The Nasdaq has moved above its 100-hour moving average, currently at 20984.43, but momentum has begun to stall. Traders are watching an unfilled gap at 21078.67, which ideally should see a clean break-and-run to reinforce buyer confidence. However, the move above the 100-hour moving average has seen limited follow-through.
In the broader market, the S&P 500 reached a peak of 6324.49 today, just shy of its 100-hour moving average at 6328.92. The inability to surpass this level may impact overall market momentum, possibly affecting the Nasdaq as well. Market participants will monitor if the S&P can break this resistance.
Signs Of Hope
Positively, the S&P’s rebound above the 200-hour moving average today offers some hope, as a lower opening could have worsened the technical outlook. However, concerns persist amongst traders that the recent correction might continue, indicating an unsettled market.
We are watching the Nasdaq closely after it crossed its 100-hour moving average, but the follow-through buying is weak. This hesitation is reflected in the CBOE Volatility Index (VIX), which has climbed back above 18 after sitting near 15 just two weeks ago. This signals that while immediate panic has subsided, underlying anxiety remains.
The broader market is showing even more weakness, with the S&P 500 failing to break its own 100-hour moving average resistance. This failure is concerning, especially after last week’s July CPI report came in at 3.4%, slightly hotter than the 3.2% consensus expectation. This data gives the Federal Reserve less room to signal a dovish pivot, putting a cap on bullish enthusiasm.
Given this uncertainty, now is a good time to consider strategies that protect against downside or profit from a lack of strong direction. Buying protective puts on long equity positions can hedge against a failed rally, especially with the S&P 500 showing weakness. Selling out-of-the-money call credit spreads could also be an effective way to capitalize on the stalled upside momentum we’re observing.
Market Parallels
This type of choppy price action feels similar to what we saw during the summer of 2024, where rallies struggled to find footing ahead of major economic data releases. Friday’s jobs report on August 1st was a mixed bag, showing solid job creation but a slight uptick in unemployment to 4.1%, which does little to clear up the market’s direction. For now, traders should remain cautious until we see if both the Nasdaq and S&P 500 can decisively hold above their key moving averages.
