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The Technical Indicator
Sept. 14, 2010, 12:28 p.m. EDT · Recommend (1) · Post:
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S&P shows signs of life, faces next technical test
First Take "º
Kroger's results leave little room for more
By Michael Ashbaugh, MarketWatch
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CINCINNATI (MarketWatch) - While the September rally has its issues, the U.S. markets have covered significant technical ground.
Most notably, each major U.S. benchmark has cleared its 200-day moving average -- a widely-tracked longer-term trending indicator -- setting the stage for yet another test of the summer range top. The charts below add color:
The S&P 500's hourly chart details the past three weeks.
As illustrated, the S&P has gapped atop its 200-day moving average, notching one-month highs.
From current levels, notable support holds at the 200-day -- currently 1,115 -- while conversely, its first significant resistance rests at the August peak of 1,131.
Moving to the Dow Jones Industrial Average, its near-term backdrop is similar.
Namely, the blue-chip benchmark has broken atop its 200-day moving average, an area that now marks notable support.
Looking ahead, modest resistance holds at 10,630 (the Aug. 11 high) and is followed by significant overhead at the August peak of 10,720.
And not surprisingly, the Nasdaq Composite is also pressing one-month highs.
From current levels, initial support rests at its 200-day moving average -- currently 2,274 -- while significant resistance spans from 2,307 to 2,309, matching the early-June and August peaks.
Widening the view to six months adds color.
On this wider view, the Nasdaq has cleared three significant technical levels:
The 2009 close of 2,270.
The 200-day moving average, currently 2,274.
The downtrend from the April peak, illustrated in orange.
Its breakout suggests that market bulls have a pulse -- the September rally has covered significant technical ground -- opening the path to a retest of resistance at 2,307.
Moving to the Dow, its six-month view is similar.
In its case, the index has placed distance atop its 200-day moving average, also edging atop a five-month downtrend.
From current levels, its next significant resistance holds at the August peak of 10,720, matching the summer range top.
And the S&P 500's wider view rounds out the major U.S. benchmarks.
As illustrated, the index has cleared a five-month downtrend and its 200-day moving average, setting up an important test of the summer range top at S&P 1,131.
As detailed above, the U.S. markets have covered significant technical ground with this week's rally.
Specifically, each major U.S. benchmark has broken atop its 200-day moving average as follows:
The S&P 500 has gapped atop its 200-day moving average, currently 1,115.
The Nasdaq has also cleared its 200-day moving average, currently 2,274.
The Dow industrials have placed distance atop its 200-day, currently 10,452.
And just as notably, each benchmark has cleared a five-month downtrend, illustrated above, also signaling a potentially meaningful trend shift.
Against this backdrop, market bulls will contend that the groundwork has been laid for a strong year-end rally -- and the bull case has merit.
For nearly two years, grocery stores have been in a race to the bottom. This could be changing, writes Jim Jelter.
3:57 p.m. Sept. 14, 2010
- brinker | 3:06 p.m. Sept. 14, 2010
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