By Michael Ashbaugh, MarketWatch
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Technically speaking, the major U.S. benchmarks are off to a volatile March start, pulling in respectably from major resistance.
Still, the downturn has thus far inflicted limited technical damage, preserving a bullish bigger-picture bias. Broadly speaking, the S&P 500’s pulling-teeth breakout attempt is intact.
Before detailing the U.S. markets’ wider view, the S&P 500’s /quotes/zigman/3870025/realtime SPX +0.88% hourly chart highlights the past two weeks.
As illustrated, the S&P has pulled in respectably from major resistance.
The specific area matches the late-October peak (2,816.94) and Monday’s session high (2,816.88) effectively matched resistance.
On a constructive note, the S&P has maintained its near-term range, closing firmly above session lows. In fact, the session close (2,792) matched the mid-point of the daily range.
Meanwhile, the Dow Jones Industrial Average has pulled in more aggressively, briefly tagging two-week lows.
Here again, the downturn punctuates a failed retest of the range top.
Tactically, the former range bottom (25,762) is followed by an inflection point matching Monday’s low (25,611).
Against this backdrop, the Nasdaq Composite /quotes/zigman/12633936/realtime COMP +1.32% has strengthened slightly versus the other benchmarks.
Consider that it briefly tagged four-month highs before pulling in to the range.
Moreover, the index has thus far maintained major support (7,486) a level closely matching the 200-day moving average. Both areas are also illustrated below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq is acting well technically.
More specifically, the index has maintained its breakout point (7,486), a level defined by the December peak. Last week’s low (7,485) matched support, punctuating a successful test of major support.
Delving slightly deeper, the 200-day moving average, currently 7,479, rests nominally under the breakout point. The Nasdaq’s longer-term bias remains bullish barring a violation of this area.
Looking elsewhere, the Dow Jones Industrial Average has balked at its range top.
Still, Monday’s bearish engulfing pattern has thus far inflicted limited damage. The session close (25,820) matched an inflection point at the December closing peak (25,826), detailed previously.
Delving deeper, the 20-day moving average, currently 25,644, has underpinned the 2019 uptrend. Monday’s reversal from the session low punctuated a successful retest of the near-term trending indicator.
More broadly, the chart illustrates a bull flag — pinned to the early-February rally — a continuation pattern improving the chances of upside follow-through. A closing violation of the range bottom (25,762) would raise a question mark.
Similarly, the S&P 500 has thus far weathered a single-day whipsaw at major resistance.
To reiterate, Monday’s session high (2,816.88) almost precisely matched the range top (2,816.94) and the index has pulled in to its near-term range.
The bigger picture
As detailed above, the major U.S. benchmarks are off to a volatile March start.
Still, the technical damage has thus far been limited — even on the hourly charts — and downside follow-through has been lacking early Tuesday.
Moving to the small-caps, the iShares Russell 2000 ETF has effectively flatlined at major resistance. Two inflection points remain in play:
Resistance matching the November peak of 157.90.
The 200-day moving average, currently 157.82.
Against this backdrop, the small-cap benchmark has registered seven straight closes within one point of the 200-day moving average — three higher, and four lower. An extended retest remains underway.
Meanwhile, the SPDR S&P MidCap 400 has strengthened on the margin versus the Russell 2000. Familiar inflection points fall out as follows:
Former resistance matching the four-month range top of 349.27.
The 200-day moving average, currently 347.60.
Consider that Monday’s close (349.22) effectively matched the range top, preserving a posture slightly atop the 200-day moving average. The prevailing flag-like pattern lays the groundwork for a potential breakout.
Looking elsewhere, the SPDR Trust S&P 500 /quotes/zigman/714403/composite SPY +0.90% has balked at major resistance. As detailed repeatedly, two areas stand out: