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Michael Ashbaugh

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March 3, 2020, 1:02 p.m. EST

Charting a fragile market recovery attempt, S&P 500 reclaims 200-day average

Focus: 10-year yield digests plunge to record lows amid Fed rate cut, Charting U.S. sector damage, TNX, XLF, KRE, IYT, QQQ, SMH

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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 major U.S. benchmarks continue to whipsaw amid a prolonged market volatility spike.

Against this backdrop, the S&P 500 has reclaimed its marquee 200-day moving average, raising the flag to a fragile, but potentially viable, market recovery attempt.

Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX -1.12%  hourly chart highlights the past two weeks.

As illustrated, the S&P has rallied sharply from major support (2,954).

Recall that last week’s close (2,954) matched a key inflection point, detailed previously.

The index has subsequently reversed sharply, rising to reclaim its 200-day moving average, currently 3,049. The bullish reversal signals a potentially viable recovery attempt to the extent the S&P maintains a posture atop support broadly spanning from about 3,028 to 3,050.

Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.88%  has also rallied from notable support.

Recall that last week’s low (26,481) matched the June low (26,480).

This level marked a 13-month range bottom, the Dow’s lowest since January 2019. Put differently, the Dow narrowly averted a 52-week low by a one-point margin.

From current levels, gap resistance (26,775) is followed by the more distant 200-day moving average, currently 27,244.

Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -1.07%  has narrowly maintained major support.

The specific area matches the 200-day moving average, and the November breakout point, levels better illustrated on the daily chart below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has registered a bullish reversal near the breakout point. Recall three inflection points, detailed previously:

  • The 200-day moving average, currently 8,402.

  • Major support matching the July peak, also the late-2019 breakout point (8,339).

  • Support matching the September peak (8,243).

Against this backdrop, last week’s low (8,264) matched support, in the broad sweep, and the index has rallied sharply.

On further strength, notable resistance matches the breakdown point (9,088). A retest is underway early Tuesday.

Looking elsewhere, the Dow Jones Industrial Average has reversed sharply from the June low (24,680) bottoming last week within one point.

On further strength, an inflection point matches the October gap, circa 26,700, and is followed by the more distant 200-day moving average. A sustained break back atop the 200-day would mark a step toward stabilization.

Meanwhile, the S&P 500 has spiked from five-month lows.

The sharp reversal places it atop the 200-day moving average, currently 3,049, opening the path to a potentially viable rally attempt.

Separately, note that the S&P’s longer-term technical bias remains bullish to the extent it maintains a posture atop the 200-day.

The bigger picture

Collectively, the major U.S. benchmarks continue to whipsaw amid a prolonged market volatility spike.

Amid the cross currents, last week’s plunge marked the biggest single-week downdraft since 2008. The downturn has been punctuated by Monday’s massive spike, each benchmark’s biggest daily point gain on record.

Moving to the small-caps, the iShares Russell 2000 ETF has violated its 200-day moving average, currently 156.58, pressured amid a sustained volume spike.

Conversely, the small-cap benchmark has maintained its 13-month range bottom, an area matching the August low (144.25).

Meanwhile, the SPDR S&P MidCap 400 ETF plunged from all-time highs to 13-month lows across just six sessions.

The MDY has subsequently reversed from the February low, rising to reclaim first resistance. Recall that the top of the gap (336.83) matches the breakdown point (336.82).

Looking elsewhere, the SPDR Trust S&P 500 /zigman2/quotes/209901640/composite SPY -1.15%  has rallied sharply from five-month lows.

The bullish reversal places the SPY atop its 200-day moving average, currently 304.60, a widely-tracked longer-term trending indicator. A rally attempt is underway to the extent the SPY sustains the break atop this area

Placing a finer point on the S&P 500, the index has broadly maintained an important technical floor.

The three-year chart above is a weekly view of the S&P 500. Each bar on the chart represents one week.

-37.54 -1.12%
Volume: 4.09B
Sept. 18, 2020 5:15p
US : Dow Jones Global
-244.56 -0.88%
Volume: 703.89M
Sept. 18, 2020 5:15p
US : U.S.: Nasdaq
-116.99 -1.07%
Volume: 5.26M
Sept. 18, 2020 5:16p
US : U.S.: NYSE Arca
$ 330.65
-3.85 -1.15%
Volume: 105.88M
Sept. 18, 2020 4:00p
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