June 17 (Reuters) - The Nasdaq Composite — the index most closely associated with technology stocks — has staged an impressive comeback after a bruising stretch, and charts indicate that the path of least resistance may now be pointing higher.
The index closed Monday at 26,683.94, capping a surge of more than 3% in a single session — its best one-day performance since March 31. That date was itself a turning point: the moment the Nasdaq emerged from a correction that had dragged it lower from October through March. On Tuesday, it gave back just over 1% to end at 26,376.34, according to data supplied by LSEG.
Still, the recovery has been swift enough to put record highs within arm's reach. The Nasdaq now sits about 2.7% below its all-time closing high, set on June 2, and 3% below its peak intraday level from June 1. In market terms, that's close enough to reach in a relatively short period of trade.
The 50-day moving average — a closely watched measure of medium-term trend — has proven to be a reliable floor, with buyers stepping in near that level multiple times during the recent pullback. That kind of repeated defense of a support level is generally seen as a bullish signal.
If the Nasdaq does push through to new highs, the next test for bulls would be channel resistance just below 28,000 — essentially a ceiling built into the chart's recent trading pattern. On the downside, the 20-day moving average near 26,350 offers the first layer of support, with the sturdier 50-day average around 25,400 acting as a deeper safety net. A close below that 50-day line would be a warning sign worth heeding.
For now, momentum appears to be on the bulls' side.
What the chart shows:
Strong single-day rebound of more than 3%, the biggest since March 31
Record highs within striking distance, about 2.7% away
Key support at the 50-day moving average near 25,400; resistance above at the 28,000 channel ceiling
(Daily markets commentary from Reuters analysts on the signals financial charts are sending - and what they might mean.)
Terence Gabriel is a Reuters market analyst. The views expressed are his own. Editing by Burton Frierson and Jamie Freed
