The Tell: Stock-market rally faces key challenge at S&P 500’s 200-day moving average

by | Aug 17, 2022 | Stock Market

Stocks have roared back from their mid-June lows but have run into stiff resistance at a key moving average for the S&P 500 — chart watchers say that failure to overcome it could spark a significant near-term giveback of recent gains and underline notions the summer rally is a bear-market bounce. The S&P 500
ended at its highest since April 21 on Tuesday, leaving it up 17% from its June 16 low. But it was set back during the session after hitting an intraday high at 4,325.78, less than a point shy of its 200-day moving average, which then stood at 4,326.18.

“The index hit its slightly falling 200-day average yesterday to the penny and the machines turned off their buying and hit the sell button. As we said, there is a cluster of resistance which started at the 200-day, and went up to 4,367, which is a 61.8% retrace of the bear market,” said Mark Arbeter, president of Arbeter Investments. The 200-day moving average is widely tracked, making it a natural resistance level and an area well suited to serve as a battleground given the speed and scope of the market’s rise from the June lows. A close above the 200-day moving average would be viewed as a change in the market’s long-term trend. The average stands at 4,324.51 on Wednesday, according to FactSet. Stocks trimmed losses to trade at session highs in afternoon trade, following the release of minutes …

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