By Michael Ashbaugh, MarketWatch
Technically speaking, the U.S. benchmarks’ bigger-picture backdrop remains uneven as a March divergence persists.
On a headline basis, the S&P 500 and Dow industrials have retained a bullish intermediate-term bias — even amid recent volatility — while the Nasdaq Composite is vying Tuesday to repair a more damaging March downdraft.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +1.49% hourly chart highlights the past two weeks.
As illustrated, the S&P has staged a bullish reversal from major support (3,723).
The successful retest preserves a bullish intermediate-term bias.
More immediately, the prevailing upturn initially stalled near the breakdown point (3,870). The S&P has followed through atop this area early Tuesday. Constructive price action.
Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.06% remains the strongest major benchmark.
In fact, the index has briefly tagged all-time highs.
The prevailing upturn punctuates a massive three-session bullish reversal, spanning as much as 1,601 points, or 5.2%.
Tactically, the former range top (31,650) pivots to notable support.
True to recent form, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +2.32% continues to lag behind.
As illustrated, the index has maintained its next significant support (12,607). (See for instance, the Jan. 7 review.)
Consider that Monday’s close (12,609) effectively matched support, an area also illustrated below.
Conversely, the Nasdaq has initially stalled near its breakdown point (12,973). An extended retest of this area remains underway Tuesday.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq is vying to neutralize last week’s technical breakdown.
Recall the initial downdraft resolved a bearish head-and-shoulders top — defined by the January, February and March peaks — placing the index at two-month lows.
Tactically, Monday’s close (12,609) matched the Nasdaq’s next significant support (12,607).
Conversely, important resistance matches the breakdown point, a level matching the 2020 peak (12,973). A swift reversal atop this area would neutralize last week’s breakdown.
(On a granular note, resistance technically spans from 12,973 to 13,004, levels matching the 2020 peak and February low. Monday’s session high (13,001) matched the latter.)
Looking elsewhere, the Dow Jones Industrial Average continues to outperform.
Technically, the index has registered a bullish reversal from the 50-day moving average, rising to briefly tag all-time highs.
Slightly more broadly, the Dow has not strayed too far from its mid-February range amid constructive price action.
Meanwhile, the S&P 500’s bullish reversal punctuates a fleeting downturn to one-month lows.
Recall that last week’s low (3,723.3) matched the December gap (3,723), a level matching major support.
The bigger picture
Collectively, the major U.S. benchmarks remain in divergence mode — each index is doing different things — amid uneven March price action.
Against this backdrop, the S&P 500 and Dow industrials have retained a bullish intermediate-term bias, while the Nasdaq Composite’s price action has at least briefly signaled an intermediate-term caution flag.
Recall that the Nasdaq’s retest of its breakdown point — an area matching the 2020 peak (12,973) — remains underway Tuesday. A sustained reversal higher would neutralize the March downturn.
Moving to the small-caps, the iShares Russell 2000 ETF /zigman2/quotes/209961116/composite IWM +2.44% has weathered a less aggressive March downturn.
The prevailing upturn punctuates a jagged retest of the 50-day moving average.
Also recall that the small-cap benchmark registered an unusually strong early-February breakout, encompassing four straight closes atop the 20-day Bollinger bands. The two standard deviation breakout signaled an extended posture — due to consolidate — amid a firmly-bullish longer-term outlook.
Similarly, the SPDR S&P MidCap 400 ETF /zigman2/quotes/201764887/composite MDY +1.63% has effectively maintained its prevailing range, rising from a successful test of the 50-day moving average. Constructive price action.