The S&P 500 and Nasdaq Composite are holding the swing-high zones they broke out of earlier this week, after two straight sessions of selling. Greg Michalowski says defending those levels keeps buyers in control, while a momentum break below them would hand sellers the advantage.
Both indices are defending the breakout zones that drove this week's record highs, after two straight sessions of selling. Greg Michalowski points to those old swing highs as the line between a bullish hold and a bearish failure for both the S&P 500 and the Nasdaq Composite: holding them keeps buyers in the game, while breaking below them and staying below gives sellers more control.
S&P 500 defends its breakout zone
Earlier this week, the S&P 500 broke above its swing area between 7771 and 7815.54, reaching a record high of 7844.52. Today, the index briefly traded back below that zone, touching 7769.15, but the break did not gather momentum and buyers pushed price back inside the 7771-7815.54 range.
According to Michalowski, "Hold the area, and buyers retain their opportunity." A close back above 7815.54 would put the record high at 7844.52 back in focus. A move below 7771 with momentum, however, would signal a failed break and open the door to further corrective selling.
Nasdaq Composite holds above its summer highs
The Nasdaq Composite moved above its June and September highs between 27190 and 27288 this week, with Tuesday's advance reaching 27722.75 near a topside trendline. A move below 27190 with momentum would likewise disappoint buyers and tilt the bias toward sellers.
Old ceiling, new floor
For both indices, an old ceiling can become a new support level once price breaks above it, and a pullback into that zone gives buyers a chance to defend the breakout. Sellers, in turn, want to push the S&P and Nasdaq back below their old highs and force breakout buyers to reassess the rally.
Source: investingLive
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