US stock indices extended yesterday's decline as Treasury yields spiked on rising expectations for further Fed rate hikes. The S&P 500, Nasdaq Composite and Nasdaq 100 are each testing distinct downside levels that will determine whether sellers keep control.
The broader US stock indices are lower again today after yesterday's sharp decline. Treasury yields spiked as traders increased their expectations for further Fed rate hikes, and higher yields can weigh on stocks because they raise borrowing costs and make future earnings less valuable in today's terms. That pressure can be especially pronounced for growth stocks.
Each index is now testing a different downside level. These levels serve as short-term barometers: holding support could give buyers room to push back, while a break with momentum would put sellers more firmly in control. A brief move below a level is one thing; staying below it adds conviction to the break.
S&P 500 pinned between hourly averages
The S&P 500 is trading between its 100-hour moving average at 7667.44 and its 200-hour moving average at 7682.65, leaving traders a narrow area to watch. A move below the 100-hour average, followed by momentum away from it, would tilt the short-term bias further toward sellers, with the next downside target the swing area between 7573 and 7617. Reclaiming the 200-hour average, on the other hand, would be a step toward giving buyers more control.
Nasdaq gauges retreat from record highs
The Nasdaq Composite is testing the underside of a broken trendline and a swing area between 26,676 and 26,856, with today's low of 26,706 falling inside that area. A break below 26,676 would shift attention to the 100-hour moving average at 26,477, followed by the 200-hour moving average at 26,393, while a move above 26,856 would improve the buyers' position. The index reached a new all-time high earlier this week but could not sustain the move.
Meanwhile, the Nasdaq 100 has declined back toward 30,195, a level marked by swing highs from August, with today's low reaching 30,204 just above that support. Buyers have held it so far, but a break below would open the door toward 29,947, with the 100-hour moving average sitting further down at 29,594.33. Like the Composite, the Nasdaq 100 closed at a record level earlier this week before reversing lower.
The question now is whether buyers can defend these support levels after yesterday's yield-driven decline. Watch how price behaves at support and whether any break holds — that will tell traders more than the first move through a level alone.
Source: Investinglive
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