By Michael Ashbaugh, MarketWatch
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Technically speaking, the U.S. benchmarks’ already-bullish bigger-picture backdrop continues to strengthen.
On a headline basis, each big three benchmark has staged a decisive November breakout — confirming its uptrend — and has since flatlined, signaling still muted selling pressure amid healthy market rotation.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX -3.35% hourly chart highlights the past two weeks.
As illustrated, the S&P continues to hold its range top. The selling pressure near record highs remains flat.
Tactically, a near-term inflection point (3,085) is followed by gap support (3,067), a level closely matching last week’s low (3,066).
Similarly, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -3.56% is digesting its November breakout.
To reiterate, near-term support (27,560) is followed by a firmer floor at the 27,400 mark, a level also detailed on the daily chart.
Recall that the top of the gap (27,402) closely matches the July peak (27,398).
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -3.71% has also drawn muted selling pressure near record highs.
Tactically, the former range top (8,457) is followed by gap support (8,386) roughly matching last week’s low.
Collectively, each big three U.S. benchmark has registered a shallow pullback from its all-time high signaling that bullish momentum is intact.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq is digesting a decisive November breakout. The prevailing flag pattern at record territory is technically constructive.
As detailed previously, gap support (8,386) is followed by the firmer breakout point — the 8,335-to-8,339 area — levels matching the October and July peaks.
Conversely, an intermediate-term target projects from the October low to the 8,700 mark.
Looking elsewhere, the Dow Jones Industrial Average has registered an increasingly respectable November breakout. (This remains the “weakest” breakout of the major U.S. benchmarks.)
The prevailing upturn originates from major support (27,400).
Last week’s low (27,408) registered slightly above the breakout point (27,400), an area also detailed on the hourly chart. Bullish price action.
Meanwhile, the S&P 500 has paced the U.S. benchmarks’ rally to record highs. This was the first major benchmark to break out, initially reaching record territory on Oct. 28.
The steep rally has been punctuated by shallow and short-lived pullbacks, signaling that late-year selling pressure remains muted.
Put differently, the break to record highs opened the path to uncharted territory — capped by no true resistance — and the S&P has responded accordingly.
The bigger picture
Collectively, an already-bullish bigger-picture backdrop has strengthened materially to start November.
On a headline basis, each major benchmark has knifed to record territory. Moreover, the decisive breakouts have surfaced amid rotational price action — across sectors and asset classes — detailed last week.
Moving to the small-caps, the iShares Russell 2000 ETF /zigman2/quotes/209961116/composite IWM -3.01% continues to lag behind.
Not only has the IWM not reached record territory, it remains capped by its year-to-date peak (161.11).
Still, the IWM has asserted a November flag-like pattern, underpinned by first support (158.00). As always, the flag is a continuation pattern, improving the chances of eventual upside follow-through.
Meanwhile, the SPDR S&P MidCap 400 has sustained a break to 52-week highs.
In its case, the prevailing flag pattern is underpinned by gap support, detailed previously. Last week’s low (361.51) registered fractionally above the bottom of the gap (361.43).
More broadly, the November gap has marked a familiar floor across the widely-tracked benchmarks. (See the hourly charts.)