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Both the broader S&P and Nasdaq indices are trading lower on the day, with declines of around 0.45%. The weakness has both indices moving closer to key hourly moving averages that could help determine whether buyers remain in control—or whether the short-term bias begins to shift more firmly to the downside.
S&P tests its 100- and 200-hour moving averages
For the S&P index, the price is testing both its 100- and 200-hour moving averages in early North American trading:
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100-hour moving average: 7,689.86
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200-hour moving average: 7,676
Those moving averages represent an important technical barometer for buyers and sellers. Holding above them would give buyers some hope that the current decline is simply a corrective move within the broader upward trend. The low price for the day just reached 7675.69 right near the 200 hour moving average level.
Conversely, a sustained move below both moving averages would tilt the short-term bias back to the downside. It would also tell traders that buyers are losing control of a support area that has helped define the trend.
That distinction is important. Moving averages do not predict where the market must go, but they provide traders with levels where risk can be defined. Buyers looking to lean against the area want to see the price remain above it. If the price breaks below and stays below, those buyers may be forced to exit, while sellers become more confident.
Lower highs signal fading upside momentum
Looking at the broader price action, the S&P broke higher in early August and eventually reached an all-time high of 7,815.54. Since then, however, the subsequent highs have been lower:
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All-time high: 7,815.54
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Late-August high: 7,771.48
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September high: 7,756.00
The sequence of lower highs is a modest negative. It shows that buyers have continued to push the index higher, but each rally has stalled sooner than the one before it.
That does not guarantee a larger decline, but when lower highs are combined with a break below important moving-average support, the technical picture becomes more bearish.
If the S&P moves below its 100- and 200-hour moving averages—and can stay below—the next downside target would be the swing area between 7,577.92 and 7,617.37.
That area would become the next key test. Buyers would likely try to establish support there, while sellers would look for a break below it to open the door to additional downside momentum.
Nasdaq remains above its hourly moving averages—for now
The Nasdaq index is also moving closer to its 100- and 200-hour moving averages, although it remains above both levels:
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100-hour moving average: 26,279.68
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200-hour moving average: 26,216.81
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Today’s low: 26,341.17
Because the Nasdaq remains above both moving averages, buyers retain more control in the short term. However, the cushion is narrowing.
Staying above the 100-hour moving average would keep the immediate bias more positive. A break below that level would increase the focus on the 200-hour moving average. If both moving averages are broken, the technical bias would shift more decisively in favor of sellers.
Nasdaq’s lower highs are also a warning
Like the S&P, the Nasdaq has also been making lower highs:
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All-time high from early June: 27,190.21
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August high: 26,875.52
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September high: 26,644.00
The Nasdaq is therefore still well below its record high, unlike the S&P, which set its all-time high more recently.
The declining highs from June into August and September indicate that buyers have been unable to regain the momentum needed to challenge the record. That makes the approaching hourly moving averages even more important. If those levels hold, buyers would have another opportunity to rebuild upside momentum. If they break, the lower-high pattern would receive additional confirmation.
What traders should watch now
For both indices, the technical story is centered on the same question: Can the hourly moving averages hold?
The S&P is already testing its 100- and 200-hour moving averages, making it the more immediate focus. The Nasdaq remains above its corresponding levels, but it is moving closer.
The educational lesson is that traders should watch how the market behaves around a key level—not simply whether the level is touched. A brief move below a moving average followed by a quick recovery can signal a failed break. By contrast,ly, a move below followed by failed attempts to recover above the moving averages would give sellers greater confidence.
For now, the S&P is at a key decision point. The Nasdaq is approaching one. The price action around these hourly moving averages should help determine whether today’s weakness remains a modest correction or develops into a more meaningful downside move.
This article was written by Greg Michalowski at investinglive.com.
