally to record territory, and has since extended the breakout.
The prevailing upturn punctuates a successful test of the breakout point (3,028) and the September peak (3,022). Bullish price action.
The bigger picture
Collectively, the major U.S. benchmarks have reached uncharted territory, rising amid early-November breakouts. An already-bullish bigger-picture backdrop continues to strengthen.
Moving to the small-caps, the iShares Russell 2000 ETF remains the weakest widely-tracked U.S. benchmark.
Still, the IWM has tagged a nearly six-month high, rising to challenge its range top. Tactically, overhead inflection points match the year-to-date closing peak (160.71) and absolute year-to-date peak (161.11).
Meanwhile, the SPDR S&P MidCap 400 has cleared its range top, reaching 52-week highs.
The MDY’s all-time high (374.10) — a level precisely matching the August and September 2018 peaks — remains slightly more distant.
Also recall that the prevailing upturn punctuates a successful test of support, circa 355. Constructive price action.
Looking elsewhere, the SPDR Trust S&P 500 has extended to record territory amid increased volume.
The strong November start punctuates a successful test of the breakout point, the 302.00-to-302.60 area.
More broadly, the SPY is rising from a double bottom, defined by the August and October lows, a pattern hinged to the steep June-through-July rally. The prevailing backdrop is firmly bullish.