The US 500 stock index (cash) rose back above the 4,000 level yesterday, recouping the bearish breakdown caused by SVB’s collapse.
The bulls gained extra positive momentum over the past couple of hours, deviating clearly above the support-turned-resistance trendline from October. Technically, that increases the odds for another extension to 4,070, where the 61.8% Fibonacci retracement of the 4,195-3,809 downtrend is placed. Not far above, the tentative descending trendline at 4,085 could be a make-or-break point. If the bulls breach that wall, the ascent could stretch up to the 4,100 psychological mark and then to the 4,130 barrier.
The technical signals in the four-hour chart are still encouraging. The 20-period simple moving average (SMA) has crossed above the longer-term 200-period SMA, endorsing the upturn in the market. Also, the RSI and the MACD are clearly trending up, though the former is already in the overbought zone, suggesting that upside pressures could soon ease.
Yet, the bulls may not abandon the market unless the price tumbles below the trendline at 4,023. If the simple moving averages (SMAs) let the price slip below 3,980, then the spotlight will immediately fall on the key ascending trendline at 3,940, which has been navigating the market since mid-March. A forceful move lower could see a revisit of the 3,900 round level.
All in all, the US 500 index is still being driven by buyers, with resistance likely developing within the 4,060-4,085 zone.