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Michael Ashbaugh

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April 30, 2019, 12:37 p.m. EDT

S&P 500’s grinding-higher bull trend approaches seasonal headwind

Focus: Financials extend breakout, Regional banks challenge 200-day average, Japan’s breakout attempt, XLF, KRE, EWJ, TWTR, JBL, JBLU

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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 approaching the worst six months seasonally — May through October — against a still comfortably bullish bigger-picture backdrop.

Consider that the S&P 500 and Nasdaq Composite have tagged record territory this week, while the still slightly lagging behind Dow industrials have nonetheless sustained a break to six-month highs.

Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX -0.02%  hourly chart highlights the past two weeks.

As illustrated, the S&P has staged a modest late-month breakout, reaching record territory.

The prevailing upturn punctuates a successful test of the breakout point, the 2,912-to-2,916 area. From current levels, the former range top (2,936) pivots to near-term support.

Meanwhile, the Dow Jones Industrial Average has not yet reached new highs.

Still, the index has maintained support matching the top of the April gap (26,310) also illustrated on the daily chart.

The prevailing upturn has thus far been capped by near-term resistance (26,602), detailed previously, a level precisely matching Monday’s session high.

Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.09%  has extended its April uptrend, reaching uncharted territory.

To reiterate, the former range top, circa 8,150, is followed by an inflection point around the 8,100 mark. Delving deeper, the Nasdaq’s breakout point (8,052) has underpinned the late-month price action.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has reached uncharted territory, and selling pressure remains muted. When sellers are absent, prices generally rise to attract new sellers.

Tactically, near-term floors are detailed on the hourly chart, areas followed by the firmer breakout point (7,850).

Looking elsewhere, the Dow Jones Industrial Average is holding six-month highs.

Recall that notable support broadly spans from about 26,240 to 26.310, levels matching the February peak and the top of the April gap.

Last week’s low (26,310) precisely matched gap support, punctuating a successful retest. This area matches the breakout point from the Dow’s massive V-shaped bullish reversal.

Meanwhile, the S&P 500 has edged to record territory, rising from a successful test of first support.

The grinding-higher April uptrend — punctuated by progressively higher plateaus — has dovetailed with a pronounced volatility drop. Bullish price action.

The bigger picture

Collectively, the major U.S. benchmarks are approaching the worst six months seasonally — May through October — against a still comfortably bullish bigger-picture backdrop.

On a headline basis, the S&P 500 and Nasdaq Composite have scratched out nominal record highs, while the Dow Jones Industrial Average has sustained a break to six-month highs, recently nailing major support (26,310).

Moving to the small-caps, the iShares Russell 2000 ETF continues to lag behind. This is the lone widely-tracked U.S. benchmark not holding at least six-month highs.

Still, the small-cap benchmark is pressing major resistance (159.50), rising from a tight April range. An eventual breakout would resolve a head-and-shoulders bottom defined by the November, December and March lows.

Separately, consider that a golden cross — or bullish 50-day/200-day moving average crossover — will likely signal this week.

True to recent form, the SPDR S&P MidCap 400 remains comparably stronger.

As illustrated, the MDY has sustained the mid-April breakout, maintaining a posture atop major support, circa 355.

Meanwhile, the SPDR Trust S&P 500 /zigman2/quotes/209901640/composite SPY -0.0067%  has extended its April uptrend, tagging fractional record highs to start this week.

Tactically, a near-term floor broadly spans from about 290.70 to 291.40, areas matching the post-breakout low, and the breakout point, respectively.

/zigman2/quotes/210599714/realtime
US : S&P US
2,997.28
-0.68 -0.02%
Volume: 324.32M
Sept. 17, 2019 10:21a
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/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
8,145.96
-7.58 -0.09%
Volume: 329,882
Sept. 17, 2019 10:21a
loading...
/zigman2/quotes/209901640/composite
US : U.S.: NYSE Arca
$ 300.14
-0.02 -0.0067%
Volume: 9.44M
Sept. 17, 2019 10:20a
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