By Michael Ashbaugh, MarketWatch
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Technically speaking, the big three U.S. benchmarks continue to digest potentially consequential September breakouts.
On a headline basis, each index has knifed from its jagged August range — by a margin initially exceeding 1% — while the subsequent selling pressure has registered as flat, preserving a bullish intermediate-term bias.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +0.48% hourly chart highlights the past two weeks.
As illustrated, the S&P is digesting the September breakout. The flat prevailing pullback is technically constructive.
To reiterate, initial support matches the top of the gap (2,960) and is followed by the firmer breakout point (2,943).
Similarly, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.07% has flatlined, digesting a respectable September breakout.
Here again, the prevailing flag-like pattern is technically constructive.
From current levels, the post-breakout low (26,708) is followed by the top of the gap (26,603) and the 50-day moving average, currently 26,575.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +1.29% has narrowly sustained its recent breakout.
Recall that notable support matches the July gap (8,059), and the 50-day moving average, currently 8,055. The Nasdaq has ventured under this area early Tuesday, though as always, it’s the close that matters.
Delving deeper, nearby inflection points match the breakout point (8,018) and the round-number 8,000 mark.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has sustained a break atop major resistance (8,059) notching three straight closes higher. This area closely matches the 50-day moving average, and a sustained posture higher area signals a bullish intermediate-term bias.
As detailed previously, next resistance (8,135) matches the former range bottom, and is followed by the April peak (8,176).
The September peak (8,134) has matched next resistance — across consecutive sessions — and modest selling pressure has surfaced.
Looking elsewhere, the Dow Jones Industrial Average has slightly extended its September breakout, outpacing the Nasdaq Composite.
Tactically, recall that the former range top (26,427) pivots to support. A posture higher signals a bullish intermediate-term bias.
Conversely, additional overhead (26,966) is followed by more distant resistance matching the July gap (27,088), also the former breakdown point.
Similarly, the S&P 500 has extended a break from its jagged August range.
On further strength, the 2,995 inflection point is followed by the S&P’s record peak (3,028).
The bigger picture
Collectively, the major U.S. benchmarks have staged a respectable, if admittedly less than picture-perfect, September breakout.
On a headline basis, each index has knifed to one-month highs, and the immediate selling pressure has registered as flat. Constructive price action.
Moving to the small-caps, the iShares Russell 2000 ETF remains the weakest widely-tracked U.S. benchmark.
Still, the small-cap benchmark has belatedly reclaimed its 200-day moving average, currently 150.80. The prevailing upturn punctuates a successful test of the range bottom.
Meanwhile, the SPDR S&P MidCap 400 remains incrementally stronger.
Technically, the MDY has reclaimed its breakdown point (345.40) as well as the 50-day moving average, currently 348.98.
More broadly, the flatlining 50- and 200-day moving averages signal a trendless, or range-bound, backdrop.
Looking elsewhere, the SPDR Trust S&P 500 continues to outpace the small and mid-caps.
As illustrated, the SPY has knifed atop its 50-day moving average (294.50) and the breakdown point (294.95) an area that broadly pivots to major support.