By Michael Ashbaugh, MarketWatch
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Technically speaking, the U.S. benchmarks’ grinding-higher recovery attempt remains in play, though amid increasingly uneven price action.
On a headline basis, the Nasdaq Composite has extended its break to positive year-to-date territory — reaching a 10-week high — while the S&P 500 and Dow industrials remain range-bound, but have tagged a month-to-date peak to start this week.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +1.60% hourly chart highlights the past two weeks.
As illustrated, the S&P has extended a break atop the 2,900 mark.
Tactically, recall that last week’s high (2,932) closely matched the 62% Fibonacci retracement of the 2020 crash (2,934).
On further strength, major resistance (2,954) matches the April peak.
Meanwhile, the Dow industrials’ /zigman2/quotes/210598065/realtime DJIA +1.34% backdrop remains incrementally softer.
Still, the index continues to challenge its breakdown point (24,264). An extended retest remains underway this week.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +2.26% remains the strongest benchmark.
As illustrated, the index has extended its May break to positive year-to-date territory. The prevailing upturn punctuates a bullish island reversal at the range bottom, a pattern defined by the gaps.
Tactically, a near-term floor (9,126) is followed by the 2019 close (8,972).
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has reached 10-week highs, rising from an island reversal to start May.
The upturn builds on a similar April start, also punctuated by a bullish island reversal. (See for instance, the April 8 review.)
On further strength, resistance spans from 9,300 to 9,323, levels matching the bottom of the February gaps. The second February gap (9,323) punctuated the Nasdaq’s initial technical breakdown, as well as a bearish island reversal.
Looking elsewhere, the Dow Jones Industrial Average remains in consolidation mode.
Still, the index has extended its May upturn, reclaiming the 24,000 mark.
On further strength, major resistance matches the June 2019 low (24,680) and the February low (24,681).
Similarly, the S&P 500 has extended a rally from the May low.
The upturn places a second test of major resistance (2,954) firmly within view. (Resistance matches the May 2019 peak (2,954.1) the July 2019 peak (2,952.2) and the April 2020 peak (2,954.9).
The bigger picture
As detailed above, a notable divergence has surfaced to start May.
Namely, the Nasdaq Composite has extended its rally attempt — reaching positive year-to-date territory — while the S&P 500 and Dow industrials remain range-bound.
The net result is a broadly constructive start to the worst six months seasonally.
As it applies to the S&P 500, its intermediate-term bias remains bullish within the context of a bearish longer-term backdrop.
Moving to the small-caps, the iShares Russell 2000 ETF has sustained its recent breakout.
The May upturn punctuates a successful test of the breakout point and the 50-day moving average, currently 120.90.
Similarly, the SPDR S&P MidCap 400 ETF has sustained its breakout, maintaining the 50-day moving average, currently 278.90.