By Michael Ashbaugh, MarketWatch
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Technically speaking, the major U.S. benchmarks kick off October against a backdrop that is not one-size-fits-all.
On a headline basis, the Nasdaq Composite has registered a bearish divergence, recently placing distance under its 50-day moving average. Meanwhile, the S&P 500 remains comparably resilient, though a retest of key support (2,960) is underway Tuesday, to start the fourth quarter.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +1.05% hourly chart highlights the past two weeks.
As illustrated, the S&P has thus far maintained notable support. On a headline basis, the downturn has been underpinned by the 50-day moving average, currently 2,948.
Separately, recall that last week’s close (2,961.8) registered slightly above the top of the September gap (2,960). The S&P has yet to close under the 2,960 area, though the latest retest is underway Tuesday.
Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.44% is traversing an increasingly familiar range.
Recall that last week’s low (26,705) registered slightly above the April peak (26,696) an area better illustrated on the daily chart.
Conversely, the range top (27,080) matches the July gap (27,088), an area also detailed on the daily chart.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.66% remains the weakest major benchmark.
Consider that the September close (7,999.34) — also the third-quarter close — registered fractionally under the 8,000 mark.
But more importantly, the Nasdaq remains capped by its 50-day moving average, and major resistance (8,059), areas also detailed on the daily chart below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has violated major support.
The familiar area matches the July gap (8,059), the top of the September gap (8,061) and the 50-day moving average, currently 8,033. Viewed in isolation, the Nasdaq’s downturn raises an intermediate-term caution flag.
Looking elsewhere, the Dow Jones Industrial Average remains comparably stronger than the Nasdaq.
Still, the index is traversing a lower plateau. Recall that the range top (27,080), established last week, closely matches the July gap (27,088).
Conversely, last week’s low (26,705) roughly matched the April peak (26,696).
More broadly, the index has maintained a posture comfortably atop its 50-day moving average, currently 26,565. Delving deeper, the Dow’s intermediate-term bias remains bullish barring a violation of the August range top (26,427).
Meanwhile, the S&P 500 has also maintained next support.
Familiar floors match the September gap (2,960) and the 50-day moving average, currently 2,948. Conversely, recall that the September peak (3,022) registered just six points under the S&P’s all-time high.
The bigger picture
As detailed above, the prevailing bigger-picture backdrop is not one-size-fits-all.
To start, the S&P 500 and Dow industrials have largely absorbed the late-September downturn, maintaining next support — the S&P 2,960 and Dow 26,700 areas. Each benchmark’s intermediate-term bias remains bullish.
Meanwhile, the comparably weaker Nasdaq Composite has registered three straight closes under the 50-day moving average. Its intermediate-term bias remains bearish-leaning, pending repairs.
Moving to the small-caps, the iShares Russell 2000 ETF is pressing its marquee 200-day moving average, currently 151.34.
Monday’s close (151.34) matched the trending indicator, and an extended retest remains underway. Note that the 200-day has marked a 2019 bull-bear inflection point.
Meanwhile, the SPDR S&P MidCap 400 has thus far maintained its 50-day moving average, currently 349.05. Here again, the 50-day has marked an inflection point.
More broadly, the early-September rallies registered as directionally sharp, while the subsequent downturns, though admittedly persistent, have been comparably flat.
Looking elsewhere, the SPDR Trust S&P 500 remains comparably stronger than the small- and mid-caps.
Its prevailing pullback has thus far been underpinned by major support matching the May peak (294.95) and the 50-day moving average, currently 294.62.