The S&P and Nasdaq indices are both finding buyers against key support, but the rebounds still have work to do before the technical bias turns more bullish.
For the S&P index, buyers are leaning against the swing area between 7577.92 and 7636.33. This area previously acted as a ceiling and is now being tested as a floor, making it the key risk-defining area. Stay above—and especially move back above 7636.33—and the buyers remain in the game. However, they still need to reclaim the 100-hour moving average at 7681.09 and the 200-hour moving average at 7694.73 to take back more control. A move below the 7577.92 would weaken the technical structure and give sellers more confidence to potentially make a run toward the rising 100 day MA at 7491.51.
For the Nasdaq Composite, buyers came in against the August 24 low at 25,910 and the rising 100-day moving average near 25,945. That combination creates a clearly defined support area and risk level for buyers. Holding above those levels keeps the longer-term bullish structure intact. However, resistance is now found at the 100-hour moving average at 26,273.69 and the 200-hour moving average at 26,328.64. Buyers need to reclaim those moving averages to improve the short-term bias. A break below 25,910 would put sellers more firmly in control and increase the downside risk.
The dominant message is that buyers have defended important support, but they have not taken back control (shorter term bears/sellers are holding a better hand). Holding support is the first step toward a recovery, but it is not the same as confirming a bullish reversal. Buyers must also reclaim the moving-average resistance above to show that momentum is shifting back in their favor.
This article was written by Greg Michalowski at investinglive.com.