Stock Market Rally Helps S&P 500, Nasdaq Clamber Back Above a Bullish Trend Line

By Mark DeCambre Markets MarketWatch Pulse

A broad stock-market rally on Monday was driving the S&P 500 index and the Nasdaq Composite back above a short-term trend line that helps to underscore bullish sentiment in an asset. Both the S&P 500 and the Nasdaq Composite indexes were trading above their 50-day moving averages, after slipping below those levels last week in downbeat trade underpinned by escalating worries that verbal clashes between North Korea and the U.S. would result in military conflict. The S&P 500 index was up 1% at 2,465, trading above its 50-day moving average of 2,448.79, according to FactSet data. The Nasdaq, meanwhile, was up 1.2% at 6,331.08, compared with its 50-day MA of 6,272.10. A three-session dive last week pushed the indexes below their short-term averages for the first time since July 11. Market technicians tend to pay attention to moving averages to help determine bullish or bearish momentum in an asset. However, looking at the S&P 500 and Nasdaq Composite's trend line to determine momentum may come into more doubt because it has failed to be followed by a bearish slump as typically would be expected when the gauges dip below their short-term trend lines. Overall, stocks were attempting to claw back from last week's losses, which represented the worst weekly drop for U.S. stock market in months. Most recently, the Dow Jones Industrial Average was trading 0.7% higher in late-morning trade at 22,006. The Dow has managed to hold above its 50-day MA at 21,566.50, despite the ugly weekly downturn.

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