The S&P 500 and NASDAQ both broke out above key technical levels on October 23.
That’s the day the S&P 500 regained is 20 day moving average for the first time in over 2 months, while NASDAQ traded north of its 200 day moving average and eclipsed the NASDAQ 5000 threshold that had provided stiff resistance for the first 3½ months of 2015.
SPY-NASDAQ Key Support Levels Loom Large
The catalyst for this breakout was strong earnings from GOOGLE, AMAZON, Microsoft, and ATT, all of which reported stellar earnings after the prior day’s close.
Those key near term support levels of 5000 on the NASDAQ, as well as the 200 day moving averages of 2064 on the S&P 500 and 4954 on NASDAQ are now very much at risk.
Both the S&P 500 and NASDAQ have been down 5 of the last 6 days and 1 hour into today’s trading, it’s likely to be 6 of 7 after today. These net declines are certainly not excessive, with the S&P 500 and NASDAQ, 1.9% and 1.5% off their recent closing highs from November 3.
The continued weakness in the Oil sector, with the commodity another 1% lower this morning will likely continue to put pressure on the S&P 500, -0.65% while some firming in high beta tech names could give some support to NASDAQ, -0.40% at 10:30 AM.
Today is a very busy day for senior FOMC members on the speaking circuit. FED Chair Janet Yellen and St Louis FED President Bullard have already spoken, FED Vice Chair Fischer speaks at 6:00 PM this evening, while 3 other voting FED members get their turn at the microphone between now and then.
With investors and traders very focused on the prospects of an initial rate hike at the December FOMC meeting 4 weeks from now, you can be sure today’s FED SPEAK PALOOZA will be heavily scrutinized for every nuance and innuendo.
Late Morning Update: 90 minutes into the trading day, stocks are trying to stabilize after a sharply lower opening.
The S&P 500, -0.6% at 2062 is hovering just a couple points below its 200 MA of 2064, while the NASDAQ, -0.4% at 5047 is showing a bit of relative strength, although high beta leaders AMZN, GOOG and MSFT have turned “red“ on the day, while AAPL is struggling to hold near term support at $116. Keep a close watch on those key support levels, as well as the individual momentum leaders from the October rally.