By Michael Ashbaugh, MarketWatch
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Technically speaking, the major U.S. benchmarks’ already-bullish backdrop continues to strengthen with the best six months seasonally set to start Friday.
On a headline basis, the S&P 500 has broken to record highs — and is traversing previously uncharted territory — while the Nasdaq Composite’s October peak has thus far missed an all-time high by just four points.
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 has broken out, reaching all-time highs.
Tactically, the top of the gap (3,032) is closely followed by major support matching the breakout point (3,028) a level defined by the July peak. (The S&P’s former record high.)
Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.34% has not broken out — at least not yet.
Still, the blue-chip benchmark has knifed from its range bottom, rising to challenge major resistance.
Consider that Monday’s close (27,090) closely matched the July gap (27,088), an area also detailed on the daily chart.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +2.26% has extended a late-month breakout.
In the process, the index is pressing record territory matching the July peak (8,339.6), an area better illustrated below. Monday’s session high (8,335.6) missed the record high by just four points.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq is challenging all-time highs. A retest of the record close (8,330.21) and absolute record peak (8,339.64) is currently underway.
As always, the response to resistance is worth tracking. The chances of follow-through improve to the extent the index holds tightly to the range top.
More broadly, the prevailing upturn resolves a bullish double bottom — the W formation, defined by the August and October lows — a pattern hinged to the steep June-through-July rally. The October rally originates from a successful test of the 200-day moving average.
Looking elsewhere, the Dow Jones Industrial Average is pressing its range top.
As detailed repeatedly, overhead inflection points match the July gap — at 27,088 and 27,135. Monday’s close (27,090) matched resistance, and the Dow has ventured slightly higher early Tuesday.
On further strength, the September peak (27,306.73) is followed by the Dow’s record close (27,359.16) and absolute record peak (27,398.68), areas that remain slightly more distant.
Meanwhile, the S&P 500 remains the strongest major U.S. benchmark.
As illustrated, the index has reached record territory, clearing resistance matching the July and September peaks. The breakout point (3,028) pivots to notable support.
The bigger picture
Collectively, the U.S. benchmarks’ bigger-picture backdrop remains bullish, and it continues to strengthen.
The S&P 500 has reached record territory, while the Nasdaq Composite has thus far missed an all-time high by just four points.
Meanwhile, the Dow Jones Industrial Average is lagging slightly behind, though with just 30 components, it’s the least representative widely-tracked U.S. benchmark. (And even the Dow’s intermediate-term bias remains comfortably bullish.)
Moving to the small-caps, the iShares Russell 2000 ETF remains the weakest widely-tracked U.S. benchmark.
Still, the IWM has extended its break atop the 200-day moving average. Next resistance matches the 158 area, and the pending retest may add color.
Meanwhile, the SPDR S&P MidCap 400 has cleared next resistance, circa 355, following last week’s extended retest. Bullish price action.
On further strength, the September peak (360.98) is followed by the year-to-date closing peak (362.01).
Looking elsewhere, the SPDR Trust S&P 500 has cleared major resistance.