The S&P 500 fell below its 200-day moving average of 5732.91 for the first time since November 1, 2023. Although it closed at 5738.52, the volatility continues, with the current trading level at 5730.49, down 0.11%.
A daily close beneath this moving average could indicate a bearish trend. Key support zones are situated between 5669.67 and 5688.43, with the 50% retracement figure of 5633.27 being relevant should selling intensify.
Shifting Market Momentum
Conversely, maintaining above the 200-day moving average could suggest a shift in momentum, and surpassing 5754.58 would imply recovery for buyers. The Nasdaq index has fluctuated around its moving average of 18399.30 and is down 4.74% for the week, while the S&P is down 4.08%.
The fact that the S&P 500 momentarily dropped under its 200-day moving average but later closed slightly above it suggests uncertainty among market participants. With ongoing selling pressure, a daily close beneath this threshold would provide a bearish confirmation. If that happens, further declines towards the nearby support range between 5669.67 and 5688.43 could follow. Should momentum continue downward, traders would need to watch 5633.27 closely, as that represents the 50% retracement level, a technical point that often attracts buying or profit-taking activity.
If the opposite scenario occurs and support holds, staying above the 200-day moving average could give way to short-term stability. A close above 5754.58 would reinforce that view and indicate that buyers are regaining strength. In such a case, it would be wise to reassess positioning based on whether momentum builds or stalls at these levels.
Meanwhile, broader market weakness persists. The Nasdaq, which has also been fluctuating near its own 200-day moving average, has already taken a more pronounced hit this week. With a 4.74% decline over the last five trading sessions, it has fared worse than the S&P 500, which is down 4.08% over the same period. These drops reinforce the need to manage risk carefully and adapt to shifting dynamics.
Market Correlations And Risk
With both indices experiencing turbulence, one cannot ignore correlations between them, particularly in high-growth sectors and technology stocks. If losses in the Nasdaq accelerate, it could weigh further on broader indices. Given these conditions, reacting swiftly to confirmed breakouts or breakdowns will be critical. Premature positioning could lead to unnecessary risk exposure, making it all the more important to wait for definitive signs before adjusting strategies.
Price action in the coming sessions should clarify whether this is a mere shakeout or the start of extended weakness. If weakness persists, previous support levels will become focal points. If buyers regain control, overhead resistance will be just as telling.
