Nasdaq 100 and S&P 500 Hold Key Technical Levels as Volatility Persists

What to Know

• Global equity markets remain volatile as geopolitical tensions and rising U.S. Treasury yields weigh on risk sentiment.
• The U.S. 10-year yield around 4.3% has become a key indicator for risk appetite in equities.
• The Nasdaq 100 could attempt a rally toward 25,000 if it breaks above the 24,250 resistance level.
• The S&P 500 is currently testing its 200-day EMA, with 6,600 acting as a key price magnet.
• A break below 6,500 on the S&P 500 could signal deeper downside for the broader market.

Volatility and uncertainty continue to be the main backdrop in both of these markets as well as anything that has risk appetite attached to it, which is not a huge surprise considering there is a war going on and of course it has played havoc with the interest rate markets.

The key to trading these markets right now that I have found has actually been the 10-year yield in the United States. Above 4.3%, things get more risk off. If we can fall below there, it becomes more risk on. Right now, for reference, we’re at 4.329%, so we are a little bit above that area, and we of course have seen the indices fall in pre-market trading.

The United States hitting Kharg Island caused a little bit of panic at one point in the morning, but it has since been confirmed that they were basically targets they had hit before so it has not disrupted the flow of oil. President Trump has reiterated that at 8:00 PM Eastern Standard Time tonight, that will be the deadline for Iran to open the Strait of Hormuz, or it will start a new attack on the Iranian infrastructure.

That would be a very serious escalation. In that environment, I think it’s difficult for risk appetite to do anything other than dissipate. 

NASDAQ 100 

That being said, from a technical analysis standpoint, the NASDAQ 100 does seem to have the proclivity to at least attempt a rally. If we can clear the 24,250 level, we could very well see a bit of a move, maybe towards the 25,000 level. Again, you’re going to have to watch those interest rates and see the correlation there because that’s probably the most important thing.

S&P 500

The S&P 500 finds itself sitting right at the 200-day EMA, so I suppose that’s a little bit more bullish than the NASDAQ 100, but we’re splitting hairs here. The 6,600 level has been a bit of a magnet for price as of late. I think you have to look at this as a market that is resilient considering everything that’s going on, because had you told me several months ago that we would see the Americans and the Iranians in an actual war, I would have probably thought that the stock markets in America would have cratered.

As things stand right now, it’s basically been a normal correction. If we can break above the highs of the last few days, somewhere around 6,630, that could open up a bigger move, perhaps towards the 50-day EMA. Underneath the 6,500 level is support—breaking that to the downside would be rather negative.

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