S&P500 and Nasdaq Index: Stock Market Forecast Hinges on 200-Day MA Battle

S&P 500 Defends 200-Day Moving Average

The S&P 500 Index (SPX) is trading higher shortly after the opening as investors continue to vigorously defend the 200-day moving average at 6600.51 and the long-term retracement zone at 6566.52 to 6483.01. Although this could lead to a strong technical bounce, buyers still have a lot of work to do before momentum shifts to the upside.

SPX Traders Eyeing 6705.42

The immediate level to watch early in the session is 6705.42. Overcoming this level will be the first step toward recovery. The next level to watch will be 6762.10. Buying could strengthen over this price with 6819.16 to 6862.38 the next major objective before the 50-day moving average at 6885.51.

The market is currently trapped between the 200-day moving average and the 50-day moving average. Trading could tighten inside these moving averages, which would then set up for an explosive move.

E-Mini S&P 500 Recovering Key Price Cluster

March E-mini S&P 500 Index futures are showing signs of strength with its recovering of the price cluster formed by the 200-day moving average and 50% level at 6697.00. Trader reaction to this price will set the tone for the day.

A sustained move over 6697.00 will indicate the presence of buyers. If this creates enough near-term momentum, the index could eventually reach the retracement zone at 6784.25 to 6831.25. If 6697.00 fails as support, the futures contract could plunge to 6644.50 then 6583.00.

Essentially, trader reaction to the 200-day moving average will set the tone.

Nasdaq Composite (IXIC) Holding Inside Key Moving Averages

The Nasdaq Composite Index (IXIC) is showing a similar pattern. The index is currently trading inside a pair of 50% levels at 22290.08 to 22959.14. However, more importantly, it’s holding inside the 200-day moving average at 22176.03 and the 50-day moving average at 23093.69.

The longer the market holds inside this range, the greater the chances of a major breakdown. At this time, we’re leaning to the downside because of the bearish influence of soaring crude oil prices.

E-Mini Nasdaq-100 Eyes 200-Day Moving Average

March E-mini Nasdaq-100 Index futures are edging higher early Friday as traders struggle to overcome the 200-day moving average at 24675.75. Trader reaction to this indicator will set the tone today.

A sustained move over the 200-day moving average will indicate the presence of buyers. This could lead to a test of a trendline at 24925.75. This level is both resistance and a potential trigger point for an acceleration to the upside.

A sustained move under the 200-day MA will signal the presence of selling with 24000.00 the next major downside target.

200-Day Moving Average Is the Common Theme

Technically speaking, the common theme today is trader reaction to the 200-day moving average. This is typically an attractive area for investors. The news has been bearish since oil prices started to climb toward a four-year high and the 200-day moving averages are usually attractive entry levels. The combination of these two events lays the groundwork for elevated volatility.

More Information in our Economic Calendar.