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Michael Ashbaugh

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Aug. 25, 2020, 12:47 p.m. EDT

Charting a bullish technical tilt, S&P 500 breaks to record territory

Focus: Transports assert bull flag, Financials hold key trendline, Amazon presses uncharted territory, IYT, XLF, AMZN, NSC, WLK

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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 U.S. benchmarks’ already-bullish bigger-picture backdrop continues to strengthen.

Consider that the S&P 500 has rallied to record highs — clearing the 3,400 mark for the first time on record — while the Nasdaq Composite has also reached uncharted territory, rising to nail its projected target (11,460).

Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX -1.21%  hourly chart highlights the past two weeks.

As illustrated, the S&P has reached uncharted territory, gapping atop the 3,400 mark.

The sharp follow-through punctuates an eight-session, pulling-teeth breakout attempt.

Tactically, a near-term floor matches the top of the gap (3,413) and is followed by the breakout point (3,400).

Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.59%  has knifed to six-month highs.

The prevailing upturn originates from major support (27,580) an area better illustrated on the daily chart.

More immediately, the breakout point (28,154) pivots to first support.

True to recent form, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -2.45%  remains the strongest major benchmark.

As illustrated, the index has extended its August breakout, notching three straight record closes.

Tactically, the former range top, circa 11,250, is followed by the firmer breakout point (11,126).

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has knifed to record territory, rising from a tight early-August range.

In the process, the index has reached its projected target in the 11,460-to-11,480 area, detailed repeatedly. (See, for instance, the Aug. 3 review and Wednesday’s review.)

Monday’s session high (11,462) matched the target, and thus far modest selling pressure has surfaced.

Tactically, notable support broadly spans from 11,080 to 11,126, an area also detailed on the hourly chart.

Looking elsewhere, the Dow Jones Industrial Average has rallied to six-month highs, notching its first August close atop the 28,000 mark.

The prevailing upturn punctuates a flag-like pattern, underpinned by the breakout point (27,580).

From current levels, additional resistance matches the February gap (28,403), detailed previously.

Tuesday’s early session high (28,400) has matched resistance and a retest remains underway. On further strength, the top of the February gap (28,892) marks an inflection point.

Meanwhile, the S&P 500 has knifed to all-time highs atop the 3,400 mark.

Recall that last week’s high (3,399.96) registered fractionally under the round number. This area roughly matches the February peak (3,393) and pivots to support.

The bigger picture

Collectively, the U.S. benchmarks’ bigger-picture backdrop remains comfortably bullish.

Consider that the S&P 500 and Nasdaq Composite have concurrently notched record highs — reaching previously uncharted territory — while the Dow Jones Industrial Average has reclaimed the 28,000 mark, knifing to six-month highs.

Each benchmark’s breakout has been sufficient to confirm its prevailing uptrend.

Moving to the small-caps, the iShares Russell 2000 ETF is digesting a break to five-month highs.

Recall that trendline support roughly matches the June peak (153.39).

Last week’s low (153.60) registered slightly above the trendline amid a successful retest. Constructive price action.

/zigman2/quotes/210599714/realtime
US : S&P US
3,269.96
-40.15 -1.21%
Volume: 3.01B
Oct. 30, 2020 5:18p
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
26,501.60
-157.51 -0.59%
Volume: 506.32M
Oct. 30, 2020 5:18p
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/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
10,911.59
-274.00 -2.45%
Volume: 3.18M
Oct. 30, 2020 5:16p
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