HomeContributorsTechnical AnalysisUS 500 Cash Index in the Red Again

US 500 Cash Index in the Red Again

  • US 500 index trades lower after recording a new all-time high
  • The pace of the rally remains aggressive but euphoria dominates
  • Bears continue to closely monitor the stochastic oscillator’s movements

The US 500 cash index is edging lower again today after recording a new all-time high of 5,189 last week. Friday’s mixed US labour market data do not appear to have dented the market’s bullish appetite but some profit taking has clearly taken place. Having said that, the pace of the rally since the trough low at 4,100 remains aggressive as made evident by the October 27, 2023 ascending trendline being respected by the US 500 price action.

With the momentum indicators not sending strong bearish signals, the current bullish trend is assumed to be still in place. In more detail, the RSI is trading sideways, but it has completed four months of comfortably hovering above its 50-midpoint. More importantly, the stochastic oscillator is apparently trying to break below its overbought (OB) area. Should it finally manage to record this move, it would be seen as a strong bearish signal. In the meantime, the Average Directional Movement Index (ADX) is uninterested in the recent moves and remains in range-trading territory.

The bears are desperately trying to retake market control and to push the US 500 index below both the October 27, 2023 ascending trendline and the 5,000 threshold. If successful, they could then have a go at testing the support set by the 4,936-4,976 range, which is populated by the 50-day simple moving average (SMA) and the February 2, 2024 high. Even lower, the January 4, 2022 high at 4,818 could prove stronger to overcome than currently anticipated.

On the flip side, the bulls remain confident and might prepare for new record-high levels. They could first try to keep the US 500 index above the October 27, 2023 trendline and then push the index above 5,189, with the 5,200 level looking like the next easy target.

To conclude, with the US 500 index continuing its advance, the bears are anxiously waiting for a signal from the momentum indicators to, at least, stop the bulls from recording successive record highs.

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