By Michael Ashbaugh, MarketWatch
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Technically speaking, an already-bullish bigger-picture backdrop has strengthened to start April.
Against this backdrop, the S&P 500 has knifed to less-charted territory at five-month highs, rising to nail significant resistance (2,873). The prevailing 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 -0.67% hourly chart highlights the past two weeks.
As illustrated, the S&P has broken out, reaching five-month highs.
Recall that the January 2018 peak (2,873) defines next resistance. Tuesday’s early session high (2,872.9) has matched resistance and the retest remains underway.
Similarly, the Dow industrials have knifed to the range top, tagging a nominal five-month high.
Tactically, the February peak (26,241) remains an inflection point, also illustrated on the daily chart.
Delving deeper, the former range top (26,109) is closely followed by the top of the gap (26,071).
Meanwhile, the Nasdaq Composite has not registered new highs.
Still, the index knifed toward the range top, rising within striking distance of the March peak.
From current levels, the top of the gap (7,777) is followed by deeper support, circa 7,740.
WIdening the view to six months adds perspective.
On this wider view, the Nasdaq has knifed to less-charted territory near five-month highs. The breakout point (7,670) remains its first significant floor.
Conversely, additional overhead rests at the March closing peak (7,839) and absolute March peak (7,850). The Nasdaq’s former projected target (7,844) matches this area.
Consider that a material rally atop the March peak — on the order of a 1% breakout — would confirm the Nasdaq’s intermediate-term uptrend.
Looking elsewhere, the Dow Jones Industrial Average has belatedly come to life, shaking off a recent Boeing-fueled headwind.
The prevailing upturn originates from major support (25,400) an area roughly matching the 50-day moving average.
Conversely, additional resistance (25,440) is followed by the Dow’s more distant record close (26,828). A near-term projected target (26,846) closely matches the latter.
Meanwhile, the S&P 500 has weathered a jagged late-March retest of major support — the 2,800-to-2,817 area.
To reiterate, next resistance matches the January 2018 peak (2,873). Tuesday’s early session high (2,872.9) has matched the target.
The bigger picture
Collectively, an already-bullish bigger-picture technical backdrop has strengthened to start the second quarter.
On a headline basis, the S&P 500 has absorbed a prolonged retest of major support — the 2,800 area — rising to nail next resistance (2,873). Bullish price action.
Moving to the small-caps, the iShares Russell 2000 ETF continues to lag behind.
Still, the small-cap benchmark has extended its rally attempt, rising within view of the 200-day moving average, currently 156.70.
This is the lone widely-tracked U.S. benchmark still capped by the 200-day, and the pending retest from underneath should add color.
True to recent form, the SPDR S&P MidCap 400 remains incrementally stronger than the Russell 2000.
The mid-cap benchmark has reclaimed its 200-day moving average, currently 346.05, rising within striking distance of the range top (354.70).
More broadly, the small- and mid-cap benchmarks are rising from inverse head-and-shoulders patterns defined by the October, December and March lows. Though still developing, this is a high-reliability bullish reversal pattern.
Looking elsewhere, the SPDR Trust S&P 500 /zigman2/quotes/209901640/composite SPY -0.66% continues to outpace the small- and mid-caps.