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Michael Ashbaugh

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Nov. 14, 2017, 12:37 p.m. EST

Charting a bull-trend downdraft, S&P 500 nails first support

Focus: South Korea’s technical breakout, Consumer discretionary sector tags record highs, EWY, XLY, WUBA, MSI, HES

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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 U.S. benchmarks’ persistent bull trend has thus far weathered a respectable mid-November downdraft.

Still, the S&P 500 has once again nailed near-term support early Tuesday — S&P 2,566 — and the downturn’s aggressiveness is worth tracking for potential follow-through.

Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +2.28%   hourly chart highlights the past two weeks.

As illustrated, the S&P has pulled in from record territory amid jagged near-term price action.

Though the index has maintained the range bottom (2,566), it remains capped by first resistance, circa 2,586.

To reiterate, Tuesday’s early session low (2,566.5) punctuates a consecutive successful retest.

Similarly, the Dow Jones Industrial Average has pulled in from record territory.

In its case, the blue-chip benchmark has ventured under support (23,340) early Tuesday, briefly notching a month-to-date low.

A deeper floor matches the late-October low, circa 23,250.

Meanwhile, the Nasdaq Composite’s backdrop remains slightly stronger.

Tactically, the 6,750 area marks an inflection point matching last week’s close.

Slightly more broadly, consider that the November low of 6,677 currently defines the range bottom.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has thus far sustained the late-October gap to record territory. The index continues to trend atop the 20-day moving average, currently 6,691.

Delving deeper, firmer support spans from 6,626 to 6,640, levels matching the top of the gap and the breakout point. The response to this area, on the eventual pullback, should be a useful bull-bear gauge.

Moving to the Dow, the blue-chip benchmark has staged an initially tame November downturn.

Still, the index has ventured under the 20-day moving average, currently 23,386, early Tuesday. A close lower would mark the Dow’s first since Sept. 8.

Deeper support, circa 23,250, matches the late-October low.

Similarly, the S&P 500 has staged an initially shallow November pullback.

But here again, the S&P is retesting its 20-day moving average, currently 2,576, early Tuesday. Recall that the index has not closed under the near-term trending indicator since Aug. 29.

Delving slightly deeper, support spans from 2,564 to 2,566, levels matching the former gap and the November low respectively.

The bigger picture

Broadly speaking, the major U.S. benchmarks have thus far weathered a modest mid-November downturn.

Each index has maintained its two-week range, though near-term support is once again under siege early Tuesday. The session close may add color.

Moving to the small-caps, the iShares Russell 2000 ETF’s /zigman2/quotes/209961116/lastsale IWM +0.95%  backdrop is characteristically softer.

As illustrated, the small-cap benchmark has reached six-week lows, staging an extended retest of the 50-day moving average, currently 146.80.

The shares closed Monday fractionally lower, and have extended the downturn early Tuesday. Recall that deeper support matches the breakout point, spanning from 144.05 to 144.25.

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