The broader US stock indices are moving higher, led by a gain of around 1.7% in the Nasdaq 100. The Nasdaq Composite is up nearly 1.3%, while the S&P 500 is higher by about 0.85%.
The gains have tilted the short-term technical bias more toward the buyers. However, after the recent sharp declines, the sellers still have a say. Reclaiming a technical level is a positive step. Staying above it—and breaking the next resistance target—is what would give the buyers more control.
In the video, I outline the technical roadmap for each index, including the levels buyers need to hold, the resistance ahead and where a failed break would put sellers back in charge.
S&P 500: Buyers push into a key resistance area.
The S&P 500 is testing a key swing area between 7577 and 7621. Within that area sit the 100 hour moving average near 7605 and the 100 day moving average at 7621.28.
Today’s high reached 7603.52, putting the index just short of its 100 hour moving average before rotating lower. The current price near 7580 leaves it just above the bottom of the swing area.
That makes this area the near-term barometer. Buyers need to hold above 7577 and build acceptance above the moving averages at 7605 and 7621.28. Doing so would strengthen the recovery and give them more control.
Conversely, a move back below 7577 would suggest sellers are successfully defending resistance. Buyers have pushed into an important area, but they have yet to clear it.
Nasdaq Composite: Reclaimed support gives buyers something to lean against.
The Nasdaq Composite gapped back above its 200 day moving average at 25122.14. That is an encouraging development after the index spent the last few sessions trading above and below that moving average and the 38.2% retracement of the move higher from the April low at 25036.33.
Those two levels now define a key support area between 25036.33 and 25122.14. Stay above, and buyers have a foundation to build on—and a defined area to lean against.
There is still work to do overhead. The next upside targets come in at:
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The 100 hour moving average at 25626.70.
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The swing target at 25831.74.
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The 100 day moving average at 26174.44.
Each break would strengthen the buyers’ position.
The risk is a failure to hold today’s move higher. A drop back below the 200 day moving average would be a warning. A break below the 38.2% retracement as well would undermine the recovery and shift the technical bias back toward the sellers.
Nasdaq 100: Leading the rebound, but resistance remains overhead.
The Nasdaq 100 is leading today’s gains and has moved back above both its 200 day moving average at 28016.88 and its previously broken 38.2% retracement at 28108.03.
That puts the support area between 28016.88 and 28108.03 firmly in focus. Holding above it keeps buyers in play. Falling back below both levels would turn today’s recovery into a failed break and put sellers back in control.
On the topside, the first hurdle is the falling 100 hour moving average at 28511.99. A sustained move above that level would open the door toward the swing area between 28822.67 and 28953.26.
Beyond that, the 100 day moving average at 29388.44 remains a key hurdle before buyers could make a stronger claim to broader technical control.
The rebound is giving buyers an opportunity. Now they need to hold the reclaimed support and work through the resistance above.
The trading lesson: Let the levels measure the recovery.
A strong percentage gain gets attention, but the technical levels help determine how much has changed.
For the Nasdaq indices, the reclaimed support areas define the risk. For the S&P 500, the immediate test is whether buyers can push through the swing area and moving averages overhead.
Hold support and break resistance, and buyers earn more control. Lose those reclaimed levels, and the bounce becomes vulnerable. Know the levels. Define the risk. Let the price action confirm the next move.
This article was written by Greg Michalowski at investinglive.com.