By Michael Ashbaugh, MarketWatch
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Technically speaking, the U.S. benchmarks’ bigger-picture backdrop remains bullish, and continues to strengthen, amid constructive October price action.
On a headline basis, the S&P 500 has sustained its break to a higher plateau, rising within striking distance of record territory just ahead of the best six months seasonally — November through April.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +0.95% hourly chart highlights the past two weeks.
As illustrated, the S&P has flatlined, digesting recent gains. The hourly chart illustrates a flag-like pattern pinned to the mid-October breakout.
Tactically, the range top (3,008) matches next resistance, initially detailed last week. Conversely, the breakout point (2,989) is followed by deeper gap support (2,960).
(The Dow is a price-weighted index, unlike the other widely-tracked benchmarks, meaning that higher-priced components are more influential. Boeing is the highest-priced of the Dow industrials’ 30 components, making it the most influential individual name.)
The downturn punctuates a retest of next resistance (27,088), an area also detailed on the daily chart.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.73% is holding its range top.
Recall that major resistance matches the April peak (8,176) an area that has initially capped the prevailing rally attempt. Conversely, major support, circa 8,059, has effectively underpinned the mid-October breakout.
Both areas are also detailed below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has sustained its break to a higher plateau, signaling a bullish intermediate-term bias.
To reiterate, major support matches the July gap (8,059) and the September gap (8,061). This area has underpinned the prevailing range.
Conversely, next resistance matches the April peak (8,176), an area that has initially drawn modest selling pressure.
Looking elsewhere, the Dow Jones Industrial Average is also traversing a higher plateau.
Overhead inflection points match the July gap — at 27,088 and 27,135 — an area that has capped the October upturn.
Conversely, the top of the October gap (26,694) matches the April peak (26,696), an area that pivots to support.
(On a granular note, the April peak has underpinned the Dow’s prevailing range, and capped the Nasdaq’s corresponding range — almost precisely.)
Meanwhile, the S&P 500 has sustained a break to its former range, territory matching its July and September ranges.
To reiterate, notable support spans from 2,960 to 2,963, levels matching the September and October gaps respectively.
The bigger picture
As detailed above, the major U.S. benchmarks are acting well technically. Each index has sustained its mid-October breakout, asserting a higher plateau amid still muted selling pressure.
Moving to the small-caps, the iShares Russell 2000 ETF remains the weakest widely-tracked U.S. benchmark.
Nonetheless, the small-cap benchmark has placed distance atop its 200-day moving average, currently 152.54. The prevailing upturn punctuates a successful test of the range bottom.
Meanwhile, the SPDR S&P MidCap 400 has extended its recent break atop the 50- and 200-day moving averages, rising to next resistance.
Recall that the MDY’s 50-day moving average has marked a 2019 bull-bear inflection point.
Looking elsewhere, the SPDR Trust S&P 500 has sustained its October rally to a higher plateau.
The chart illustrates a developing double bottom, the “W” formation defined by the August and October lows. To reiterate, major support spans from 294.95 to 295.57, levels matching the May peak and the post-breakout low.
Placing a finer point on the S&P 500, the index has stabilized at a higher plateau as October volatility recedes.