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Wall Street Hunts for Bottom as S&P Retests 'Rock Solid' Support.

stock :: 11hrs ago :: source - bloomberg

By Geoffrey Morgan

(Bloomberg) -- After the S&P 500’s biggest weekly drop since November, Wall Street strategists are grappling with just how far the benchmark will slide as it once again tests what has been a months-long support level.

For the third day this month, the benchmark gauge traded below its 100-day moving average, a key support line that has held since May, as investors rotate out of richly valued tech stocks into more defensive corners of the market. On Tuesday, stocks whipsawed, clawing back early losses to close marginally higher.

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“If it was to fail now, that would be an indication that sentiment might be shifting more bearishly,” Colin Cieszynski, chief market strategist at SIA Wealth Management Inc., said by phone.

An extended drop below the 100-day average would be particularly troubling because the index held the line in November and then rallied to hit its most recent record high in January, he said.


Now, however, the benchmark has shown signs of a market under pressure, recently trading in a tight range roughly from 6,800 to just under 7,000. Investors have reduced their equity exposure to the lowest level since July, as measured by the National Association of Active Investment Managers’ poll of active money managers.

Read: Risk Managers Shun Exposure as S&P 500 Slips: Equity Insight

While the S&P 500 once again held the line on Tuesday, closing up 0.1% at 6,843.22, it earlier fell to intraday low of 6,775.50. That compares with a 100-day moving average of 6,814.51.

That swirling price action is spurring strategists and technicians to scrutinize their charts to determine the next support levels.

Cieszynski sees a “cluster” between 6,500 and 6,550 points for the S&P 500, noting that the 200-day moving average and the low point set in November, falls in that range.

Indeed, the combination of the 200-day moving average and the recent nadirs together in the low 6,500-point range are “very important” to watch if the market sinks any further, said Matt Maley, chief market strategist at Miller Tabak + Co LLC. He said the 100-day level has been “rock solid” for months, but is now threatening to give way.

A major drag on the S&P 500 is weakness in its largest stocks. The Magnificent Seven has fallen about 7% in 2026, led by double-digit declines from Amazon.com Inc. and Microsoft Corp. The group “continues to carve out a top” and is putting pressure on the S&P 500, said Jonathan Krinsky, managing director and chief market technician at BTIG.

A major test for the group arrives next week when Nvidia Corp. reports results.

Tug of War

Market watchers at Bank of America Corp. see another key test for the index at the 6,720 line, which would clarify for technical strategists whether the index is either in a rotation or truly starting to falter.

“It’s a range-bound tug of war between a bullish and bearish pattern,” said Paul Ciana, global chief technical strategist at Bank of America. A drop below 6,720 would complete the “invalidation” of the bullish pattern.

To be sure, many Wall Street technicians are also watching the number of stocks in the market hitting new highs as a sign that bullish trends remain intact. In a research note Tuesday, Roth Capital Partners noted that 15% of Russell 3000 members are hitting new highs, while 8% are falling to fresh lows even as fears about artificial intelligence hit additional sectors.

“That weakness, while painful at the stock level, cannot match the muscle provided by internal strength as twice as many stocks are making new highs compared to new lows,” JC O’Hara, chief market technician at Roth, wrote.

On the other hand, Oppenheimer & Co.’s Ari Wald said the dispersion between the net number of firms hitting fresh highs from one week to the next “often warn of trend exhaustion and a potential reversal.”

Wald noted that net new 52-week highs on the New York Stock Exchange hit the highest level since November last week at 263, but was just 109 when the S&P 500 hit a new record in January and said it would be monitoring for another breadth warning.

“For S&P 500, we think the index’s uptrend is intact above 6,520 support,” Oppenheimer’s head of technical analysis said.

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