The Technical Indicator: Bull trend confirmed: S&P 500, Nasdaq knife to uncharted territory

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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.

Technically speaking, the U.S. benchmarks’ already-bullish backdrop has strengthened amid a decisive November breakout.

In the process, each big three benchmark has concurrently tagged all-time highs — and is traversing previously uncharted territory, capped by no true resistance — opening the path to potentially material longer-term follow-through.

Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, -0.04%  hourly chart highlights the past two weeks.

As illustrated, the S&P 500 is off to a strong November start, breaking decisively to record highs.

The prevailing upturn punctuates a late-October retest of the breakout point (3,028) an area also matching the September peak (3,022). Bullish price action.

Meanwhile, the Dow Jones Industrial Average DJIA, +0.19%  has also turned firmly higher to start November.

The breakout punctuates a flag-like pattern — defined by last week’s range — placing the index in record territory. Near-term inflection points match this week’s gap, at 27,347 and 27,402.

Against this backdrop, the Nasdaq Composite COMP, +0.13%  has also taken flight, extending a break to record territory.

Tactically, notable support spans from 8,335 to 8,339 levels matching the October and July peaks, also detailed below.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has staged a bull-flag breakout, knifing to all-time highs.

Consider that last week’s tight range was underpinned by the September peak (8,243) price action mirroring that of the S&P 500. The successful test of first support, and decisive follow-through, are technically bullish.

Tactically, Monday’s close (8,433) closely matched a near-term target, circa 8,430, detailed previously. A more distant intermediate-term target projects from the October low to the 8,700 mark.

Looking elsewhere, the Dow Jones Industrial Average has belatedly broken out, reaching record territory this week.

Tactically, the 27,400 area pivots to support, levels matching the July peak (27,398) and the top of this week’s gap (27,402).

Meanwhile, the S&P 500 started last week with a rally to record territory, and has since extended the breakout.

The prevailing upturn punctuates a successful test of the breakout point (3,028) and the September peak (3,022). Bullish price action.

The bigger picture

Collectively, the major U.S. benchmarks have reached uncharted territory, rising amid early-November breakouts. An already-bullish bigger-picture backdrop continues to strengthen.

Moving to the small-caps, the iShares Russell 2000 ETF remains the weakest widely-tracked U.S. benchmark.

Still, the IWM has tagged a nearly six-month high, rising to challenge its range top. Tactically, overhead inflection points match the year-to-date closing peak (160.71) and absolute year-to-date peak (161.11).

Meanwhile, the SPDR S&P MidCap 400 has cleared its range top, reaching 52-week highs.

The MDY’s all-time high (374.10) — a level precisely matching the August and September 2018 peaks — remains slightly more distant.

Also recall that the prevailing upturn punctuates a successful test of support, circa 355. Constructive price action.

Looking elsewhere, the SPDR Trust S&P 500 has extended to record territory amid increased volume.

The strong November start punctuates a successful test of the breakout point, the 302.00-to-302.60 area.

More broadly, the SPY is rising from a double bottom, defined by the August and October lows, a pattern hinged to the steep June-through-July rally. The prevailing backdrop is firmly bullish.

Placing a finer point on the S&P 500, its already-bullish backdrop continues to strengthen.

Recall that major spans from 3,022 to 3,028, levels matching the September peak, and the S&P’s former record high. Last week’s low (3,023.2) marked a successful retest, registering after the Federal Reserve’s policy statement.

Tactically, the S&P 500’s intermediate-term bias remains comfortably bullish barring a violation of the breakout point (3,028).

More immediately, the S&P’s prevailing rally from support has reached its former projected target (3,064), detailed previously. Last week’s close (3,066.9) registered nominally atop the target.

The subsequent follow-through punctuates a decisive 1.7% breakout to start November, a rally confirming the S&P 500’s primary uptrend.

Beyond technical levels, the U.S. sub-sector backdrop continues to strengthen — as partly detailed in the next section — while the best six months seasonally are just underway to start November, an added market tailwind.

Also see: Charting a break to ‘clear skies’ territory, S&P 500 tags all-time highs.

Tuesday’s Watch List

The charts below detail names that are technically well positioned. These are radar screen names — sectors or stocks poised to move in the near term. For the original comments on the stocks below, see The Technical Indicator Library.

Drilling down further, the SPDR S&P Regional Banking ETF is acting well technically.

As illustrated, the group has extended a recent break atop trendline resistance, reaching five-month highs. The prevailing upturn originates from the trendline, punctuating a successful retest after last week’s Federal Reserve policy statement.

More broadly, the chart illustrates a modified head-and-shoulders bottom defined by the June, August and October lows. Tactically, the 200-day moving average has marked an inflection point, and the group’s rally attempt is intact barring a violation.

Meanwhile, the Materials Select Sector SPDR has started November with a breakout attempt. The group has tagged a fractional 52-week high, though by a narrow six-cent margin.

The chart illustrates a double bottom defined by the August and October lows.

Tactically, a near-term floor (59.00) is followed by the 50-day moving average (57.50) — a recent bull-bear inflection point — and the group’s breakout attempt is intact barring a violation.

More broadly, the two groups detailed above exemplify a still strengthening U.S. sub-sector backdrop. Participation continues to broaden.

Initially profiled Oct. 21, Tesla, Inc. TSLA, +0.24%  has returned 23.6% and remains well positioned.

Late last month, the shares staged a strong-volume breakout, gapping sharply higher after the company’s quarterly results.

The subsequent pullback has been orderly, fueled by decreased volume, positioning the shares to build on the initial spike. Tactically, a near-term floor matches the post-breakout low (109.20). The prevailing rally attempt is firmly intact barring a violation.

Also consider that a golden cross — or bullish 50-day/200-day moving average crossover — has signaled early Tuesday.

More broadly, the recent breakout makes Tesla the largest U.S. auto maker, as measured by market cap, narrowly eclipsing the market value of General Motors. (Tesla’s market cap = $57.7 billion, GM’s market cap = $55.2 billion.)

Alibaba Holdings Group, Ltd. BABA, +0.81%  is a large-cap China-based e-commerce name.

As illustrated, the shares are challenging the range top, rising amid increased volume after the company’s quarterly results. Recent strength punctuates a bullish ascending triangle pinned to the May low.

Tactically, the 50- and 200-day moving averages match an inflection point, circa 174, and a breakouat attempt is in play barring a violation.

Initially profiled Aug. 20, KLA Corp. KLAC, -0.75%  has returned 24.0% and remains well positioned. (Yield = 1.8%.)

Techncially, the shares have asserted a steady six-month uptrend punctuated by an October spike to all-time highs. (Last week’s strong-volume bullish reversal punctuated a successful test of the trendline, immediately after the company’s quarterly results.)

Tactically, the breakout point (163.50) closely matches trendline support, and the uptrend is firmly intact barring a violation.

Finally, U.S. Steel Corp. X, -1.92%  is a mid-cap name coming to life. (Yield = 1.7%.)

As illustrated, the shares have staged a strong-volume breakout, reaching six-week highs after the company’s better-than-expected quarterly results.

Underlying the upturn, its relative strength index (not illustrated) has notched its best levels since February, improving the chances of a durable trend shift.

Tactically, the 100-day moving average is closely followed by the former range top (12.40) and the recovery attempt is intact barring a violation.

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.

Still well positioned

The table below includes names recently profiled in The Technical Indicator that remain well positioned. For the original comments, see The Technical Indicator Library.