By Michael Ashbaugh, MarketWatch
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Technically speaking, the major U.S. benchmarks continue to grind higher amid persistently bullish, and increasingly consequential, February price action.
On a headline basis, the S&P 500 has extended a mid-month technical breakout — placing distance atop its 200-day moving average — while the Nasdaq Composite has registered its first close slightly atop the 200-day for the first time since Nov. 8. Though sustainability and follow-through remain open questions, the tandem breakouts raise the flag to a primary trend shift.
Before detailing the U.S. markets’ wider view, the S&P 500’s /quotes/zigman/3870025/realtime SPX -0.01% hourly chart highlights the past two weeks.
As illustrated, the S&P has extended its break atop the 200-day moving average, currently 2,745.6, notching four straight closes atop the primary trending indicator.
From current levels, the 2,762 area pivots to support, and is followed by the firmer breakout point, circa 2,742.
Similarly, the Dow Jones Industrial Average has knifed to two-month highs, confirming its uptrend.
Tactically, near-term support (25,626) is followed by a more significant floor matching the June peak, circa 25,400.
Meanwhile, the Nasdaq Composite /quotes/zigman/12633936/realtime COMP +0.12% has reached a headline technical test.
Specifically, the index is challenging its 200-day moving average, currently 7,467.5, closing last week slightly higher for the first time since Nov. 8.
As always, the 200-day is a widely-tracked longer-term trending indicator. A posture higher generally signals a primary uptrend.
The Nasdaq’s recent persistence near the range top improves the chances of an eventually more decisive breakout.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq is challenging major resistance. Familiar inflection points stand out:
The three-month range top, defined by the December peak of 7,486.
Major resistance at 7,474.
The 200-day moving average, currently 7,467.5.
Against this backdrop, last week’s close (7,272) effectively matched resistance (7,274), and an extended retest remains underway. Still, the weekly close atop the 200-day moving average, combined with Tuesday’s early follow-through, raises the flag to a primary trend shift.
Looking elsewhere, the Dow Jones Industrial Average has paced the 2019 market rally.
Consider that the Dow cleared its 200-day moving average to conclude January, and has subsequently taken flight. Tactically, last week’s close (25,883) matched a former inflection point at the late-August gap (25,882).
On further strength, the December peak (25,980) is followed by an inflection point in the 26,180-to-26,190 area.
Meanwhile, the S&P 500 has also extended a break to two-month highs.
Tactically, the 2,773-to-2,775 area remains an inflection point —matching the top of the December gap — and is followed by major resistance at the early-2018 range top (2,802).
The bigger picture
As detailed above, the U.S. benchmarks’ bigger-picture backdrop continues to strengthen.
On a headline basis, each big three U.S. benchmark has reached two-month highs, confirming its intermediate-term uptrend .
Perhaps more notably, key primary trends are also under siege. To reiterate, the S&P 500 has registered four straight closes atop the 200-day moving average, while the Nasdaq Composite has notched its first close atop the 200-day since Nov. 8.
Moving to the small-caps, the iShares Russell 2000 ETF has extended its rally attempt amid a volume uptick.
Consider that the 200-day moving average, currently 157.87, is increasingly within view. The 200-day has capped the small-cap benchmark since Oct. 10.
Meanwhile, the SPDR S&P MidCap 400 has edged atop the 200-day moving average, currently 347.52, closing higher for the first time since Oct. 9.
Tactically, significant resistance matches the range top (349.27) and the pending retest should bea a useful bull-bear gauge.
More broadly, the mid-cap benchmark has reached four-month highs, while the small-cap benchmark has tagged three-month highs.
Against this backdrop, the SPDR Trust S&P 500 has placed distance atop the 200-day moving average, currently 274.30.