S&P and Nasdaq rebound from support, but buyers still have work to do

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The broader U.S. stock indices are moving higher in trading today, reversing some of yesterday’s declines. At the time of the video, the S&P 500 was up 0.25%, the Nasdaq Composite was up 0.60% and the Nasdaq 100 was up 0.70%.The rebound is encouraging for buyers because all three indices held important technical support yesterday. However, holding support is only the first step. Each index still has work to do on the topside before the buyers can take more control.S&P 500 holds its floor, but remains in a neutral areaThe S&P 500 tested a key swing area yesterday between 7,573.60 and 7,617.37. That area had previously acted as a ceiling before the index broke above it. Since then, the old ceiling has become a floor, with buyers repeatedly leaning against the area on pullbacks.The 50% retracement at 7,564.73 sits just below the swing-area floor and added to the support cluster. Buyers held the area, and the price has rotated higher today.The next hurdle is the top of the swing area at 7,617.37. A move above and stay above that level would increase the bullish bias and shift the focus toward:100-hour moving average: 7,667.37200-hour moving average: 7,695.83Until the price breaks out, the area between 7,573.60 and 7,617.37 is a neutral battle zone. Be prepared for momentum in the direction of the eventual break.Nasdaq Composite bounces from its 100-day moving averageThe Nasdaq Composite also reached an important support area yesterday. The index tested its rising 100-day moving average at 26,013.38, with additional swing support near 25,910.82.Buyers leaned against the 100-day moving average, and the price has moved higher today. Staying above that moving average keeps the buyers in play, but the rebound now faces a more important test at the hourly moving averages:100-hour moving average: 26,293.66200-hour moving average: 26,360.52Those moving averages stopped the prior rebound. Buyers must get above and stay above both levels to increase the bullish bias. Until then, the Nasdaq Composite remains in a neutral area between support below and the hourly moving averages above.Nasdaq 100 remains below its 100-day moving averageThe Nasdaq 100 held a key swing area between 28,822.67 and 28,953.26 yesterday. The 50% retracement at 28,969.11 was also in that area, adding to the support cluster.That was a good hold, but the index remains below its 100-day moving average at 29,212.12. The intraday rebound stalled below that level, leaving sellers with more control in the short term.For buyers to improve the technical picture, they need to reclaim the 100-day moving average and then work through:100-hour moving average: 29,315.73200-hour moving average: 29,442.12Absent a move above those levels, the rebound remains corrective. Sellers would still need to break below the 28,822.67–28,953.26 support area to restart the downside momentum.Trading education: Holding support is only step oneSupport and resistance should be viewed as a process, not a single signal. When price holds support, it tells traders that buyers are willing to step in and gives them a level where risk can be defined and limited. However, a bounce alone does not confirm that buyers have taken control.The next confirmation comes when price reclaims resistance and stays above it. That follow-through shows that buyers are doing more than defending a floor. They are also overcoming the sellers waiting above.In this case, support held across all three indices, but each still faces resistance. The Nasdaq 100 has the most work to do because it remains below its 100-day moving average. The price action at the next resistance levels will provide the next clue.The technical roadmapS&P 500: Above 7,617.37 targets the 100- and 200-hour moving averages at 7,667.37 and 7,695.83. A break below 7,573.60, followed by 7,564.73, would weaken the technical picture.Nasdaq Composite: Holding above the 100-day moving average at 26,013.38 keeps buyers in play. A move above 26,293.66 and 26,360.52 is needed to increase the bullish bias. A move below 26,013.38 would shift the focus toward 25,910.82.Nasdaq 100: Reclaiming 29,212.12 is the first bullish hurdle, followed by 29,315.73 and 29,442.12. A break below 28,822.67 would give sellers greater control.The bottom line is that buyers successfully defended support, but they have not yet won the next battle. There is hope for a stronger rebound, but there is still work to do on the topside.Related investingLive technical analysisDivergent technicals in the short term are driving the S&P and Nasdaq indicesUS stocks rebound sharply, but major indices still close lower for the week This article was written by Greg Michalowski at investinglive.com.