The S & P 500 has found support around a key technical level, dodging a negative signal for now, but it is interest rates that will drive the index in the near term. With the closely watched 10-year Treasury yield below the psychological 4% level, stocks have been able to advance. The yield rose above that level for a period last week. At the same time, the S & P 500 was at risk of breaking below its 200-day moving average, a momentum indicator. S & P 500 tests 200-day moving average But stocks were buoyed by the decline in yields at the end of last week and were higher again Monday. The 200-day is around 3,940, and the S & P 500 closed at 4,048 Monday, comfortably above the key 4,000 level. The 200-day is literally the average of the last 200 closing prices, and a break below it could be a negative signal. The moving average has been getting a lot of attention lately because some strategists believe the behavior of the S & P 500 around that level could determine whether the October lows will be the bottom for stocks. The S & P touched a low of 3,491.58 in October. BTIG's Jonathan Krinsky said that since 1950 the S & P 500 has never made new lows during a bear market, if it has been able to hold above the 200-day for a period of a month. That is the case now, even though the index temporarily dipped below that level last week before rising back above it. Chart analysts say the index would need to close below that level and hold there for it to indicate real negative momentum. But Krinsky said it is possible the S & P 500 could still break its lows. "I still think upside is relatively limited. 4,125 to 4,150 is another high volume area, so I would expect that to cap upside," he said. Krinsky said the ultimate driver could be interest rates, which are in focus this week with Federal Reserve Chair Jerome Powell testifying before congressional committees on the economy on Tuesday and Wednesday. US10Y 1Y line 10y Rising yields are a negative for stocks in general, but particularly so for tech and growth stocks that are rewarded higher multiples because of their future earnings prospects. As rates rise and the cost of money is more expensive, those earnings could look less valuable. "Yields have been leading equities. In the last 18 months, every single tactical top in equities has been preceded by a tactical bottom in yields," Krinsky said. "The bounce Thursday, Friday definitely helped the equity market, but I don't think the move higher in yields is over. We just rallied with yields from 3.33 at the beginning of February to 4.08 in a pretty short time, so some consolidation and pullback should not be surprising." Yields move opposite price. The 10-year yield rose above 4% for the first time since November last week. The yield was at 3.966% late Monday afternoon.