Charting a slow-motion breakout attempt, S&P 500 edges to all-time high
Focus: Major benchmarks vie to build on recent 10-to-1 up day
Technically speaking, the S&P 500 and Dow industrials have staged late-month rallies, rising to tag nominal all-time highs.
Meanwhile, the Nasdaq Composite has lagged slightly behind of late, treading water amid market rotation. The charts below add color:
Editor’s Note: As always, updates can be directly accessed at chartingmarkets.substack.com.
Before detailing the U.S. markets’ wider view, the S&P 500’s hourly chart highlights the past four weeks.
As illustrated, the S&P 500 is pressing all-time highs, rising amid a well-defined two-week range.
Tactically, the prevailing range bottom (6,343) is followed by a firmer floor matching the 6,200 mark. (Also see the daily chart.)
Meanwhile, the Dow Jones Industrial Average has knifed more decisively to record territory.
The subsequent pullback has been comparably flat, and underpinned by the breakout point (45,200). Bullish price action.
Delving deeper, the 44,500 area marks an inflection point.
Against this backdrop, the Nasdaq Composite is not tagging record highs.
Nonetheless, the index has rallied toward its range top amid relatively orderly (and rotational) August price action.
Tactically, the 21,390 area is followed by the deeper range bottom (20,905).
Widening the view to six month adds perspective.
On this wider view, the Nasdaq continues to broadly grind higher, building on the early-July breakout. Recent pullbacks have been relatively shallow and short-lived.
Tactically, the 50-day moving average, currently 20,882, is followed by the August low (20,560) an area that underpinned the “jobs report” market whipsaw. A sustained posture atop this area signals a bullish intermediate-term bias.
Looking elsewhere, the Dow Jones Industrial Average has broken out, reaching all-time highs.
The prevailing upturn punctuates a six-week range, hinged to the powerful late-June rally.
Tactically, the breakout point closely matches the 2024 peak (45,073) and is followed by the 50-day moving average, currently 44,354. A sustained posture atop the 50-day signals a bullish intermediate-term bias.
(Note the prevailing breakout originates from a successful test of the 50-day moving average. Also recall the steep June rally marked an unusually bullish two standard deviation breakout.)
Meanwhile, the S&P 500 is staging a slow-motion breakout attempt.
The tight range near record highs signals muted selling pressure, laying the groundwork for potentially more decisive follow-through.
More broadly, recall the 20-day moving average (in green), currently 6,405, has marked an inflection point in recent months.
The bigger picture
As detailed above, the major U.S. benchmarks continue to act well technically.
On a headline basis, the S&P 500 and Dow industrials have staged late-month rallies, rising to tag nominal all-time highs.
Meanwhile, the Nasdaq Composite has lagged behind of late, treading water amid market rotation. (See the daily chart.)
Moving to the small-caps, the iShares Russell 2000 ETF (IWM) has extended its breakout, tagging nine-month highs.
The prevailing upturn puntctuates a tight six-week range, and originates from major support matching the 50- and 200-day moving averages.
Tactically, initial support (231.50) is followed by the firmer breakout point (226.70).
Meanwhlie, the SPDR S&P MidCap 400 ETF (MDY) has edged to six-month highs.
Here again, the prevailing upturn punctuates a tight six-week range, underpinned by the 50- and 200-day moving averages, laying the groundwork for potentially more decisive upside follow-through. (The longer the base, the higher the space.)
Separately, notice the early-August golden cross, or bullish 50-day/200-day moving average crossover, an event the small and mid-caps have both signaled. Though frequently a lagging indicator, the crossover signals the intermediate-term uptrend has overtaken the longer-term trend.
Returning to the S&P 500, this next chart is a weekly view spanning 30 months. Each bar on the chart represents one week.
As illustrated, the S&P has sustained its summer break to all-time highs.
The prevailing upturn punctuates a massive V-shaped reversal, and originates from major support (4,835) closely matching the 2022 peak (4,818).
Against this backdrop, the S&P 500 remains positioned for potentially material upside follow-through, even from current levels.
Consider that from the January peak (6,128) the S&P 500 has returned 5.7% across about seven months.
Alternately, from the April low (4,835), the S&P has returned 34.0% across about five months.
So whether the S&P 500 is extended at current levels remains partly a function of time.
Returning to the S&P 500’s six-month view adds perspective.
As illustrated, the S&P has asserted a tight range near record highs. From current levels, four support points stand out:
The August breakout point (6,427) an area bisecting the two-week range.
The ascending 50-day moving average, currently 6,306.
The 6,200 mark, defining a nearly two-month range bottom.
The slightly deeper June breakout point (6,147), a level matching the Feb. peak.
Against this backdrop, it’s worth noting that last week’s Fed-fueled market spike — the Aug. 22 rally, amid the Jackson Hole policy remarks — marked an unusually bullish 10-to-1 up day: NYSE advancing volume surpassed declining volume by a powerful 10-to-1 margin.
And in a textbook world, two 9-to-1 up days — across about a seven-session window — reliably signals a major trend reversal (or major market event). In this case, an uptrend is already in play, rendering the “reversal” aspect moot.
Nonetheless, a comparably powerful single-day rally — through the first few September sessions — would confirm the prevailing uptrend, placing market bears on the defensive.
As always, it’s not just what the markets do, it’s how they do it. But broadly speaking, the S&P 500’s intermediate-term bias remains bullish barring a violation of the 6,150 area.
Also see Aug. 7: Charting a market whipsaw, S&P 500 absorbs shaky August start.
Also see July 9: Charting a summer breakout, S&P 500 reaches 'clear skies' territory.