US stock sell-off extends, key supports in focus

Three major US equity indices were examined yesterday, each presenting a distinct market perspective and technical narrative.

• S&P 500: Of the three, it offers the widest sector representation.

• Nasdaq Composite: This index includes a wider range of Nasdaq-listed firms and carries a significant technology tilt.

• Nasdaq 100: A narrower index comprising 100 large nonfinancial Nasdaq-listed companies, also heavily exposed to tech.

Previously, the S&P 500 was attempting to maintain support at its 100-hour moving average. Meanwhile, the Nasdaq Composite and Nasdaq 100 traded between their 100- and 200-hour moving averages, granting sellers a slight short-term edge.

By the session's end, that advantage had increased. Both Nasdaq indices ended below their 200-hour moving averages. Selling has persisted today, bringing additional technical thresholds into focus.

Where must buyers take a stand?

• S&P 500 — 200-hour moving average at 7,706.38: The index has now fallen below this level. If it remains below, sellers keep the short-term bias. Buyers must recover and hold above the moving average to start fixing the technical picture.

• Nasdaq Composite — 100-day moving average at 26,289: The index gapped under its rising trendline and the 38.2% Fibonacci retracement at 26,463, but support emerged just above its rising 100-day moving average. This provides buyers with a reference level and some optimism. If they hold above it, a bounce toward 26,463 is the next challenge. A break below followed by sustained weakness would remove another support layer.

• Nasdaq 100 — 100-day moving average at 29,626.09: The index has already breached this longer-term indicator and stays beneath it. Buyers must regain that moving average and subsequently the broken trendline around 29,700. Unless those levels are retaken and held, sellers retain command.

The key trading lesson is that identifying support is merely the initial move.

The Nasdaq Composite drew buyers around its 100-day moving average. That is a beginning, not a confirmation that the slide has ended. Buyers must still drive the price above prior broken levels to demonstrate they are regaining control.

This concept also holds for the S&P 500 and Nasdaq 100. When support is breached, that level turns into a possible resistance on any bounce. A rally that halts at former support allows sellers another chance to sell at an established level.

Buyers must defend support, recapture broken thresholds, and sustain any rally. Until they do, downward pressure persists.