Technology stocks are getting hit hard following Alphabet’s earnings after the close yesterday. Markets are also digesting the FOMC rate decision, higher inflation, stronger-than-expected GDP, steady jobs and oil prices that are lower today but still near the $100 level.
There are a lot of balls in the air, and stocks—especially the technology and AI names—are not taking it well. Both the Nasdaq Composite and Nasdaq 100 are down around 1.5%, while the S&P 500 is holding up better with a decline of around 0.50%.
The technical picture reflects that divergence. The S&P remains above its key daily support, while both Nasdaq indices have fallen below their 100-day moving averages. Those breaks give sellers more control until buyers can reclaim the broken levels.
S&P 500: Holding up better, but below the hourly MAs
The S&P has moved below its nearly converged 100- and 200-hour moving averages near 7726. That area is now a close barometer for buyers and sellers.
A move back above—and staying above—would improve the technical picture and give buyers a stronger foothold. Stay below, and sellers retain the near-term advantage.
On the downside, the index remains well above its rising 100-day moving average at 7612.92, which sits inside the broader swing area between 7573 and 7617. That combination makes the area an important support target should the selling gather momentum.
Nasdaq Composite: The 100-day MA becomes the risk barometer
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The Nasdaq Composite’s picture is more bearish.
Yesterday, sellers leaned against the falling 100-hour moving average, now near 26594. Today, the index gapped lower and extended below its 100-day moving average at 26254.52.
That daily moving average is now the key risk-defining level. If buyers are going to take back some control, they need to get above it and stay above it. A failed break back to the upside would keep the pressure on.
Absent that recovery, the next key target comes near 25831, where the September and October lows formed a floor. A break below that floor would open the door toward the rising 200-day moving average, currently near 25045.
Nasdaq 100: Sellers take control below the 100-day MA
The Nasdaq 100 followed a similar path. Ahead of the FOMC decision and earnings yesterday, sellers found resistance against its 100-hour moving average, currently near 29785.
Today, the index gapped below its 100-day moving average at 29559.42 and extended to a low of 29257.05.
The 29559.42 level is now the key barometer for a recovery. Getting above and staying above would give buyers some breathing room. Stay below, and sellers remain more in control.
The next major downside target is the swing area between 28822 and 28953, which provided a floor during August and September. Buyers would be expected to defend that area. A break below would weaken the technical picture further.
Microsoft holds up as Alphabet falls sharply
The earnings reaction adds another layer to the market’s divergence. Microsoft is down only marginally after beating expectations, while Alphabet shares are down approximately 12% as investors react negatively to its AI investment story.
In the video above, I outline the key technical levels for the S&P 500, Nasdaq Composite and Nasdaq 100. I also take a closer look at Microsoft and Alphabet following yesterday’s earnings, highlighting where buyers need to respond and the levels that keep sellers in control.
This article was written by Greg Michalowski at investinglive.com.