- US 500 index flirts with new all-time highs on daily basis
- Bears lack the strength to stage a correction
- Momentum indicators still support the bullish move
The US 500 cash index is edging lower after recording a new all-time high of 4,976 last week. Friday’s US labour market statistics do not appear to have dented the market’s bullish appetite. Having said that, the pace of the rally since the October 27, 2023 low of 4,100 remains too aggressive and thus keeping the door open to a much-delayed correction.
The current bullish trend is still assumed to be in place, but the momentum indicators could be close to sending bearish signals. The Average Directional Movement Index (ADX) is hovering a tad above its 25-midpoint, signaling a much-weakened bullish trend in place. Similarly, the RSI is trading sideways, completing three months above its 50-midpoint. More importantly, the stochastic oscillator continues to battle with its simple moving average (SMA) at the overbought (OB) territory. Should it finally manage to break below the OB area, it would be seen as a strong bearish signal.
The bears are desperately trying to recapture the market reins and to push the US 500 index below the October 27, 2023 ascending trendline and towards the January 4, 2022 high at 4,818. If successful, they could have a go at testing the support set by the 50-day SMA and the March 29, 2022 high at 4,740 and 4,637 respectively. Even lower, the bears could face the busy 4,533-4,550 area.
On the flip side, the bulls could first try to keep the US 500 index above the October 27, 2023 trendline and test the resistance set by the February 2, 2024 high at 4,976. Even higher, the 5,000 level looks like the plausible next target.
To conclude, with the US 500 index continuing to record new all-time highs, the bulls are probably feeling extremely confident and ignoring some early rally-exhaustion signals.