The Nasdaq has risen above its 100-hour moving average, which is currently at 20984.43, but momentum is starting to slow down. Traders are paying attention to an unfilled gap at 21078.67, where a clean break could boost buyer confidence. However, the move above the 100-hour moving average hasn’t led to strong buying activity. In the broader market, the S&P 500 hit a high of 6324.49 today, just short of its 100-hour moving average at 6328.92. If it can’t break this level, it could affect the overall market momentum and, in turn, impact the Nasdaq. Traders will be watching closely to see if the S&P can push through this resistance.

Signs Of Hope

On a positive note, the S&P’s bounce back above the 200-hour moving average today is encouraging, especially since a lower start could have worsened the situation. Still, traders are worried that the recent drop may continue, showing that the market is uncertain. We are monitoring the Nasdaq carefully after its move above the 100-hour moving average, but the buying momentum is weak. This hesitation is evident in the CBOE Volatility Index (VIX), which has risen back above 18 after being near 15 just two weeks ago. This suggests that while there’s no immediate panic, there’s still underlying concern. The broader market shows even more weakness, as the S&P 500 has not been able to break its own 100-hour moving average resistance. This is troubling, especially after last week’s July CPI report showed a 3.4% increase, which was higher than the 3.2% expected. This data limits the Federal Reserve’s ability to signal any easing of monetary policy, dampening bullish sentiment. Given this uncertainty, it’s a good idea to look at strategies that protect against losses or benefit from a lack of clear direction. Buying protective puts on long equity positions can help hedge against a failed rally, especially since the S&P 500 is showing weakness. Additionally, selling out-of-the-money call credit spreads could be an effective way to take advantage of the stalled upward momentum we’re witnessing.

Market Parallels

This type of erratic price movement feels similar to what we experienced in the summer of 2024, when rallies struggled to gain traction before major economic data releases. The jobs report on August 1st provided mixed signals, showing solid job growth but a slight increase in unemployment to 4.1%, which does not clarify the market’s direction. For now, traders should remain cautious until we see if both the Nasdaq and S&P 500 can hold above their key moving averages. Create your live VT Markets account and start trading now.

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