Michael Ashbaugh

The Technical Indicator Archives | Email alerts

Feb. 16, 2021, 12:37 p.m. EST

Charting bull-flag breakout attempts: S&P 500, Nasdaq tag record territory

Focus: Financials and transports stage tandem breakout attempt, XLF, IYT, ADI, IPHI, BLDR, LYFT

Watchlist Relevance

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    S&P 500 Index (SPX)
  • X
    Dow Jones Industrial Average (DJIA)
  • X
    NASDAQ Composite Index (COMP)

or Cancel Already have a watchlist? Log In

By Michael Ashbaugh, MarketWatch

Technically speaking, the major U.S. benchmarks continue to trend higher, rising amid a still broadly constructive 2021 start.

More immediately, each big three U.S. benchmark has briefly tagged its latest record high early Tuesday, rising amid bull-flag breakout attempts that remain underway.

Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX -0.13%  hourly chart highlights the past two weeks.

As illustrated, the S&P has cleared the range top, edging to its latest record high.

The prevailing upturn punctuates a bull flag, the prior relatively tight five-session range.

Tactically, the breakout point, circa 3,925, is followed by the former range bottom (3,885).

Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.05%  has sustained a recently less decisive break to record territory.

Nonetheless, the Dow’s tight range underpinned by the breakout point — the 31,236-to-31,272 area — is technically constructive.

Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.07% is challenging its range top.

Consider that Friday’s session high (14,102) registered slightly under its record high (14,109).

The index briefly followed through early Tuesday, tagging previously uncharted territory. As always, it’s the session close that matters. A breakout attempt is in play.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq is consolidating a sharp early-February rally. Recall the initially decisive 2.0% breakout confirms its primary uptrend.

Tactically, the Nasdaq’s first notable floor matches the breakout point (13,730).

More broadly, the prevailing upturn originates from major support matching the 2020 peak (12,973).

Looking elsewhere, the Dow Jones Industrial Average has sustained a less decisive break to record highs.

The prevailing upturn marks about a 0.6% breakout, not yet confirming its primary trend.

Nonetheless, the sharp V-shaped reversal from last-ditch support (29,964) — and grinding-higher follow-through — are technically constructive.

Recall that the former range top pivots to support, an area also detailed on the hourly chart.

Meanwhile, the S&P 500 has slightly extended its February break to record territory.

Recall that the prevailing flag — the S&P’s tight mid-month range — is a bullish continuation pattern.

The bigger picture

Collectively, the major U.S. benchmarks are acting well technically.

On a headline basis, each big three benchmark has asserted a flag-like pattern — tight one-week ranges — signaling still muted selling pressure near record highs.

Against this backdrop, each index has at least briefly tagged a record high early Tuesday. Breakout attempts are underway.

Moving to the small-caps, the iShares Russell 2000 ETF /zigman2/quotes/209961116/composite IWM +0.04%  is digesting the most decisive breakout of the widely-tracked U.S. benchmarks.

As detailed repeatedly, the initial spike marked an unusually strong two standard deviation breakout, encompassing four straight closes atop the 20-day Bollinger bands.

Separately, the early-month rally marked a massive 4.8% breakout, confirming its primary uptrend.

Though near-term extended — and a sideways chopping-around phase is underway — the statistically unusual rally is likely longer-term bullish.

Meanwhile, the SPDR S&P MidCap 400 ETF /zigman2/quotes/201764887/composite MDY -0.02%  has extended a less decisive breakout.

Recall that the prevailing upturn originates from the breakout point (425.30), an area matching the 2020 peak.

-5.20 -0.13%
Volume: 0.00
Jan. 27, 2023 9:43a
US : Dow Jones Global
+15.43 +0.05%
Volume: 0.00
Jan. 27, 2023 9:43a
US : Nasdaq
-7.96 -0.07%
Volume: 865.74M
Jan. 27, 2023 9:43a
US : U.S.: NYSE Arca
$ 188.64
+0.08 +0.04%
Volume: 337,258
Jan. 27, 2023 9:43a
US : U.S.: NYSE Arca
$ 475.72
-0.11 -0.02%
Volume: 4,871
Jan. 27, 2023 9:43a
1 2

Partner Center

Link to MarketWatch's Slice.