By Michael Ashbaugh, MarketWatch
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Technically speaking, the major U.S. benchmarks continue to trend steadily higher against a strengthening bigger-picture backdrop.
In the process, the S&P 500 and Nasdaq Composite have rallied early Tuesday within striking distance of their record close — at S&P 2,930, and Nasdaq 8,109, respectively — areas defining the next headline technical test.
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 has sustained its latest break to six-month highs. Three of the prior five session lows have precisely matched the breakout point (2,896).
Conversely, the prevailing range top matches the S&P’s projected target in the 2,912-to-2,916 area, detailed previously. On further strength, its record close (2,930.75) is within striking distance.
Similarly, the Dow Jones Industrial Average has sustained a break to six-month highs.
Tactically, initial support matches the early-April peak (26,487) and is followed by a firmer floor broadly spanning from about 26,240 to 26,280. The latter matches the Dow’s breakout point, better illustrated on the daily chart.
Meanwhile, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +1.39% has asserted a jagged near-term uptrend.
Still, the index has thus far maintained first support (7,993) notching four consecutive closes higher. Constructive price action.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has reached less-charted territory, rising in grinding-higher form.
The April peak (8,052) has registered within striking distance of the Nasdaq’s record close (8,109) and absolute record peak (8,133). Conversely, the Nasdaq’s first notable support matches the breakout point (7,850).
Looking elsewhere, the Dow Jones Industrial Average is digesting a more recent break to six-month highs.
The prevailing upturn punctuates a massive bullish V-shaped reversal from the December low. To reiterate, the former range top matches the February and November peaks — the 26,240-to-26,280 area — and remains the Dow’s first notable floor.
Conversely, more distant inflection points match the January 2018 peak (26,616) and September peak (26,769). These areas are followed by the Dow’s record close (26,828.39) and absolute record peak (26,951.81).
Meanwhile, the S&P 500 has asserted consecutive April flag-like patterns as it approaches record territory.
The prevailing upturn has been punctuated by successful tests of first support at 2,873 and 2,896, areas also illustrated on the hourly chart.
The bigger picture
As partly detailed above, an already-bullish bigger-picture backdrop continues to strengthen.
On a headline basis, the S&P 500 and Nasdaq Composite have concurrently notched six-month closing highs, also rising within striking distance of record territory.
Moving to the small-caps, the iShares Russell 2000 ETF remains the weakest widely-tracked U.S. benchmark.
In fact, the small-cap benchmark has ventured back under its 200-day moving average, currently 156.04, notching three straight closes fractionally lower.
Delving slightly deeper, the 50-day moving average, currently 155.10, is rising toward a golden cross, or bullish 50-day/200-day moving average crossover.
Meanwhile, the SPDR S&P MidCap 400 remains stronger than the Russell 2000.
As illustrated, the prevailing pullback has been shallow, though an extended retest of the breakout point, circa 355, remains underway. Recall that the MDY’s slight breakout dovetailed with a recent golden cross.
Looking elsewhere, the SPDR Trust S&P 500 is digesting a more decisive break to six-month highs.
As detailed repeatedly, the SPY’s first notable floor matches the early-April peaks, spanning from about 288.80 to 288.90. Monday’s session low (289.07) registered fractionally higher, punctuating a successful retest.