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Michael Ashbaugh

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Jan. 23, 2018, 1:28 p.m. EST

Bull trend grinds higher, S&P 500 extends January breakout

Focus: Gold miners digest technical breakout, GDX, NEM, SYNA, ATVI, KBH, VUZI

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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 U.S. benchmarks’ broadly-based bull trend continues to grind higher.

On a headline basis, each big three benchmark has notched consecutive record closes, a move technically neutralizing last week’s respectable mid-month downdraft.

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 extended its uptrend, notching another record high.

Tactically, first support (2,807) matches the former range top. Delving deeper, a near-term floor, circa 2,774, underpinned last week’s fleeting downturn.

Meanwhile, the Dow Jones Industrial Average has edged less decisively to record territory.

Still, the slight breakout is constructive. The blue-chip benchmark has registered four straight closes atop the 26,000 mark.

From current levels, the breakout point (26,150) pivots to first support, and is followed by a very near-term floor, circa 25,940.

Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.70% has also registered another record high.

Tactically, the 7,330 area remains an inflection point, and is followed by a deeper floor, circa 7,220.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has knifed decisively to record territory. Though stubbornly near-term extended, the nearly straightline January rally is longer-term bullish.

Recall that the ascending 20-day moving average, currently 7,146, is closely followed by support, circa 7,110, matching a weekly low.

Looking elsewhere, the Dow Jones Industrial Average has also taken flight.

The chart above includes the 20-day Bollinger bands, also known as volatility bands. As always, the bands bracket two standard deviations of the Dow’s trailing 20-day volatility.

Recall that consecutive closes atop the bands signal an increasingly familiar technical tension.

Specifically, such closes signal a near-term extended posture — due at least a sideways chopping-around phase — against a firmly-bullish longer-term backdrop.

The Dow’s January breakout has encompassed six closes atop the bands across a nine-session span. This is statistically unusual, and distinctly bullish for the longer-term.

The index previously registered precisely five consecutive closes atop the bands, price action preceding the strong January spike. (See the late-July, September and November breakouts.)

Meanwhile, the S&P 500 is also trending firmly higher.

The prevailing breakout punctuates the late-December bull flag, and has encompassed five recent closes atop the 20-day volatility bands.

The bigger picture

The major U.S. benchmarks have taken flight to start the new year, and selling pressure near record highs remains muted.

Each widely-tracked benchmark has recently confirmed its primary uptrend.

Moving to the small-caps, the iShares Russell 2000 ETF’s /zigman2/quotes/209961116/composite IWM +1.47%  backdrop has weathered a potentially bearish pattern, a key reversal, detailed last week.

As illustrated, the small-cap benchmark has maintained first support (155.80), subsequently rising to register consecutive record closes.

Meanwhile, the S&P MidCap 400 has also notched consecutive record closes. In its case, support spans from 249.20 to 530.40, the latter closely matching the mid-month low.

-0.82 -0.02%
Volume: 2.09B
July 28, 2021 4:55p
US : Nasdaq
+102.01 +0.70%
Volume: 3.80M
July 28, 2021 5:16p
US : U.S.: NYSE Arca
$ 220.82
+3.20 +1.47%
Volume: 33.04M
July 28, 2021 4:00p
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