By Michael Ashbaugh, MarketWatch
Technically speaking, the U.S. benchmarks are off to a strong February start, rising in the wake of the most aggressive market downturn in about three months.
Against this backdrop, each big three benchmark has extended a reversal from major support, rallies preserving a bullish intermediate-term technical bias.
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 weathered a jagged retest of major support closely matching the 50-day moving average.
Last week’s close registered less than two points from the 50-day — (the trending indicator has since “moved” slightly higher) — and the S&P has rallied respectably from support.
Monday’s session high (3,784) closely matched next resistance (3,783) and has been punctuated by Tuesday’s early follow-through. Bullish price action.
The specific area matches the mid-November range top (29,964), also illustrated on the daily chart.
More immediately, Tuesday’s strong start places the Dow firmly back atop its 50-day moving average. Additional overhead matches the former range bottom, circa 30,790.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.68% has also rallied from major support.
In its case, the specific area matches the 2020 peak (12,973) detailed previously.
Last week’s low (12,985) registered slightly above support, and the index has subsequently reversed to the former range. Constructive price action.
Combined, each big three benchmark has maintained a relatively well-defined support point.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has weathered a respectable pullback from record highs.
To reiterate, the downturn has been underpinned by a notable floor matching the 2020 peak (12,973). Last week’s low registered about 12 points above support.
Tactically, the prevailing upturn preserves a comfortably bullish intermediate-term bias. (The recent downturn filled the mid-January gap, and has been punctuated by a rally to the former range from well-defined support. Bullish price action.)
Looking elsewhere, the Dow Jones Industrial Average registered the most damaging late-January downturn.
This is the only big three U.S. benchmark to venture materially under its 50-day moving average.
Still, the index has maintained last-ditch support, an area matching the mid-November range top (29,964), detailed previously. Tuesday’s strong start punctuates a pronounced bullish reversal from support.
Meanwhile, the S&P 500 has weathered a jagged turn-of-the-month retest of major support.
In its case, the 50-day moving average, currently 3,724, matches a familiar floor in the 3,723-to-3,726 area.
The bigger picture
Collectively, the major U.S. benchmarks seem to have weathered the strongest market downturn in about three months.
In the process, each big three benchmark has rallied respectably from notable support.
Specifically, the Nasdaq Composite has maintained the 2020 peak (12,973), the Dow Jones Industrial Average has maintained its former breakout point (29,964) and the S&P 500 has staged a jagged test of its 50-day moving average. (See the daily charts.)
Each benchmark’s intermediate-term bias has remained bullish throughout the recent downturn.
Moving to the small-caps, the iShares Russell 2000 ETF /zigman2/quotes/209961116/composite IWM +0.70% is digesting a decisive early-January breakout.
Tactically, the post-breakout low (204.66) is followed by the breakout point (201.20), areas that have underpinned the pullback.
Meanwhile, the SPDR S&P MidCap 400 ETF /zigman2/quotes/201764887/composite MDY +0.08% has pulled in slightly more aggressively from recent record highs.