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Michael Ashbaugh

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Feb. 14, 2017, 12:22 p.m. EST

Bull trend confirmed: Charting the S&P 500’s break to ‘clear skies’ territory

Focus: Financials tag nine-year highs, Transports press uncharted territory, XLF, IYT, WB, WDC, ETN, CENX

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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 each market day, click here.

True to recent form, strong bull trends have been confirmed this week, across the widely-tracked U.S. benchmarks.

On a headline basis, the S&P 500 has notched three straight record closes — effectively nailing a near-term target at 2,333 — while the Dow industrials have knifed to uncharted territory from the 20,000 mark.

Before detailing the U.S. markets’ wider view, the S&P 500’s /quotes/zigman/3870025/realtime SPX -0.30%  hourly chart highlights the past two weeks.

As illustrated, the S&P has extended its break atop the 2,300 mark.

This week’s high, currently 2,331.6, closely matches the projected target of 2,333. (See Friday’s review.)

Similarly, the Dow Jones Industrial Average /quotes/zigman/627449/realtime DJIA -0.36%  has knifed to record territory.

The steep breakout originates from successful tests of the 20,000 mark. Last week’s low held at 20,002. This area remains a notable floor, illustrated on the daily chart.

Separately, recall that a near-term target projects from the former range to the 20,460 area. (Also see Friday’s review.)

Not surprisingly, the Nasdaq Composite has also extended its uptrend.

Here again, near-term support is poorly-defined, though potential floors rest at 5,743 (last week’s high) and 5,722.

The Nasdaq’s first notable support matches the 5,670 breakout point, better illustrated below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has launched to uncharted territory, punctuating a successful test of the 5,574 support. The Jan. 31 low held at 5,576.

Separately, recall that a near-term target projects from the former range to the 5,764 area. The index closed Monday at 5,763.96, matching the target.

More broadly, the February breakout confirms the Nasdaq’s primary uptrend.

Meanwhile, the Dow Jones Industrial Average has also confirmed its uptrend.

Recall that the latest leg higher originates from a successful test of the breakout point, in this case the 20,000 mark.

Separately, the February spike constitutes the “expected” continuation from the Dow’s bull flag, pinned to the steep 2016 breakout.

Similarly, the S&P 500 has taken flight, knifing from the 2,300 mark toward the 2,333 target.

The breakout originates from a shaky, but successful, test of the 2,277 breakout point, punctuated by four consecutive closes nominally higher.

The bigger picture

As partly detailed above, the 2017 price action remains technical, and bullish.

Each major benchmark has confirmed its primary uptrend, rising to, or just under, near-term technical targets — S&P 2,333, Nasdaq 5,674 and Dow 20,460.

Moving to the small-caps, the iShares Russell 2000 ETF /quotes/zigman/260873/composite IWM +0.11% remains the lone widely-tracked U.S. benchmark not to register a record close.

Consider that its record close rests at 138.31, and the small-cap benchmark closed Monday one penny lower, at 138.30.

Still, the backdrop illustrated is technically bullish. The prevailing breakout attempt punctuates a successful test of the range bottom.

Meanwhile, the SPDR S&P MidCap 400’s backdrop remains stronger, punctuated by three straight record closes.

Recall that the initial breakout was fueled by a volume uptick, and originates from a successful test of the 50-day moving average.

US : S&P Base CME
-8.05 -0.30%
Volume: 409.47M
May 23, 2018 10:35a
US : DJ-Index
-90.12 -0.36%
Volume: 68.27M
May 23, 2018 10:35a
US : U.S.: NYSE Arca
$ 161.94
+0.18 +0.11%
Volume: 3.99M
May 23, 2018 10:35a
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