The discouraging start to 2024 didn’t result in the SPDR S&P 500 ETF Trust (NYSEARCA: SPY) falling anywhere close to its 50-day moving average. 

A rally of 1.43% on January 8 brought the broad index back above its 5-day and 10-day lines, as American Airlines Group Inc. (NASDAQ: AAL), Arista Networks Inc. (NYSE: ANET), Nvidia Corp. (NASDAQ: NVDA), Advanced Micro Devices (NASDAQ: AMD) and Fortinet Inc. (NASDAQ: FTNT) led the market higher. 

Contrary to some hand-wringing about the pullback in early January, the S&P 500 is now trading less than one percent below its December 28 high of $477.55. 

What’s next for stocks?

The S&P 500 has continued to get support at its 21-day moving average. 

That’s significant because the 21-day average, which isn’t as widely used as the 50-day line, is more sensitive to price moves that are fresh on investors’ minds. It also filters out the noise better than shorter-term lines such as the 5-day and 10-day. 

Meanwhile, the Nasdaq 100, home to numerous technology stocks, is tracked by the Invesco QQQ (NASDAQ: QQQ), which underperformed the S&P 500 the week ending January 5. It fell as far as its 50-day line, but easily found support and also noticed a strong rebound on January 8. 

Nasdaq 100 finding broad support

Take a look at the Invesco QQQ chart. Notice the top of the Nasdaq’s correction between July and September. The Nasdaq 100 is currently finding support above that level, which is a good sign, indicating that institutional investors aren’t inclined toward selling off at the moment. 

However, markets are in a precarious position at the moment, as geopolitical events, the upcoming earnings season, economic or interest-rate news or just pure market sentiment could move stocks in either direction. 

Right now, with several leading stocks setting up in bullish bases, the broad-market action could either cause breakouts or breakdowns. 

Nvidia breaks out of consolidation

For example, the Nvidia chart shows the 2023 leader clearing a flat base that began in November. The January 8 upside price action in the stock was accompanied by volume 57% heavier than normal. 

That’s important because it shows investors are still eager to pile into the stock, despite its meteoric rise in 2023, and its extremely frothy price-to-earnings ratio of 56. 

Boeing didn’t keep the Dow grounded

Despite a decline of 8% after a panel blew out of an Alaska Air Group Inc. (NYSE: ALK) plane during a flight, the Boeing Co. (NYSE: BA) couldn’t drag down performance of the 30-stock index. 

The SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA: DIA) advanced 0.6%. 

But does the Dow even matter anymore if you’re trying to track market support and resistance levels as a trader or investor? 

The Dow was designed as a bellwether for the broader domestic equity market, and although it’s not as expansive as the S&P 500, it continues to serve that purpose, as stocks are swapped in and out as industries gain and lose influence. 

A look at the DIA ETF chart shows the Dow, like the Nasdaq 100, getting support at its 21-day moving average, a possible sign that investors were taking some profits early in the month and are ready to start buying again. The ETF advanced in heavy trading volume, another encouraging indicator.

Eli Lilly looking healthy

Eli Lilly & Co. (NYSE: LLY) never did succumb to the market’s pullback in early January, and investors are still jumping in on the promise of the company’s weight loss and diabetes treatments.

The stock’s performance is a possible indication that leaders are not breaking down, showing that institutional investors aren’t hitting the “sell” button after prior run-ups. 

The Eli Lilly chart shows the stock remains in buy range below a January 4 high of $636.41.

Snowflake getting warmer, not icier

Snowflake Inc. (NYSE: SNOW) is another leader performing well, indicating that the sub-industry of data management continues to look promising. 

Snowflake bounced off its 50-day line the week ended January 5.

This could be an important indicator for future market action, as newer stocks from fast-growing industries often lead the market. Snowflake, which went public in 2020, has a three-year revenue growth rate of 77%, putting it in the category of a young fast mover. 

Additionally, as we saw in 2023, a healthy tech sector is a big contributor to broad market gains.