Bulls look for a bounce after S&P 500 pulls back from records

The S&P 500 .SPX looked poised to extend its rally last Thursday after breaking above a short-term pennant pattern, a technical signal that typically points to further gains. Instead, in a market still heavily driven by headlines, the breakout quickly fizzled. After a one-day advance, the index reversed lower, while the Nasdaq Composite .IXIC followed a similar path, briefly pushing to new highs before retreating.

The pullback continued Tuesday as technology .SPLRCT and growth stocks .IGX came under pressure, dragging the S&P 500 down 0.7% to 7,691.76. The decline marked the benchmark's third straight losing session. Even so, the index remains just 1.37% below its August 13 record close of 7,798.99 and 1.6% below its intraday high of 7,816.70.

Early Wednesday, E-mini S&P 500 futures Esc1 are up about 0.5%, pointing to a bounce at the open.

Despite last week's failed breakout, bulls continue to highlight a strong support zone between roughly 7,620 and 7,520. The area encompasses several closely watched technical levels, including the June 2 high, the August 4 gap-fill level at 7,610.04, the mid-June and mid-July highs near 7,580, a weekly Gann line around 7,550 and the rising 50-day moving average.