By Michael Ashbaugh, MarketWatch
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Technically speaking, December selling pressure has surfaced following the U.S. benchmarks’ persistent November break to record territory.
Against this backdrop, each big three benchmark has ventured under major support early Tuesday — S&P 3,100, Nasdaq 8,500 and Dow 27,400 — and a close near current levels would inflict near-term damage for the first time since October.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +0.48% hourly chart highlights the past two weeks.
As illustrated, the S&P has extended its pullback from record territory.
Tactically, the 3,100 mark matches major support. The S&P has ventured under this area early Tuesday.
Delving deeper, a near-term inflection point (3,085) is followed by gap support at 3,067 and 3,050.
Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.07% has started December with a slightly more aggressive downdraft.
Its first notable support matches the breakout point (27,744), and here again, the index has ventured firmly lower early Tuesday.
Delving deeper, a more significant floor matches the 27,400 mark, an area illustrated on the daily chart.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +1.29% has also pulled in to its former range.
Tactically, major support matches the 8,500 mark, an area that more broadly spans from about 8,483 to 8,504. An extended retest is underway early Tuesday.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq’s November peak (8,705.9) — also the all-time high — matched its intermediate-term target at the 8,700 mark, detailed repeatedly.
(Start with the 8,243 inflection point and subtract the October closing low: 8,243 - 7785 = 458 points. Then, add the result to the breakout point: 8,243 + 458 = 8,701.)
More immediately, the Nasdaq has started December with a respectable downdraft. Tactically, the 8,500 mark is followed by gap support (8,386) and the much more important breakout point (8,339). The Nasdaq’s intermediate-term bias remains bullish barring a violation.
Looking elsewhere, the Dow Jones Industrial Average has also reversed from record highs.
Recall that the breakout point (27,400) marks major support, a level matching the July peak (27,398) and the early-November gap (27,402).
The Dow has ventured under major support early Tuesday. A close below the breakout point would raise a technical question mark.
Deeper inflection points match the September peak (27,306) and the 50-day moving average, currently 27,210.
Similarly, the S&P 500 has pulled in respectably from record territory.
Recall that the November close (3,041) matched the S&P’s intermediate-term target of 3,140, detailed repeatedly.
On further weakness, gap support (3,067) is followed by the much firmer breakout point (3,028), a level closely matching the 50-day moving average.
The bigger picture
As detailed above, December selling pressure has surfaced following the U.S. benchmarks’ persistent November break to record territory.
The downturns originate from notable target levels. For instance, the Nasdaq’s all-time high (8,705.9), established last week, has matched its 8,700 target. Similarly, the S&P 500’s November close (3,141) — its second-best close on record — matched the 3,140 target.
Both targets have been detailed repeatedly.
Separately, the downturn has registered to start December. The year-to-date price action has been punctuated by key trend shifts at turns of the month. (See, for instance, May, June, August, October and November.)
Against this backdrop, the prevailing downturn’s aggressiveness is worth tracking for potential technical damage. Each benchmark’s intermediate-term bias remains bullish, based on today’s backdrop.
Moving to the small-caps, the iShares Russell 2000 ETF has reversed from 52-week highs.
Recall that the late-November spike registered as a two standard deviation breakout, punctuated by consecutive closes atop its 20-day Bollinger bands .
Still, the small-cap benchmark has pulled back to its formerly tight range to start this month. Recall that major support matches the 158.00 mark.
Similarly, the SPDR S&P MidCap 400 ETF has pulled in to its former range from 52-week highs. In its case, a significant floor spans from about 360.50 to 361.00.