S&P and Nasdaq: Price Action's Story in Technical Analysis

I hold that belief is necessary in life. This belief encompasses not only religious faith, such as my own belief in God, but also confidence in marriage, the safety of driving, and many other areas.

For traders, a core belief is that price action narrates the story of buyers and sellers. I am convinced this is accurate: when buyers overpower sellers, prices rise; when sellers dominate, prices fall. That narrative is one I genuinely accept.

Taking this concept further: Do I accept that technical tools applied to price action also reveal a story about buyers and sellers, as well as bias, risk, and targets? My response is: show me the evidence.

I examine the S&P and Nasdaq indices, focusing on price action and simple technical tools such as moving averages and swing levels that help tell the story of which side—buyers or sellers—is in control. To understand this better, technical levels help traders answer two fundamental questions: who has the advantage, buyers or sellers, and what would change that? A moving average smooths price fluctuations, making it easier to identify the trend and potential support or resistance levels. The price action and technical tools applied to the Nasdaq Composite and S&P 500 indices illustrate this dynamic.

• Nasdaq Composite: The 200-hour moving average has recently provided support for the index. Buyers have stepped in near that level, pushing the index higher. As long as the price remains above the 200-hour moving average, buyers maintain the advantage. To strengthen this advantage, the index must move above its 100-hour moving average at 26,332. The next target is the 26,707–26,788 swing area, a zone where previous price turning points may attract sellers. Moving above and staying above these levels would reinforce the bullish narrative. A drop below the 200-hour moving average would weaken it.
• S&P 500: The index fell below its 200-hour moving average yesterday, a bearish signal, but found support at 7,617, the upper edge of a swing area. Buyers then stepped in and pushed the price back above the 200-hour moving average, now at 7,647. This recovery is encouraging for buyers, but they need to hold above that level to sustain the improved outlook. The next upside target is the 100-hour moving average at 7,702. A move above and the ability to stay above that level would provide further evidence that buyers are gaining control. A move back below 7,647 would shift focus back to support at 7,617.

For novice traders, the key takeaway is that technical levels serve as checkpoints, not guarantees. Holding support gives buyers a foundation to build on. Breaking above the next resistance level strengthens their argument. Failing to hold support signals that a reassessment is needed.