At turning points, short-term moving averages often provide a roadmap for corrective moves within trending markets. U.S. stock indices have been trending higher since the April lows, but recent price action has featured a sharp pullback followed by a snapback rally—and the market is now at a decision point.
Today, the major U.S. indices opened higher, pushing the S&P 500 back above its 100-hour moving average. Last Thursday, the index tested this level (blue line) and found buyers, but Friday’s weaker-than-expected U.S. jobs report triggered a gap lower that broke both the 100-hour and 200-hour moving averages—the latter (green line) being a reliable support floor in July, making that breakdown a notable bearish shift.
Yesterday, the S&P gapped higher to reclaim the 200-hour MA, offering buyers a glimmer of hope, but the 100-hour MA capped the rally and the close was back below that level. Today’s open above the 100-hour MA looked promising, but the weaker ISM non-manufacturing index undercut momentum, and the failure to hold above is now eroding near-term bullish sentiment.
With the 100-hour MA at 6330.86 flipping to resistance, the question is whether sellers seize the window to push lower. If they do, the 200-hour MA at 6270.48 becomes the next downside target. A break below that level would add to the short-term bearish bias and put the rally from the April lows under greater pressure. The 38.2% retracement of the move up from the end of June low at 6242.21 followed by the 50% and swing area (see yellow area on the chart above) near 6185.13 would be the other downside targets.
The S&P index is now down -33 points or -0.54% at 6295.66. The NASDAQ index is also under pressure with a decline of -0.59% down 124.86 points
