By Michael Ashbaugh, MarketWatch
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Technically speaking, the U.S. benchmarks have staged a bullish June reversal, rising sharply from multi-month lows.
Against this backdrop, the S&P 500 remains near-term extended — and due to consolidate at some point — though its decisive trendline breakout supports a bullish intermediate-term bias.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +0.28% hourly chart highlights the past two weeks.
As illustrated, the S&P has extended a persistent June rally.
Recall that last week’s close (2,873) matched a familiar inflection point as well as the 50-day moving average, also currently 2,873.
On further strength, additional overhead (2,898) is followed by resistance in the 2,912-to-2,916 area.
Similarly, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.09% has extended a directionally sharp rally.
In the process, the Dow has also reclaimed its 50-day moving average, currently 26,008. This area matches a bull-bear inflection point, better illustrated on the daily chart.
Meanwhile, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.40% has reversed sharply from four-month lows.
This the lone big three U.S. benchmark still capped by the 50-day moving average, currently 7,861. A retest from underneath remains underway.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has knifed atop trendline resistance and the breakdown point (7,670).
Though near-term extended, the steep June reversal places the Nasdaq on firmer technical ground. Its intermediate-term bias remains bullish barring a violation of the 7,670 area.
More immediately, additional overhead matches the March peak (7,850) and the 50-day moving average, currently 7,861. The initial retest from underneath has thus far drawn muted selling pressure.
Looking elsewhere, the Dow industrials remain stronger, reclaiming the 50-day moving average, and reaching one-month highs.
Tactically, the former range top closely matches the December peak (25,980) and the 50-day moving average, currently 26,008. This area pivots to support.
Conversely, gap resistance (26,310) matches the early-May breakdown point.
Similarly, the S&P 500 has tagged one-month highs, rising atop its 50-day moving average.
To reiterate, additional resistance (2,898) is followed by an inflection point in the 2,912-to-2,916 area.
The bigger picture
As detailed above, the major U.S. benchmarks have staged a decisive June reversal, reaching firmer technical ground.
Moreover, the upturn originates from last week’s statistically unusual 8-to-1 up day. (Advancing volume surpassed declining volume by an 8-to-1 margin.)
This marked a stake-in-the-ground bullish reversal — sufficient to underpin a durable uptrend — and a comparable follow-through session, across the next several sessions, would materially strengthen the bull case.
Recall that the early-2019 rally originated from two 10-to-1 up days across a seven-session window. Almost textbook bullish price action.
Moving to the small-caps, the iShares Russell 2000 ETF has extended a rally from four-month lows.
On further strength, the 200-day moving average (153.64) and 50-day moving average (154.44) are increasingly within striking distance.
Meanwhile, the SPDR S&P MidCap 400 remains incrementally stronger, notching three straight closes atop the 200-day moving average.