On July 22, I made the call that the market low was in, and I gave you three big reasons to support that claim.
If you need a refresher, you can review that article right here.
Well, since the close that day, the S&P 500 has jumped as much as 9.2%.
The Nasdaq 100 has gained as much as 10.7%, while the Russell 2000 is really leading the way with a gain of 12.4%.
The Russell also stands out because it has just cleared a key technical level that the other indexes have yet to overcome.
This is a critical point for the major stock indexes, so let’s check in and see if they have the strength to push through to even higher highs…
Roadblock
Regular readers know that I put a lot of emphasis on the 200-day moving average (MA).
This is my “line in the sand” that establishes whether stocks are trending higher or lower.
And I’ve told you that I don’t buy stocks that are trading below their 200-day MAs… not under any circumstances.
Now, with the recent rebound, we’ve seen the number of stocks trading above their 200-day MAs rise back up to more normal levels.
That’s really good to see, but the major indexes — with the exception of the Russell — are still trading below their 200-day MAs.
Take a look at the S&P 500 below…
And here’s a daily chart of the Nasdaq 100…
While the Russell closed above its 200-day MA (blue line on the chart) for the past two trading days, the S&P and Nasdaq are approaching theirs from the underside.
This presents a big test for the market where the 200-day MA could act as resistance and send it lower again like it did back in March of this year.
Where To Next?
If the market does head lower again, where might we look for support?
Well, again, the markets have put in some pretty strong rallies since the June bottom, so a drop of 5% would not be out of the question.
Even a 10% drop wouldn’t surprise me.
However, before that happens the 50-day MAs (red line on the chart) will continue to push higher over the coming days and could potentially support stocks if they fall.
Of course, anything can happen when it comes to the market…
So, be prepared for another round of volatility as the markets hit resistance, but don’t count the bulls out just yet.
Ready for the Big Show?
Before I go, I need to invite you to a LIVE special event happening on TODAY at 12 p.m. ET…
My colleague and expert trader Josh Martinez is set to unveil his brand-new professional-grade system that virtually anyone can use with minimal upfront investments…
We’re talking as low as FIFTY BUCKS! You don’t want to miss this!
Click here to snag your seat for the main event happening TODAY at 12 p.m. ET.
I look forward to seeing you there!
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
