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Michael Ashbaugh

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July 7, 2020, 12:20 p.m. EDT

Charting a bullish July start, Nasdaq extends break to record territory

Focus: Emerging markets stage triangle breakout, Semiconductor sector tags record highs, EEM, SMH, ADI, CRM, FDX

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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 are off to a constructive July start despite persistently uneven bigger-picture price action.

On a headline basis, the S&P 500 has reclaimed major resistance (3,155) — rising to fill the June gap — while the Nasdaq Composite extends a more decisive July break to previously uncharted territory.

Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX -0.17%  hourly chart highlights the past two weeks.

As illustrated, the S&P has reclaimed major resistance (3,155), a level matching the November peak (3,154). This area pivots to first support.

Separately, the index has effectively nailed additional overhead at the top of the June gap (3,181.5). Recall that a close atop gap resistance would neutralize the early-June island reversal.

Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.40%  has nailed its range top, an area matching the early-June gap (26,294).

Monday’s high (26,297) and the session close (26,287) registered nearby.

Separately, the blue-chip benchmark continues to challenge its 200-day moving average, currently 26,245. The prevailing retest is also detailed on the daily chart.

Not surprisingly, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.05%  remains the strongest major benchmark.

As illustrated, the index has extended a decisive break to record territory.

The prevailing upturn punctuates a jagged test of the breakout point (9,838) an area better illustrated below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has knifed to record territory, rising from a jagged retest of the breakout point (9,838).

Though near-term extended, and due to consolidate, the nearly straightline July start is longer-term bullish.

Overhead targets continue to project to the 10,505 and 10,610 areas, and are firmly within view.

Looking elsewhere, the Dow Jones Industrial Average remains range-bound amid a persistently weaker backdrop.

Still, the index has maintained a posture atop its 50-day moving average, a level that has underpinned the May and June lows.

Conversely, the 200-day moving average, currently 26,245, has marked an overhead sticking point. Though Monday’s close (26,287) marked the Dow’s first close higher since June 10, an extended retest remains underway.

Separately, the week-to-date peak (26,297) has matched gap resistance (26,294). Follow-through atop this area would mark technical progress.

Meanwhile, the S&P 500 has rallied atop major resistance (3,154), notching its first close higher since June 10.

Separately, the prevailing upturn has tagged the top of the June gap (3,181.5).

The early-week peak (3,182.6) has effectively matched gap resistance.

On further strength, more distant overhead matches the 2019 close (3,230) and the June peak (3,233).

The bigger picture

As detailed above, the major U.S. benchmarks are off to a constructive July start.

On a headline basis, the Nasdaq Composite has knifed decisively to record territory. Meanwhile, the S&P 500 and Dow industrials continue to broadly trend higher, though less aggressively.

Each benchmark’s intermediate-term bias remains bullish.

Moving to the small-caps, the iShares Russell 2000 ETF has maintained major support.

Tactically, its trendline tracks the 50-day moving average, currently 137.00, a level that has surpassed the breakout point (136.20).

Conversely, the small-cap benchmark remains capped by its 200-day moving average, currently 146.34.

-6.61 -0.17%
Volume: 1.44B
Jan. 22, 2021 2:43p
US : Dow Jones Global
-124.33 -0.40%
Volume: 297.66M
Jan. 22, 2021 2:43p
US : U.S.: Nasdaq
+6.32 +0.05%
Volume: 4.22M
Jan. 22, 2021 2:43p
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