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S&P 500, Nasdaq 100: Time to Buy the Dip? Watch These Support Levels for Clues

Published 04/22/2024, 05:42 AM
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  • Last week, geopolitical tensions dampened investor confidence, leading to a sell-off in the S&P 500 and Nasdaq 100.
  • Concerns over the Federal Reserve's hawkish stance and Middle East conflict fueled uncertainty, prompting a market correction.
  • As expectations for interest rate cuts shift, major indexes approach critical support levels.
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  • The S&P 500 and Nasdaq 100 continued to correct last week amid a double-whammy of rising interest rates and escalating geopolitical tensions.

    The Federal Reserve's aggressive stance on monetary tightening, coupled with the ongoing conflict in the Middle East, dampened investor confidence and triggered a sell-off.

    Recent comments from Fed officials signal a slowdown in disinflation, raising concerns that interest rate cuts might be pushed back to next year.

    The market currently expects the first cut in September, a significant delay from the March forecast anticipated just a few months ago in December/January.

    Major indexes are nearing critical levels that will likely determine the short- and medium-term direction of stock prices.

    Will Nasdaq 100 break below 17,000?

    The Nasdaq 100 has already dropped nearly 6%, and the selling pressure shows no signs of abating.

    The bears are now testing key support levels. If this support breaks, the index could plunge below 17,000 points and target the next major level at 16,000 points, which also coincides with an upward trend line.

    Nasdaq 100 Price Chart

    The reaction to the current test of this level is key. A strong rejection could signal the end of the rebound and a fresh downward move. However, considering the recent dominance of bears, further declines seem more probable.

    S&P 500 Eyes Support at 4800 After Recent Sell-Off

    The recent market downturn suggests the S&P 500 could fall below the key 5,000 level. But technically, a more crucial support zone lies at 4,800 – a level defined by historical highs.

    Another support level at 4600 is under threat. This means a simple drop below 4800 points isn't enough to confirm a free fall in the market.

    However, a breakout below both the 4600 support and the downtrend line could trigger a steeper decline.

    But for that to happen, we'd likely need a strong signal of tightening from the Federal Reserve or a significant escalation in the Middle East.

    ***

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    Disclaimer: The author does not own any of these shares. This content, which is prepared for purely educational purposes, cannot be considered as investment advice.

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