By Michael Ashbaugh, MarketWatch
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Technically speaking, U.S. stocks are off to a strong November start, rising respectably to begin the best six months seasonally — November through April.
Against this backdrop, the S&P 500 has extended a rally from major support (3,233), rising within striking distance of a key bull-bear inflection point closely matching the 50-day moving average.
Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +0.75% hourly chart highlights the past two weeks.
As illustrated, the S&P has rallied from its next notable floor.
Recall that last week’s low (3,233.9) matched support at the June peak (3,233).
More immediately, the S&P has extended its rally attempt early Tuesday. Additional overhead matches the top of the gap (3,388.7) and the February peak (3,393).
Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.09% has survived a major technical test.
Specifically, the index has maintained its 200-day moving average, currently 26,180.
Separately, the Dow has also maintained major support, circa 26,537, with a strong November start. Both the 200-day and major support are also detailed on the daily chart.
Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.50% is also traversing a lower plateau.
Tactically, major resistance (11,245) closely matches the bottom of the gap (11,249).
Conversely, the Nasdaq has maintained its former breakout point, a level matching the July peak (10,840), illustrated below.
Widening the view to six months adds perspective.
On this wider view, the Nasdaq has maintained major support (10,840) closely matching the July peak and the August gap. The prevailing rally attempt punctuates a successful retest.
Conversely, the index has violated key technical levels, including the mid-September range top (11,245) and the 50-day moving average, currently 11,296.
Moreover, the Nasdaq failed a retest of each area to conclude last week. (See the hourly chart.)
Tactically, a sustained reversal atop the 50-day moving average would strengthen the bull case. The pending retest from underneath will likely add color.
Looking elsewhere, the Dow Jones Industrial Average remains the weakest major benchmark.
Still, the index has narrowly maintained two key technical areas. Specifically:
Major support spanning from 26,534 to 26,537, levels matching the August and October lows.
The 200-day moving average, currently 26,180.
Though the Dow briefly ventured under support to conclude last week, the strong November start punctuates a jagged retest.
Consider that Friday’s bullish reversal — a dragonfly doji, underpinned by the 200-day moving average — has been punctuated by upside follow-through to start this week.
On further strength, the June peak (27,580) is followed by the more distant 50-day moving average, currently 27,902.
Meanwhile, the S&P 500 has reversed respectably from major support.
Recall that last week’s low (3,233.9) effectively matched the June peak (3,233). A rally attempt is underway to start November.
The bigger picture
Collectively, the major U.S. benchmarks are off to a constructive November start, rising in the wake of a damaging market downdraft.
Against this backdrop, each big three U.S. benchmark survived a key technical test to conclude last week.
Specifically, the S&P 500 nailed major support (3,233), the Dow industrials maintained the 200-day moving average and the Nasdaq Composite has rallied from its former breakout point (10,840).
The quality of the prevailing rally attempt will likely add color to start November, and the best six months seasonally.
Moving to the small-caps, the iShares Russell 2000 ETF is digesting a strong-volume late-October downdraft.
Tactically, a retest of the 50-day moving average, currently 155.15, remains underway.
Similarly, the SPDR S&P MidCap 400 ETF gapped firmly lower, violating key technical levels to conclude October.
More immediately, the MDY has whipsawed at its 50-day moving average, currently 349.65.