The S&P 500, Nasdaq Composite and Nasdaq 100 are bouncing, but buyers still have key technical levels to reclaim.
Yesterday’s selloff left the major US stock indices in a deep hole. The Nasdaq 100 fell 6.36%, its biggest one-day decline since 2020, and the weakness spread well beyond the tech-heavy index. Along the way, the selling broke technical levels that buyers had leaned against. Those breaks matter today because some of the same levels that gave way on the way down are now the first hurdles on the climb back.
Today, the major indices are finding their footing. The bounce is welcome, but there is still work to do before buyers can start to wrestle back more control. The first test is what happens when the rebound reaches a level that broke yesterday. Can buyers get above it and stay above it? If they can, the next upside target comes into focus. If the rally stalls and sellers lean against that old support, yesterday’s lows can come back into play.
In the video above, I walk through the S&P 500, the Nasdaq Composite and the Nasdaq 100 one at a time. I look at what each index broke on the way down, what today’s rebound has managed to repair and where the next test comes in. Which levels would give buyers more confidence if reclaimed? Where can buyers define close risk if they step in? And what would tell us that sellers are taking control again?
Dips have often found buyers, but the climb back can take longer than the fall. After a day like yesterday, traders have to sort through the fundamental stories, shifts in positioning and a change in the market’s appetite for risk. All of that goes into the witches’ brew that drives price action. In the meantime, the chart gives traders something concrete to work with. A broken swing area or moving average can become a barometer for the bias. If buyers reclaim it and hold it on a pullback, they have a level to lean against and a target to look toward. If the level gives way again, they know where the case for the rebound starts to weaken.
For now, buyers have taken the first step out of the hole. How they handle the levels that gave way yesterday will tell us how much further the rebound can go.
A look at the charts
Watch the video for the your roadmap but below is a look at the charts for the S&P, Nasdaq composite and Nasdaq 100 indices:
S&P Index:
The S&P index stalled the fall ahead of the 200 day MA at 7325 and a swing area down to 7300. If that level can hold, the upside target at 7507 is the target for buyers followed by the 100 day MA at 7619.
Nasdaq Composite Index.
The low yesterday did stall in the swing area between 24206 and 24425. The price today is above that area but below the 200 day MA at 25098 and the broken 38.2% at 25036. Get above each is needed to increase the bullish bias.
Nasdaq 100.
The fall in the Nasdaq 100 is seeing a rebound, but the move back above the broken 50% is failing (at 27103). If the buyers are to scare the sellers (or the buyers to gain confidence), they need to get and stay above 27103.
This article was written by Greg Michalowski at investinglive.com.