By Michael Ashbaugh, MarketWatch
Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.
Technically speaking, the major U.S. benchmarks are off to a bullish third-quarter start.
On a headline basis, the S&P 500 has nailed its near-term target (2,995) — a level currently defining its all-time high — while the prevailing pullback has been comparably flat, underpinned by well-defined support.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX -4.41% hourly chart highlights the past two weeks.
As illustrated, the S&P is digesting a July break to record territory.
Recall that last week’s high (2,995.8) — currently the S&P’s all-time high — matched its near-term target (2,995) detailed last week.
Tactically, near-term support (2,973) is closely followed by the firmer breakout point (2,964).
Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -4.44% has pulled in from a less decisive July breakout.
Recall that last week’s high (26,966.00) narrowly surpassed the Dow’s former record peak (26,951.81) established Oct. 3.
The subsequent pullback to the range places the index under the 2018 closing peak (26,828) a level closely matching last week’s gap (26,831). This area remains a hurdle.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -4.41% has sustained a breakout of sorts.
The index scratched out a record close last week (8,170) eclipsing its former record close by just six points.
Still, the July peak (8,172) has thus far registered just under the Nasdaq’s all-time record high (8,176) established April 29.
Put differently, the Nasdaq continues to challenge record territory, as better illustrated below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has rallied to challenge its record high, a level matching the April peak (8,176). The July peak has registered four points lower.
As detailed previously, near-term support broadly spans from 8,059 to 8,089, the latter matching the top of the gap. (See the hourly chart.) The Nasdaq’s breakout attempt is firmly intact barring a violation.
(Tuesday’s early session low (8,061) has punctuated a successful retest.)
Looking elsewhere, the Dow Jones Industrial Average is digesting a modest July breakout.
To reiterate, notable support matches the April peak (26,696) an area also detailed on the hourly chart.
Delving deeper, an inflection point matches the Dow’s former range bottom (26,465). The prevailing uptrend is firmly intact barring a violation.
Meanwhile, the S&P 500 has rallied more decisively to record territory, tagging its near-term target (2,995).
This marked a 1.2% breakout, registering respectably (though not overwhelmingly) atop the May and June peaks.
The bigger picture
Collectively, the major U.S. benchmarks are off to a constructive third-quarter start.
Each index has tagged an all-time closing high, and the prevailing selling pressure near record territory remains muted. Consider that the Nasdaq Composite and S&P 500 have thus far maintained well-defined support. (See the hourly charts.)
Moving to the small-caps, the iShares Russell 2000 ETF continues to lag behind.
Still, the small-cap benchmark has sustained a modest break atop its 50- and 200-day moving averages. By comparison, the July pullback has been flat, fueled by decreased volume. Constructive price action.
Meanwhile, the SPDR S&P MidCap 400 has edged to a higher plateau, an area matching the late-April range.