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Michael Ashbaugh

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June 9, 2020, 12:40 p.m. EDT

Charting a break to ‘clear skies’ territory, Nasdaq approaches 10,000 mark

Focus: Small- and mid-caps stage statistically unusual breakout, Semiconductor sector challenges record highs, SMH, MDC, ZS, WSM, BYND

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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 major U.S. benchmarks have taken flight to start June, rising amid distinctly bullish bigger-picture price action.

In the process, the Nasdaq Composite has reached all-time highs — previously uncharted territory — as it approaches the marquee 10,000 mark.

Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX -1.31%  hourly chart highlights the past two weeks.

As illustrated, the S&P is off to a strong June start.

Consider that Monday’s close (3,232) registered nominally atop the 2019 close (3,230) briefly placing the index in positive year-to-date territory. Selling pressure has resurfaced early Tuesday.

Tactically, an inflection point matches last week’s close (3,193.9) and is followed by the top of the gap (3,164).

Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.58%  has also taken flight, gapping firmly atop the 200-day moving average.

The index is traversing less-charted territory, better illustrated on the daily chart.

Tactically, a downside inflection point matches last week’s close (27,110) and the March peak (27,102).

Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.92%  has rallied to all-time highs.

The breakout point (9,838) pivots to notable support, an area is also detailed on the daily chart below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has reached all-time highs, previously uncharted territory. Recall that the prevailing leg higher originates from major support (9,323).

More immediately, the breakout point (9,838) marks a notable floor.

On further strength, the marquee 10,000 mark is increasingly within view. The index has thus far topped about 73 points under the round-number milestone.

Looking elsewhere, the Dow Jones Industrial Average has knifed decisively atop the 200-day moving average, signaling a primary trend shift.

In the process, the Dow has staged a bullish two standard deviation breakout, encompassing consecutive closes atop the 20-day Bollinger bands. (The Dow has also closed atop the bands across three of the prior four sessions.)

As always, consecutive closes atop the volatility bands are statistically unusual, and signal a tension between time horizons.

For the near-term, the Dow is extended following a massive rally outside the “normal” range of its trailing 20-day volatility. A cooling-off period is due.

But more importantly, extreme bullish momentum has fueled the upturn, likely laying the groundwork for longer-term gains.

Meanwhile, the S&P 500 has also taken flight to start June, placing distance atop its 200-day moving average.

And here again, the upturn has marked an unusual two standard deviation breakout, punctuated by consecutive closes atop the 20-day Bollinger bands.

The bigger picture

As detailed above, the major U.S. benchmarks have started June with a broadly-based, and longer-term bullish, technical breakout.

In the process, the Dow Jones Industrial Average has reclaimed its 200-day moving average, rising amid statistically unusual bullish momentum. The Dow is the last big three U.S. benchmark to signal a primary trend shift.

Meanwhile, the Nasdaq Composite has reached all-time highs. The marquee 10,000 mark is firmly within view.

Moving to the small-caps, the iShares Russell 2000 ETF has knifed atop its 200-day moving average concurrently with the Dow industrials. The tandem small- and large-cap breakout is unusual in the recent market context.

The prevailing follow-through builds on the steep late-May rally encompassing consecutive closes atop its 20-day volatility bands.

Meanwhile, the SPDR S&P MidCap 400 ETF has also followed through, placing distance atop its 200-day moving average.

Combined, the small- and mid-cap benchmarks — as well as the Dow industrials — have concurrently signaled primary trend shifts across just the prior two sessions.

Looking elsewhere, the SPDR Trust S&P 500 has also extended a strong June rally.

Its follow-through atop next resistance (313.84) was initially fueled by a volume spike.

-55.41 -1.31%
Volume: 3.62B
June 18, 2021 5:09p
US : Dow Jones Global
-533.37 -1.58%
Volume: 569.38M
June 18, 2021 5:09p
US : Nasdaq
-130.97 -0.92%
Volume: 5.62M
June 18, 2021 5:16p
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