By Michael Ashbaugh, MarketWatch
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Technically speaking, the U.S. benchmarks’ persistent late-year breakout remains in play.
Against this backdrop, the S&P 500 has extended to its latest record peak — tagging an intermediate-term target (3,140) early Tuesday — as the Russell 2000 belatedly breaks to 52-week highs amid bullish market rotation.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +0.15% hourly chart highlights the past two weeks.
As illustrated, the S&P has extended its November breakout, tagging another nominal record high. The prevailing upturn punctuates a successful test of the breakout point (3,100).
From current levels, the former range top (3,127) marks a near-term floor.
Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.09% has rallied to challenge its record high.
Here again, the index has effectively maintained its breakout point (27,774).
Recall that last week’s closing low (27,766) registered nominally under support, punctuating a jagged, but ultimately successful, retest.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.01% has broken decisively to record territory.
Consider that this week’s strong start once again punctuates a successful test of the breakout point (8,504). Last week’s closing low (8,506) registered nominally above support.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has extended its November break to all-time highs. The late-month follow-through originates from first support around the 8,500 mark.
More broadly, the prevailing breakout punctuates a bullish double bottom defined by the August and October lows. An intermediate-term target projects to the 8,700 mark, and is increasingly within striking distance.
Looking elsewhere, the Dow Jones Industrial Average has weathered last week’s slightly more aggressive pullback.
Recall that the downturn was effectively underpinned by its first notable floor, an area spanning from 27,774 to 27,800. Last week’s closing low (27,766) registered nominally lower.
More immediately, Monday’s close (28,066) marked a record close, and the Dow is challenging its absolute record peak (28,090) early Tuesday.
Meanwhile, the S&P 500 has slightly extended its break to record territory.
The late-month upturn punctuates a successful test of its first notable support around the 3,100 mark. Bullish price action.
The bigger picture
Collectively, the U.S. benchmarks’ bigger-picture backdrop remains comfortably bullish.
On a headline basis, the S&P 500 and Nasdaq Composite have concurrently tagged nominal record highs to start this week. Moreover, both benchmarks are rising from successful tests of first support — the S&P 3,100 and Nasdaq 8,500 areas. Bullish price action.
Moving to the small-caps, the iShares Russell 2000 ETF has finally come to life.
Specifically, the small-cap benchmark has knifed to 52-week highs, rising from a tight November range amid increased volume.
Notably, the late-month spike has registered as a bullish two standard deviation breakout. The IWM is vying Tuesday for a second consecutive close atop its 20-day Bollinger bands .
As always, consecutive closes atop the bands are statistically unusual, likely laying the groundwork for longer-term follow-through.
Meanwhile, the SPDR S&P MidCap 400 ETF has tagged 52-week highs, though less decisively.
Here again, the prevailing upturn punctuates a tight November range underpinned by well-defined support.
More broadly, the small- and mid-caps’ tandem resurgence signals a rotational market backdrop, strengthening the bull case.