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Michael Ashbaugh

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May 21, 2019, 12:37 p.m. EDT

Charting a range-bound backdrop, S&P 500 weathers May trade-fueled volatility

Focus: Crude oil maintains major support, Semiconductors pressured amid trade tensions, USO, SMH, XLP, WDAY, AXP, CPA

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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 increased, and largely trade-fueled, May market volatility.

Amid the cross currents, the bigger-picture technical damage has thus far been largely contained, with each big three U.S. benchmark maintaining major support.

Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +0.97%  hourly chart highlights the past two weeks.

As illustrated, the S&P is traversing a jagged May range, vacillating amid each day’s trade-related developments.

Tactically, the 50-day moving average, currently 2,872, is followed by notable overhead at the May breakdown point (2,898).

Meanwhile, the Dow industrials’ /zigman2/quotes/210598065/realtime DJIA +1.35%  recent price action is equally jagged.

Recall that major resistance matches the breakdown point — spanning from about 25,950 to 25,980 — an area also illustrated on the daily chart.

Consider that Friday’s session high (25,949) matched resistance, and the Dow has pulled in to its range.

Against this backdrop, the Nasdaq Composite’s /zigman2/quotes/210598365/realtime COMP +1.39%  immediate pullback — across the prior two sessions — has registered as the most aggressive.

Tactically, major support (7,670) matches the former range top, an area also illustrated on the daily chart below.

Monday’s session low (7,678) closely matched support, and Tuesday’s early upturn punctuates a second successful retest.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has thus far maintained major support. Recall that the former range top spanned from 7,643 to 7,670.

To reiterate, the week-to-date low (7,678) has registered just above the inflection point.

Separately, the Nasdaq has whipsawed at the breakdown point (7,850) an area roughly matching the 50-day moving average.

Looking elsewhere, the Dow Jones Industrial Average is traversing an increasingly familiar range.

Recall that the May low (25,222) has registered slightly above the range bottom (25,208).

Conversely, notable resistance matches the breakdown point, an area spanning from 25,950 to 25,980. (See the May 14 review.)

Thursday’s session high (25,957) and Friday’s high (25,949) have punctuated a failed initial retest. On further strength, the Dow’s 50-day moving average, currently 26,075, remains slightly more distant.

Meanwhile, the S&P 500 has maintained major support in the 2,800-to-2,817 area.

The subsequent rally attempt has been capped by cluttered technical territory, including the May breakdown point (2,898) better illustrated on the hourly chart.

The bigger picture

As detailed above, the U.S. benchmarks are off to a volatile start to the worst six months seasonally — May through October.

Amid the cross currents, the prevailing backdrop is not one-size-fits-all, though on balance, the bigger-picture technical damage has been relatively contained.

Each big three benchmark has maintained well-defined support, most notably the S&P 2,817 and Nasdaq 7,670 areas.

Moving to the small-caps, the iShares Russell 2000 ETF remains capped by its major moving averages.

The 200-day moving average (154.90) and 50-day moving average (155.48) closely match.

Conversely, the May low (151.16) marks a downside inflection point. An eventual violation would mark a “lower low” strengthening the bear case.

Meanwhile, the SPDR S&P MidCap 400 has pulled in to an extended test of the 200-day moving average, currently 344.90.

Here again, a tandem violation of the 200-day moving average and the May low (340.78) would strengthen the bear case.

Conversely, the 50-day moving average, currently 350.58, remains an overhead inflection point.

/zigman2/quotes/210599714/realtime
US : S&P US
2,917.75
+28.08 +0.97%
Volume: 2.00B
June 18, 2019 4:55p
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
26,465.54
+353.01 +1.35%
Volume: 273.49M
June 18, 2019 4:55p
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/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
7,953.88
+108.86 +1.39%
Volume: 1.98M
June 18, 2019 5:16p
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