By Michael Ashbaugh, MarketWatch
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Technically speaking, the major U.S. benchmarks are off to a strong November start, rising amid bullish longer-term trends.
Against this backdrop, the S&P 500 and Dow industrials have extended aggressive rally attempts — briefly tagging record highs to start this week — amid market rotation and expanding sector participation.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +1.95% hourly chart highlights the past two weeks.
As illustrated, the S&P has staged a technical breakout, of sorts.
Specifically, the index briefly tagged record highs Monday before pulling in to the former range.
Monday’s close (3,550.5) closely matched the October peak (3,550), and marked the S&P’s second-best close on record.
Similarly, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.85% has gapped sharply higher, briefly tagging record territory.
Consider that Monday’s session high (29,933) registered within view of the marquee 30,000 mark.
Tactically, the Dow is traversing a much less-charted patch, better illustrated on the daily chart.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +1.55% has diverged from the other benchmarks.
To be sure, the index briefly tagged record territory at Monday’s session high (12,108).
But the subsequent selling pressure punctuated a failed test of resistance, better illustrated below.
(On a granular note, Monday’s close (11,703) matched the October gap (11,704).)
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has balked at major resistance matching the September peak. In the process, the index formed a bearish engulfing pattern, the long red bar, engulfing the range of the prior two sessions.
The question now is the aggressiveness of the downside follow-through, or lack thereof.
Tactically, familiar support (11,460) is followed by the 50-day moving average, currently 11,304, and the former breakout point (11,245).
Delving deeper, likely last-ditch support matches the July peak (10,840). A sustained posture higher signals a range-bound backdrop, and a bullish intermediate-term bias.
The prevailing pullback punctuates a massive 9.0% one-week rally to start November.
Looking elsewhere, the Dow Jones Industrial Average has extended its rally attempt.
Consider that the index has gapped sharply higher — briefly clearing its range top — unlike the Nasdaq Composite.
Tactically, the Dow’s record close (29,551.42) and the February peak (29,568.57) — formerly the record peak — remain overhead inflection points.
More broadly, the prevailing upturn punctuates a successful test of the 200-day moving average, and originates from three-month lows.
Meanwhile, the S&P 500 has tagged a record high, rising from a double bottom defined by the September and October lows.
The prevailing upturn originates from major support. Recall that the October low (3,233.9) closely matched the June peak (3,233).
The bigger picture
As detailed above, the major U.S. benchmarks have diverged this week, and the bigger-picture backdrop is not one-size-fits-all.
On a headline basis, the S&P 500 and Dow industrials have extended their rally attempts, gapping higher to briefly tag record territory.
Meanwhile, the Nasdaq Composite has balked at its range top, drawing respectable selling pressure near major resistance.
Amid the cross currents, the bigger-picture backdrop remains comfortably bullish to start November and the best six months seasonally — November through April.
Moving to the small-caps, the iShares Russell 2000 ETF has also staged a breakout of sorts.
Here again, Monday’s session high (178.10) marked an all-time high. Still, the session close (169.55) registered comfortably under its record close (173.02), established August 2018.
Slightly more broadly, the prevailing upturn punctuates a bullish island reversal to start November.
Similarly, the SPDR S&P MidCap 400 ETF has tagged an intraday record high.
Still, the session close (380.10) registered under the record close (384.02), established February 2020.
Combined, the small- and mid-cap benchmarks are near-term extended, though the strong-volume breakouts confirm the prevailing uptrends.
Looking elsewhere, the SPDR Trust S&P 500 has also tagged record territory.
Consider that the session close (354.56) marked the SPY’s second-best on record, placing it fractionally atop the September peak (354.02).