By Michael Ashbaugh, MarketWatch
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Technically speaking, the U.S. benchmarks’ bigger-picture backdrop has strengthened amid unseasonably constructive October price action.
Against this backdrop, the S&P 500 and Nasdaq Composite have reached less-charted territory, rising within striking distance of record highs.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +0.74% hourly chart highlights the past two weeks.
As illustrated, the S&P has taken flight, extending a steep October breakout.
Tactically, the top of the gap (3,499.6) matches the 3,500 mark.
Delving slightly deeper, last week’s high (3,482) marks the bottom of the gap.
Similarly, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.66% has extended its breakout.
In the process, the Dow has notched consecutive closes atop the 2019 close (28,538), placing it in positive year-to-date territory.
The 29,000 mark is increasingly within view.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.88% has also knifed to one-month highs.
The prevailing upturn originates from familiar support (11,126), an area detailed previously.
Last week’s low (11,124) closely matched support.
More immediately, the top of the gap (11,704) marks a near-term floor.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has extended its October rally, rising from a successful test of the 50-day moving average (in blue).
Against this backdrop, Monday’s close registered atop the 20-day Bollinger bands to punctuate a bullish two standard deviation breakout.
Tactically, the Nasdaq is near-term extended, and due to consolidate, following a move outside its “expected” trailing 20-day volatility range.
But more importantly, the index has registered statistically unusual bullish momentum, likely laying the groundwork for longer-term incremental gains. As always, consecutive closes atop the volatility bands are more definitively bullish.
On further strength, the Nasdaq’s record close (12,056) is closely followed by its absolute record peak (12,074).
Looking elsewhere, the Dow Jones Industrial Average is also traversing less-charted territory.
Additional resistance matches the September closing peak (29,100) and absolute September peak (29,199), levels defining seven-month highs.
The Dow’s all-time high (29,568.57) — established Feb. 12 — remains more distant.
Meanwhile, the S&P 500 has staged a decisive October spike.
Tactically, the S&P’s record close (3,580.84) and absolute record peak (3,588.11) are increasingly within view.
The bigger picture
Collectively, the bigger-picture backdrop has strengthened amid an unseasonably strong early-October rally.
Against this backdrop, the S&P 500 and Nasdaq Composite have reached a less-charted patch, rising within striking distance of record highs. Both benchmarks have registered a bullish two standard deviation breakout.
Meanwhile, the Dow Jones Industrial Average continues to lag slightly behind, but has rallied within view of seven-month highs.
Moving to the small-caps, the iShares Russell 2000 ETF has extended a break to seven-month highs. Tactically, the breakout point, circa 159.80, pivots to support.
Similarly, the SPDR S&P MidCap 400 ETF has reached seven-month highs.
Here again, the breakout point, circa 360.20, pivots to support.