By Michael Ashbaugh, MarketWatch
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Technically speaking, the U.S. benchmarks’ bigger-picture backdrop remains bullish amid a solid August start.
On a headline basis, the Nasdaq Composite has rallied to record highs — reaching previously uncharted territory — while the S&P 500 has tagged five-month highs, breaking from a jagged July range.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX -0.35% hourly chart highlights the past two weeks.
As illustrated, the S&P has started August with a breakout, reaching five-month highs.
The breakout point (3,280) pivots to support.
Slightly more broadly, the prevailing upturn punctuates a successful late-July test of the range bottom (3,200). Constructive price action amid last week’s jagged backdrop.
Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.21% remains the weakest major benchmark.
In fact, the index briefly ventured under its 50- and 200-day moving averages across consecutive sessions to conclude July. Shaky price action.
The strong August start places the Dow on firmer technical ground atop former resistance (26,600). This area pivots to first support.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.28% is off to a strong August start.
In the process, the index has reached all-time highs, gapping atop the July peak.
Tactically, the breakout point (10,840) roughly matches the top of the gap (10,831), an area that pivots to support.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has gapped to previously uncharted territory at all-time highs.
The breakout punctuates a jagged July range, and confirms the prevailing uptrend. On further strength, a near- to intermediate-term target projects to the 11,460 area.
Conversely, a notable floor matches the breakout point (10,840) and the top of the gap.
Looking elsewhere, the Dow Jones Industrial Average remains weaker, though it has survived a test of two headline inflection points:
The 200-day moving average, currently 26,225.
The 50-day moving average, currently 26,172.
Consider that the 50-day moving average (in blue) has underpinned the Dow’s recovery attempt, effectively defining the May, June and July lows. The prevailing upturn preserves a bullish intermediate-term bias.
On further strength, significant resistance spans from 27,071 to 27,102, levels matching the July and March peaks.
Also recall that a golden cross — or bullish 50-day/200-day moving average crossover — will likely signal mid-week. As always, the crossover is frequently a lagging indicator.
Meanwhile, the S&P 500 has extended its uptrend, reaching five-month highs.
The prevailing upturn punctuates a jagged late-July range. Tactically, the breakout point (3,280) pivots to near-term support.
The bigger picture
Collectively, the major U.S. benchmarks remain in divergence mode — each index is doing different things — though the summer price action has been constructive, on balance.
Each benchmark’s intermediate-term bias remains bullish.
Moving to the small-caps, the iShares Russell 2000 ETF /zigman2/quotes/209961116/composite IWM -0.94% has flatlined, asserting a tight range atop the 200-day moving average.
To reiterate, resistance matches the July peaks, an area spanning from 149.35 to 150.20. A retest is underway early Tuesday.
Follow-through atop resistance would confirm the prevailing uptrend, positioning the small-cap benchmark to build on its decisive mid-July breakout.