US stocks fall after CPI. Sellers make a play, but key support remains intact.
Nasdaq 100 is closest to a key downside break as buyers defend support across the broader indices.
The higher-than-expected CPI data has US stocks on the defensive:
S&P 500: Down approximately 0.65%
Nasdaq Composite: Down approximately 0.90%
Nasdaq 100: Down approximately 1.05%
All three indices reached new record highs last Tuesday, but those breaks failed to sustain momentum. Buyers had their shot to extend higher. They missed.
Now sellers are making a play. However, the declines have yet to establish a definitive bearish bias across all three indices. Key moving average support remains in play, giving traders clear levels to measure whether sellers can take more control.
Nasdaq 100: The most vulnerable
The Nasdaq 100 is approaching its rising 200-hour moving average at 30,128.67. Today’s low reached 30,239.63, putting the index about 111 points above that key support level.
The price is within sniffing distance, but sellers still need to break below it.
A move below the 200-hour moving average—and the ability to stay below—would increase the bearish bias and open the door for further selling. The rising 100-day moving average near 29,627 would become the next major downside target.
Until that break occurs, buyers still have a level to lean against and define their risk.
Nasdaq Composite: Between the hourly moving averages
The Nasdaq Composite has fallen below its 100-hour moving average at 27,168.43, giving sellers a short-term victory. However, the price remains above its rising 200-hour moving average at 26,820.47.
With the price between those moving averages, the short-term technical bias is more neutral.
A move back above the 100-hour moving average would take some pressure off and give buyers a foothold. Conversely, a break below the 200-hour moving average would give sellers more control, targeting the swing level and rising trendline near 26,676.
Below that, the 100-day moving average near 26,290 becomes the next downside target.
S&P 500: Buyers defend the 100-hour moving average
The S&P 500 reached a low today of 7,751.93, holding just above its rising 100-hour moving average at 7,745.70.
Recall that last Thursday’s decline also tested the 100-hour moving average and found support buyers. That makes the level an important barometer again today.
Stay above, and buyers keep a foothold. Move below—and stay below—and sellers gain more control, with the 200-hour moving average at 7,706.45 the next downside target.
The trading lesson: A decline needs confirmation
A failed break to a record high is a warning. A break below key support provides the next piece of evidence.
The CPI report has given sellers a shove, but the technical levels will help determine whether that shove develops into something more. Watch how the price behaves at support—and whether a break can be sustained.
Sellers are making a play, but they still have work to do.
This article was written by Greg Michalowski at investinglive.com.
