U.S. stock indices have seen a sharp pullback since hitting April lows, now encountering a decision point. The S&P 500, in particular, rose above its 100-hour moving average today after opening higher, but weaker ISM non-manufacturing data impacted momentum.<\/p>\n
The S&P previously breached its 200-hour moving average following a weak jobs report, indicating a bearish shift. Yesterday’s recovery above this level offered a brief positive outlook, but resistance was met at the 100-hour moving average. Today, the market failed to sustain gains, further eroding bullish sentiment.<\/p>\n
The 100-hour moving average, now at 6330.86, has turned into resistance, with potential for sellers to push lower. Should this occur, the 200-hour moving average at 6270.48 is the next target. Breaking this level would increase bearish pressure, with further downside targets at the 38.2% retracement of 6242.21, followed by the 50% mark at 6185.13.<\/p>\n
The S&P index has decreased by 33 points, or 0.54%, standing at 6295.66. The NASDAQ and Dow are similarly affected, with declines of 0.59% (124.86 points) and 0.50% (218 points) respectively.<\/p>\n
With the S&P 500 failing to hold above its 100-hour moving average at 6330, the market is signaling a loss of near-term momentum. This technical weakness suggests the path of least resistance is lower in the coming days. For derivative traders, this is a clear signal to shift from a bullish to a neutral or bearish stance.<\/p>\n
This downturn is supported by recent economic data that points to a cooling economy. The ISM Services PMI reported today came in at a disappointing 50.2, barely above the contraction threshold and well below forecasts. This follows last Friday’s weaker-than-expected jobs report, which showed the U.S. added only 155,000 jobs, missing the consensus estimate of 200,000.<\/p>\n
Considering this, traders could look to buy put options with strike prices just below the next major support level, the 200-hour moving average at 6270. Specifically, weekly or monthly puts with a 6250 strike offer a way to profit from a break of this floor. This strategy protects against a sharper move down toward the next target at 6242.<\/p>\n
The market’s nervousness is also visible in the CBOE Volatility Index (VIX), which has climbed to 18.5 from the low teens just last month. This rising volatility makes buying options more expensive, so an alternative strategy is to sell out-of-the-money call credit spreads. Selling a spread with a short strike above the 6330 resistance level allows traders to collect premium while betting that the recent high will not be breached in the near term.<\/p>\n
If sellers do push the index below the 200-hour MA at 6270, we will look to the Fibonacci support level at 6242 as the next battleground. A failure to hold this level would confirm a deeper short-term bearish trend. At that point, traders might consider rolling existing puts down to lower strike prices to capture further downside.<\/p>\n
We saw a similar pattern of a technical breakdown following weak data during the pullback in the second quarter of 2024. That period showed how quickly sentiment can shift, leading to a swift 5% correction before dip-buyers returned. This historical context suggests that while the immediate outlook is weak, the situation can evolve rapidly.<\/p>\n
This economic softness has changed the calculus for Federal Reserve policy, with fed funds futures now pricing in a 60% chance of a rate pause at the September FOMC meeting. Any further signs of a slowing economy could increase bets on a rate cut before year-end. This is the key factor that could eventually put a floor under the market if the current downdraft continues.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" S&P 500 faces resistance at 100-hour moving average; bearish pressure builds amid weak economic data.<\/p>\n","protected":false},"author":62,"featured_media":16993,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-28260","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/28260","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=28260"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/28260\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16993"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=28260"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=28260"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=28260"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}