By Michael Ashbaugh, MarketWatch
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Technically speaking, the U.S. benchmarks’ jagged April recovery attempt remains in play amid still receding market volatility.
Against this backdrop, the S&P 500 has ventured slightly atop major resistance (2,874), a key intermediate-term bull-bear inflection point. The slight breakout’s sustainability, and follow-through, remain an open question.
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 rallied atop major resistance, an area broadly spanning from about 2,855 to 2,874.
The slight breakout originates from the S&P’s 50% retracement of the 2020 crash (2,793). The index registered consecutive session lows last week within one point.
Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.44% has rallied toward its range top.
Tactically, an inflection point matches the April peak (24,264). The index has ventured atop this area early Tuesday.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.66% remains the strongest major benchmark.
As illustrated, the index has cleared its range top, reaching a nearly seven-week high.
In the process, the Nasdaq has reclaimed the November peak (8,705) an area also detailed below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has sustained a break atop several key levels:
The 50-day moving average, currently 8,211.
The 50% retracement of the 2020 crash (8,235).
Former resistance matching the September peak (8,243).
The late-2019 breakout point (8,339).
The 200-day moving average, currently 8,418.
As detailed repeatedly, the area broadly detailed above — spanning from about 8,240 to 8,400 — marks the distinction between “corrective bounce” and “legitimate market rally attempt.”
Last week’s closing low (8,263) registered slightly atop major support, punctuating a successful retest. The Nasdaq’s intermediate-term bias remains bullish, based on today’s backdrop.
Looking elsewhere, the Dow Jones Industrial Average has rallied less aggressively, though its April price action remains constructive.
As illustrated, the index has reclaimed its 50-day moving average, currently 23,764, closing atop the trending indicator for the first time since Feb. 21.
Additional overhead matches the April peak (24,264). A close higher would mark a “higher high” — combined with a posture atop the 50-day moving average — signaling a bullish intermediate-term bias.
On further strength, a more distant inflection point matches the June low (24,680).
Meanwhile, the S&P 500 has extended a break atop the 50-day moving average, notching consecutive closes higher.
The prevailing upturn punctuates a jagged test of the 2,742 support, a level matching the March 11 close (2,741).
The bigger picture
As detailed above, the U.S. benchmarks’ April price action remains constructive.
On a headline basis, the big three benchmarks concurrently closed Monday atop the 50-day moving average for the first time since February.
As always, the 50-day moving average is a widely-tracked intermediate-term trending indicator. A break higher raises the flag to a potential intermediate-term trend shift.
But to be sure, the bigger-picture backdrop is not nearly so straightforward. The technical backdrop is never hinged to a single variable (in this instance, the 50-day) and especially not in the wake of a market crash.
More broadly, the major benchmarks remain in divergence mode — each index is acting slightly differently — amid a constructive, but still uneven, market recovery attempt.
Moving to the small-caps, the iShares Russell 2000 ETF has extended its recovery attempt, building on a bullish divergence detailed last week.
The small-cap benchmark is vying Tuesday to close atop its 50-day moving average, currently 126.85, for the first time since February.
The prevailing upturn punctuates a successful test of its breakout point.