The US 500 cash index has witnessed a pullback from its all-time high, reaching a 3-month low amid increasing negative forces. The index has also crossed below its 50- and 200-day simple moving average (SMA), which points towards an overall bearish outlook. However, the price is currently trading below its lower Bollinger Band, indicating that an immediate upside movement should not be ruled out.
Short-term momentum indicators are reflecting a mixed picture for the index. The MACD is found below zero and its red signal line, suggesting that the negative forces might be gaining further traction. However, the RSI has entered its 30 oversold region indicating that an immediate upside movement is not out of the equation.
Should the bears maintain control, initial support might be found at the 4,390 level before sellers target the 4,270 hurdle. A break below the latter could intensify selling pressures, sending the price to test its June low at 4,137. Breaching below this point, could open the door towards the May low at 4,034.
On the flip side, if the price crosses above its 200-day SMA currently at 4,440, buyers might then shift their attention towards the 4,495 hurdle. Moving above from this point could send the price to test the 4,550 barrier before targeting the 50-day SMA currently at 4,670. A cross above the latter could turn the fortunes around for the pair, sending the index to test its November high at 4,745.
In brief, despite the fact that the latest downside move seems overextended, the short-term outlook for the pair is bearish. For sentiment to change, sellers would need to break above the 50-day SMA.
