Nasdaq & S&P Remain Below Their 200-Day SMAs
The Nasdaq and S&P 500 both closed below their daily 200 SMAs again. While it’s not the first time they’ve dipped below these levels, they are now remaining below them on the daily charts. This is the part institutions respect: the failure to reclaim the 200-day moving average.
The 200 SMA isn’t just a line on a chart — it’s the trend filter most institutions and algos use. When price stays below it after multiple tests, the selling accelerates. It also becomes a spot to short when tickers rally into this zone and then fail to reclaim it.
Microsoft Continues the Downward Dive
Adding to the pressure, Google ($GOOGL) and Microsoft ($MSFT) both printed new lows on the year today, and the software sector finally cracked hard — down -4.29% in a single session, its biggest drop of 2026.
Microsoft has been in a downtrend since it topped last summer, so while it’s not that surprising that it made another new low, it still has a major impact on the Nasdaq and the market overall, and remains a red flag for more downside.
Microsoft accounts for such a large share of indexes, key ETFs, and sectors that a downward move like this is definitely going to pull various sectors lower.
While this is something I anticipated, as I mentioned when I discussed my short position in IGV, that doesn’t mean it’s not a continued bad sign for the indexes.
Alphabet’s Previous Relative Strength
While Microsoft’s move isn’t all that surprising, Alphabet’s move is. This is because relative strength stocks typically hold up the best during market pullbacks, and they are also typically the first to rally when the market rallies.
That’s why I always focus on relative strength to the upside in a bull market, and relative weakness to the downside in a volatile or bear market.
However, in this case, instead of Alphabet hitting those support zones and rallying, it broke – and with high volume and momentum. A -3.85% downward move is not to be ignored.
Google has shown negative volume since the trend broke on the VZO at the beginning of February, when I first shorted it after earnings. However, that was just a quick, post-earnings move. That move has since turned into a deeper downside move, and with this break of support, the next zones are between $260 and $280. This move could easily bring Google down to the 200 SMA on the daily chart at $261.
What Next?
The put/call ratio is high, at .9 today, and the Nasdaq is at extension targets to the downside. This is a great spot to look for a short squeeze rally, but only if there is a major catalyst. We would need to see the market open with a big gap up overnight for this to occur, along with high-volume buys first thing in the morning to keep it going.
On Monday, we did get a gap up, but unfortunately for the bulls, on Tuesday, the move didn’t show any follow-through. Until then, I’m sticking with downside pressure and relative weakness names for short-term trades, while looking for long-term investments I can dollar-cost-average into.
