Michael Ashbaugh

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Feb. 9, 2021, 12:32 p.m. EST

Charting a grinding-higher breakout, S&P 500 tags latest record peak

Focus: Energy sector and airlines stage tandem breakout attempt, XLE, JETS, LOW, NET, MSI

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By Michael Ashbaugh, MarketWatch

Technically speaking, the major U.S. benchmarks continue to trend higher amid a constructive February start.

Against this backdrop, each big three benchmark has concurrently registered record highs, knifing from major support to previously uncharted territory.

Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX +1.10%  hourly chart highlights the past two weeks.

As illustrated, the S&P has extended its latest break to record territory, rising to register its first close atop the 3,900 mark.

Tactically, the S&P’s first notable support matches the breakout point (3,870). Delving deeper, the 3,830 area remains an inflection point.

Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.61%  has broken less decisively to record highs.

Nonetheless, the index has edged above its former range top, reaching previously uncharted territory.

Recent follow-through punctuates a V-shaped reversal underpinned by major support (29,964) also detailed on the daily chart.

True to recent form, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +1.76% remains the strongest major benchmark.

The prevailing upturn places the 14,000 mark within view. The index has ventured slightly atop the round number early Tuesday.

Conversely, the Nasdaq’s breakout point (13,730) marks its first notable floor.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has extended its break to previously uncharted territory.

In the process, the index has registered a sharp rally from 13,000 to 14,000 — about a 7.7% span — across just eight sessions.

Tactically, a near-term target continues to project to the 14,200 area.

More broadly, the prevailing upturn originates from support matching the 2020 peak (12,973), detailed repeatedly. The late-January low (12,985) registered about 12 points above support.

Looking elsewhere, the Dow Jones Industrial Average has belatedly broken out, notching a single close above the range top.

Still, the directionally sharp February rally is technically constructive.

Tactically, the prevailing upturn originates from last-ditch support (29,964) — detailed previously — placing the index firmly atop its former breakdown point (30,283). (Also see the hourly chart.)

Meanwhile, the S&P 500 has extended a respectable February breakout.

This week’s follow-through punctuates a sharp reversal from major support. Recall the January close registered within two points of the 50-day moving average, an area matching the S&P’s former breakout point.

The bigger picture

Collectively, the major U.S. benchmarks are off to a bullish February start.

On a headline basis, each big three benchmark has reached record territory to punctuate a V-shaped reversal from major support.

Specifically, the Nasdaq Composite has rallied from the 2020 peak (12,973), the Dow Jones Industrial Average has maintained last-ditch support (29,964) and the S&P 500 has spiked from support closely matching its 50-day moving average. (See the daily charts.)

Each benchmark’s intermediate-term bias remains bullish.

Moving to the small-caps, the iShares Russell 2000 ETF /zigman2/quotes/209961116/composite IWM +0.59%  has knifed more aggressively to record highs.

The prevailing upturn marks a two standard deviation breakout, encompassing three straight closes atop the 20-day Bollinger bands.

Though still near-term extended — and due a cooling-off period — the statistically unusual breakout improves the chances of longer-term follow-through. (See the equally powerful early-November and early-January breakouts, followed by flattish pullbacks, and upside follow-through)

Meanwhile, the SPDR S&P MidCap 400 ETF /zigman2/quotes/201764887/composite MDY +0.84%  has registered a respectable, though less decisive, February breakout.

The MDY is vying Tuesday to register its second straight close atop the 20-day volatility bands amid a two standard deviation breakout.

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