S&P 500 index: A tale of two moving averages
- U.S. equity index futures red: Nasdaq 100 down ~1.7%
- Q1 GDP advance 1.6% vs 2.4% estimate
- Q1 GDP deflator advance 3.1% vs 3% estimate
- Q1 core PCE prices advance 3.7% vs 3.4% estimate
- Initial jobless claims 207k vs 215k estimate
- Euro STOXX 600 index off ~0.72%
- Dollar edges up; gold gains; crude ~flat; bitcoin down ~1%
- U.S. 10-Year Treasury yield rises to ~4.72%
S&P 500 INDEX: A TALE OF TWO MOVING AVERAGES
In the wake of Thursday's release of below estimate Q1 advance GDP, but above expectations Q1 core PCE prices, as well as fewer jobless claims than expected, the U.S. 10-year Treasury yield 
US10Y is rising above 4.70%. Add in negative reactions to quarterly reports from such companies as Meta Platforms 
META, IBM 
IBM and Caterpillar 
CAT, and e-mini S&P 500 futures 
ES1! are under pressure.
Thus, the S&P 500 index SPX is poised to slide more than 1% at the open.
Meanwhile, for the last eight trading days, the benchmark index has been trapped between its 50- and 100-day moving averages:
On April 15, the S&P 500 ended below its 50-DMA for the first time since November 2 of last year. With that break, this intermediate-term moving average became resistance, and the index then declined further, hitting a low of 4,953.56 on April 19. At that point, the SPX was down as much as 5.91% from its 5,264.85 record intraday high.
The 4,953.56 low was just above the rising 100-DMA, which at the time was around 4,934. The SPX has since recovered some of its lost ground, ending Wednesday at 5,071.63.
On Thursday, the 50-DMA, which is now roughly flat, should be around 5,122, while the rising 100-DMA will be support just over 4,950. The 100-DMA is ascending around 5 points per trading day, and the SPX has not closed below it since November 9.
If the S&P 500 can reclaim its 50-DMA on a closing basis, it may clear the way back up to its 5,264.85 record intraday high and above.
A close below the 100-DMA can suggest the potential for a greater decline.
The focus then can be on the 23.6% Fibonacci retracement of the October 2022-March 2024 advance, at 4,846, and the 38.2% Fibonacci retracement of the October 2023-March 2024 rally, at 4,821. The early 2022 record intraday and closing highs were in the 4,818-4,796 area.
A decline back to the area of the 2022 highs would put the SPX down around 8%-9% from its record intraday high.
(Terence Gabriel)
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