S&P 500 holds key technical support, keeping path open to higher highs

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S&P 500 holds key support

Highlights

S&P 500 recovered from a 4% drop off August highs, holding above the 50-day and 100-day moving averages after the Fed's rate hike.
A sustained move above the September 11 high of 7,677.02 targets resistance at 7,756–7,772, with 7,816.70 and 8,000 as further upside levels.
A break below 7,617 and 7,520 would expose the 7,237–7,314 zone and 200-day average at 7,183, implying a potential 6–8% drop from recent records.

Technical levels shape the next move

As reported by Reuters, the benchmark index briefly fell below its 50-day moving average last week and came close to breaching the 100-day moving average after the U.S. Federal Reserve raised interest rates and left markets anticipating further tightening.

Technical analysts use moving averages to smooth out price swings and gauge underlying market direction. The S&P 500, which was down as much as 4% from its August peaks, then managed to hold above the 100-day average and recover back above the 50-day average, a sign that buyers are still defending important support levels.

As long as the index stays above those averages, they are expected to act as support. Bulls now want to see the S&P 500 move above the September 11 high of 7,677.02, which would suggest the pullback from August record highs is losing force; the next resistance zone stands in the 7,756 to 7,772 area.

A move above the August 14 intraday record high of 7,816.70 would put the 8,000 level into focus as the next upside target.

Downside risks remain in view

If the S&P 500 falls back below the 50-day moving average near 7,617, attention shifts to the area around the rising 100-day moving average near 7,520 and Wednesday's intraday low of 7,507.7, both seen as critical support.

A break below those levels would open the way toward the June-July lows in the 7,237 to 7,314 range, along with the rising 200-day moving average near 7,183. A retreat to that zone would leave the index roughly 6% to 8% below its record highs.

The current setup therefore points to a market that is under pressure but not yet in technical breakdown territory. For investors, the near-term direction depends on whether the index can build on its rebound and clear resistance, or whether renewed selling pushes it through the support band it has so far managed to defend.

In our earlier coverage of Neel Kashkari’s comments on U.S. inflation, we noted his view that price pressures remain broad-based and still elevated even after excluding food and energy. We also highlighted that, following the Fed’s latest quarter-point hike, Kashkari backed a tighter-for-longer policy stance to bring underlying inflation down—an outlook that can keep markets sensitive to further tightening signals.

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