Bull trend pauses: S&P 500 traverses the range

Bull trend pauses: S&P 500 traverses the range

February 23, 2021 0 By Hitz

Referenced Symbols

SPX

-0.77% 

DJIA

+0.09% 

COMP

-2.46% 

IWM

-0.65% 

MDY

-0.31% 

SPY

-0.77% 

EWJ

-0.24% 

NTAP

-0.39% 

SCCO

+2.66% 

ODFL

-1.80% 

KSS

+6.20% 

U.S. stocks are mixed early Monday, vacillating as tech stocks turn lower, pressured at least partly amid recently surging Treasury yields.

Against this backdrop, the S&P 500 and Dow industrials have maintained bullish holding patterns, asserting trading ranges underpinned by familiar support.

Before detailing the U.S. markets’ wider view, the S&P 500’s US:SPX  hourly chart highlights the past two weeks.

As illustrated, the S&P is traversing a familiar range.

Tactically, the range bottom (3,885) matches consecutive weekly lows and is followed by the firmer breakout point (3,870).

Meanwhile, the Dow Jones Industrial Average US:DJIA  continues to strengthen, for the near-term, versus the other major benchmarks.

Tactically, the breakout point (31,272) remains a notable floor.

Thursday’s session low (31,285) and Monday’s early session low (31,286) have registered nearby.

Conversely, consider that the Dow tagged its latest record high Friday, though by a narrow four-point margin. Constructive price action.

Meanwhile, the Nasdaq Composite US:COMP is not pressing record highs.

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Still, the index maintained its breakout point (13,729) to conclude last week.

More immediately, the Nasdaq has ventured back under its breakout point early Monday. Deeper support matches the early-February gap (13,535), an area illustrated on the daily chart below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq continues to digest a recent break to record highs.

Recall that the Nasdaq’s all-time high (14,175) — established last week — has registered slightly under its projected target in the 14,200 area. (See the Feb. 5 review.)

Conversely, the breakout point (13,729) is followed by gap support (13,535). Delving deeper, the ascending 50-day moving average, currently 13,225, has ticked slightly above the former breakout point (13,208).

Likely last-ditch support matches the 2020 peak (12,973), an area from which the prevailing upturn originates.

Looking elsewhere, the Dow Jones Industrial Average has thus far maintained first support.

The familiar area matches its breakout point (31,272), also detailed on the hourly chart.

Recall that last week’s low (31,285) and Monday’s early session low (31,286) have registered slightly above the breakout point.

More broadly, the Dow’s prevailing flag-like pattern — underpinned by first support — is technically constructive.

Similarly, the S&P 500 remains in consolidation mode.

Tactically, recall that the range bottom (3,885) matches consecutive weekly lows, and is closely followed by the firmer breakout point (3,870).

The bigger picture

As detailed above, the major U.S. benchmarks have asserted a mid-February holding pattern.

More directly, each index remains range-bound, maintaining relatively well-defined support.

Specific areas match the S&P’s range bottom (3,885), the Dow’s breakout point (31,272) and the Nasdaq’s breakout point (13,729). Constructive price action. (See the hourly charts.)

Moving to the small-caps, the iShares Russell 2000 ETF US:IWM  continues to digest the most decisive February breakout.

Tactically, recall that trendline support is closely followed by the breakout point (216.70).

Meanwhile, the SPDR S&P MidCap 400 ETF US:MDY  has also asserted a flag-like pattern.

The prevailing range is underpinned by gap support, circa 453.10, an area closely followed by the breakout point (451.50).

Similarly, the SPDR Trust S&P 500 US:SPY  is consolidating an early-month breakout.

Here again, the tight prevailing range is a bullish continuation pattern.

Placing a finer point on the S&P 500, the index is traversing a relatively well-defined two-week range.

Tactically, the range bottom (3,885) matches consecutive weekly lows and is followed by the firmer breakout point (3,870).

Delving deeper, the ascending 50-day moving average, currently 3,792, is followed by the former range bottom (3,750).