By Michael Ashbaugh, MarketWatch
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Technically speaking, the major U.S. benchmarks have weathered an October market whipsaw, rising amid potentially consequential mid-month price action.
Against this backdrop, the S&P 500 has sustained its break to a higher plateau — atop the 2,940 area — while the Nasdaq Composite has belatedly cleared its corresponding resistance (8,060), venturing higher early Tuesday.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +1.23% hourly chart highlights the past two weeks.
As illustrated, the S&P has gapped atop major resistance matching the August range top (2,943) and the September gap (2,960). The latter pivots to first support.
Conversely, additional overhead matches the former breakdown point (2,989). The October peak (2,993), established Friday, registered nominally higher, and the prevailing pullback from this area has been flat. Constructive price action.
Similarly, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +2.17% has reclaimed key levels.
Consider that the top of last week’s gap (26,694) matched the April peak (26,696) an inflection point also detailed on the daily chart.
Here again, the initial selling pressure near the range top has registered as flat.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.17% has reached a headline technical test.
Recall that last week’s close (8,057) matched major resistance (8,059), an intermediate-term inflection point, detailed repeatedly. An extended retest remains underway.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has gapped atop the 50-day moving average, rising to nail next resistance.
To reiterate, the July gap (8,059) closely matches the September gap (8,061) and marks a bull-bear inflection point. A close higher would mark an escape from the former August range, signaling a bullish intermediate-term bias. (Also see the Oct. 8 review.)
More broadly, the prevailing upturn punctuates a successful test of the 200-day moving average at the October low.
Looking elsewhere, the Dow Jones Industrial Average remains comparably stronger than the Nasdaq.
To reiterate, the top of last week’s gap (26,694) matched an inflection point at the April peak (26,696). The gap to a higher plateau is constructive.
The prevailing upturn builds on the Dow’s break atop the 50-day moving average and the August range top (26,427), signaling a bullish intermediate-term bias.
On further strength, additional overhead matches the July gap (27,088).
Similarly, the S&P 500 has knifed to a higher plateau.
Last week’s trade-fueled spike places the index above the August range top (2,943) and the September gap (2,960).
The bigger picture
Collectively, the major U.S. benchmarks have absorbed the early-October market downdraft.
On a headline basis, the S&P 500 and Dow industrials have reclaimed major resistance — levels matching the former August range top — while the Nasdaq Composite has nailed its corresponding resistance (8,060).
The Nasdaq has ventured atop the 8,060 area with Tuesday’s strong start, though as always, it’s the close that matters.
Moving to the small-caps, the iShares Russell 2000 ETF remains the weakest widely-tracked U.S. benchmark.
Still, the prevailing upturn places the 50-day moving average (150.57) and 200-day moving average (152.10) under siege. A close atop the trending indicators would mark technical progress.