S&P 500 and NASDAQ Test the 200-Day MA — Déjà Vu from Last Year's Tariff Shock
S&P 500 and NASDAQ Test the 200-Day MA — Déjà Vu from Last Year's Tariff Shock
The S&P 500 and NASDAQ are catching their breath just below the 200-day moving average. It's the exact same setup we saw during the tariff shock a year ago — and back then, the rally attempt at this line preceded the most painful leg down.
Setting the Scene: The 200-Day Battlefield
On the daily chart, the single most important level for the S&P 500 right now is the 200-day moving average. This line has been tested multiple times before. It previously functioned as support, but after breaking below it, the retest turned it into resistance — and sellers piled in aggressively.
Price is now approaching from below. As a momentum trader, that direction of approach automatically reads as resistance.
The Lesson from One Year Ago
Think back to last year's tariff tantrum pattern.
The market dropped hard. It broke below the 200-day. It attempted a bounce back up to the moving average. And right there, it met fierce resistance before the deepest part of the decline began. But when price eventually broke back above the 200-day? It immediately became rock-solid support and served as the foundation for the subsequent uptrend.
The key insight is directional context. Approaching from above, it acts as support. Approaching from below, it acts as resistance. Right now, we're in the latter scenario.
The Turning Point: NASDAQ Tests Former Support
The NASDAQ tells an even clearer story. There was a level that bulls absolutely had to hold, and when it broke, the retest brought immediate selling pressure that pushed price lower. That sequence produced a peak drawdown of roughly 12–13% in the NASDAQ.
Now price is approaching that same level from below. It nearly coincides with the 200-day moving average. If bulls can reclaim this zone, upside opens up. If they can't, sellers regain control.
The Employment Data Wildcard
While the market wrestles with technical levels, fundamental data is flowing in.
This week's ADP employment report surprised to the upside at 62,000 versus 41,000 expected. But the real test comes Friday with Non-Farm Payrolls. The previous NFP print was a disaster — a miss of 150,000 jobs. Whether ADP's rebound carries through to NFP is the defining question for this week.
Unemployment came in worse than expected, and JOLTS job openings narrowly missed consensus. The labor market picture sits in "not terrible, but not great" territory.
What Comes Next
Short-term: From a momentum perspective, there's insufficient evidence for a bullish trend reversal. At this stage, treating this as a bear market rally is the more rational read. The most violent bounces always occur within downtrends.
Longer-term: That said, several Magnificent Seven names — Meta, Amazon, Microsoft, Netflix — are entering attractive price territory after the recent sell-off. I already hold Meta and Amazon positions and am evaluating adding Microsoft and Netflix to the portfolio.
I know that's straddling both camps. But that's the honest read on this market. Defensive short-term, opportunistic long-term. The 200-day moving average verdict will determine the next direction.
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