MarketWatch: Watching the charts

"The third quarter ends in just a few weeks, and the market landscape is strikingly different today than when it started," says Michael Ashbaugh.

In his top-notch The MarketWatch Technical Indicator, the advisor offers a technical assessment for the market averages as well as for a trio of global wireless stocks that now appear on his radar watch list.

"The major U.S. benchmarks are consistently pressing the year's best levels, with the S&P and the Nasdaq clearing major resistance.

"After breaking slightly higher last week, the S&P has thus far held the August peak as support. Its steep rally from the September low is constructive, improving the chances of further gains.

"Consider that each major U.S. benchmark has notched the following quarter-to-date performance: 

1. The Dow has rallied 1,126 points, or 13.2%, after finishing the second quarter at 8,500.
2. The Nasdaq has gained 317 points, or 17.9%, after ending last quarter at 1,774.
3. The S&P 500 has climbed 130 points, or 14.1%, after ending last quarter at 919.

"And while these gains seem excessive at face value, it's not clear that the rally has run its course. The S&P 500 is teetering on the verge of a break from its market-crash range.

"The specific area spans from 1,039 to 1,044 - bracketing the August peak and the mid-October high - and the index closed Monday at 1,049.

"Against this backdrop, important leadership groups, most notably transports and technology, have already broken out, and portfolio managers' third-quarter performance anxiety is an added tailwind.

"A sustained break above S&P 1,044 opens the way to the another leg higher, with the next target at the 2004 low of 1,060, followed by the September 29 close of 1,106, the day the crash truly took hold.

"Meanwhile, on our technical watch list, we highlight international wireless-communications names well positioned technically to rise:  Deutsche Telecom (NYSE: DT), Vodafone Group (NYSE: VOD) and Mobile Telesystems (NYSE: MBT).

"These are intended as radar screen names -- sectors or stocks positioned to move near term. Earlier this month, each gapped higher on increased volume, notching multi-month highs.

"Since then, each has consolidated its gains with a shallow pullback, and while each has a slightly different backdrop, the strong-volume breakouts position this group for longer-term follow through."