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The Technical Indicator
Aug. 3, 2010, 1:36 p.m. EDT · Recommend · Post:
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S&P clears the 200-day average without volume
First Take "º
Research In Motion goes after Apple's iPhone
By Michael Ashbaugh, MarketWatch
Editor's Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column, including 100 technical stock picks every month, click here .
CINCINNATI (MarketWatch) - Starting with the good news, each major U.S. benchmark is currently positioned atop its 200-day moving average.
From a technical standpoint, that's bullish.
The bad news is that this week's slight breakout has come on unusually light volume, raising questions regarding the rally's sustainability. The charts below add color:
The hourly chart on the Standard & Poor's 500 Index details the past three weeks.
As illustrated, the S&P has broken atop its 200-day moving average, notching one-month highs.
The 200-day currently holds at 1,115 - matching the 2009 close - an area that now represents first support.
Meanwhile, the Dow industrials' near-term view remains stronger.
In its case, the blue-chip benchmark has sustained a break atop its 200-day moving average, establishing support in this area.
From current levels, a modest floor holds at last week's high of 10,585, and is followed by the 200-day, currently 10,415.
And the Nasdaq Composite's near-term view rounds out the major benchmarks.
On the constructive side, the index established support last week around the 50-day moving average, currently 2,226.
Nonetheless, the Nasdaq hasn't broken out along with the Dow and the S&P, and faces notable resistance at the July peak of 2,307.
Widening the view to six months adds color.
Again, the Nasdaq established support at the 50-day moving average last week - constructive price action - and has risen back within view of resistance spanning from 2,307 to 2,326.
Looking ahead, a break atop this band would mark a "higher high," strengthening the bull case.
Moving to the Dow, its wider view is the strongest.
As illustrated, the blue-chip benchmark has sustained a break atop its 200-day moving average, notching two-month highs this week.
From current levels, significant support spans from 10,415 to 10,428, bracketing the 200-day moving average and the 2009 close.
And the S&P 500 remains the real bull/bear battleground.
While the index has cleared significant resistance, this week's underlying conviction remains a question mark.
As detailed above, the U.S. markets continue to make technical progress.
Most notably, each benchmark closed Monday atop its 200-day moving average, a headline-grabbing bullish technical signal.
But as always, it's not just what the markets do, it's also how they do it.
And by this measure, there's room for a healthy bull/bear debate, as detailed by the SPDR S&P 500's /quotes/comstock/13*!spy/quotes/nls/spy (SPY 112.32, -0.44, -0.39%) six-month view.
Starting with the bull case, the following points stand out:
The S&P has cleared a three-month downtrend, establishing support at its 50-day moving average. Almost text-book bullish price action.
The S&P has followed through this week, gapping atop its 200-day moving average.
The U.S. markets' underlying sector rotation remains constructive, as detailed over the past two weeks.
Research In Motion Ltd. is making a direct assault on Apple Inc.'s iPhone turf, and the battle has only just begun.
12:58 p.m. Today12:58 p.m. Aug. 3, 2010 | Comments: 5
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