By Michael Ashbaugh, MarketWatch
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Technically speaking, the S&P 500 has reversed sharply from one-month lows, punctuating a successful test of major support (2,742).
In the process, the S&P has rallied toward its fourth retest of the range top — the 2,802-to-2,817 area — and major resistance is frequently cleared on the third or fourth approach. The pending retest from underneath will likely add color.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX -0.62% hourly chart highlights the past two weeks.
As illustrated, the S&P has narrowly maintained major support (2,742).
Last week’s close (2,743) registered just above support, and the S&P has reversed sharply, reclaiming the 200-day moving average. Constructive price action.
Similarly, the Dow Jones Industrial Average has rallied from one-month lows.
To be sure, the Dow’s reversal registers as less decisive, as the index has been weighed down amid Boeing’s ugly downdraft. (The Dow Jones Industrial Average is a price-weighted index, meaning that higher-priced components carry a greater weight. Boeing is the highest-priced of the 30 Dow components, making it the most influential.)
Still, the Dow has thus far maintained notable support matching the June peak (25,402) on a closing basis.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.74% has reversed sharply from the March low.
In the process, the index has reclaimed its breakdown point (7,486) a level closely matching the 200-day moving average, currently 7,482. Both areas are also illustrated below.
On further strength, the February peak (7,602) marks an inflection point.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has absorbed the March downturn. This week’s swift reversal places the index on firmer technical ground, atop the breakdown point (7,486) and the 200-day moving average.
Consider that if a downtrend were in play, the 7,480 area “should have” capped the rally attempt. The nearly immediate reversal higher supports a bullish intermediate-term bias.
Looking elsewhere, the Dow Jones Industrial Average has rallied less impressively from the March low.
Still, the index has maintained an inflection point matching the June peak, circa 25,400. (The Dow has also sustained a posture atop the 200-day moving average throughout the March downturn, unlike the S&P 500 and the Nasdaq.)
Tactically, recall that a rally to the former range — atop resistance at 25,762 and 25,820 — would neutralize the March downdraft.
Meanwhile, the S&P 500 has narrowly maintained major support (2,742).
To reiterate, last week’s close (2,743) — also the March closing low — registered just above the inflection point. The subsequent sharp rally punctuates a successful retest.
The bigger picture
Collectively, the U.S. benchmarks’ bigger-picture backdrop supports a bullish near- to intermediate-term bias.
On a headline basis, the S&P 500 has maintained major support (2,742) — though narrowly — while the Nasdaq Composite has rallied sharply back atop its breakdown point (7,486). Both areas roughly match the 200-day moving average, a widely-tracked primary trending indicator.
More plainly, the major U.S. benchmarks have weathered a respectable March downturn, rising sharply from one-month lows. Bullish price action.
Moving to the small-caps, the iShares Russell 2000 ETF has also rallied from one-month lows.
Tactically, the 153.60-to-154.50 area pivots to resistance, detailed previously. The prevailing retest from underneath will likely add color.
Meanwhile, the SPDR S&P MidCap 400 has rallied from the March low amid increased volume.
In its case, resistance broadly spans from about 345.50 to the 200-day moving average, currently 247.22.