Technical Analysis – US 100 index flies to new records

Marios Hadjikyriacos, XM Investment Research Desk

The US 100 cash index (Nasdaq) entered uncharted waters today once again, breaking above its previous all-time high of 10,155. The picture is overwhelmingly positive, with the price printing higher highs and higher lows above all its simple moving averages (SMA).

Short-term oscillators detect strengthening upside momentum, endorsing the bullish picture. The RSI, already in positive territory, looks to be headed for a test of its 70 line soon, while the MACD just crossed above its red trigger line, which is a positive sign.

If buyers continue to push higher, the first obstacle to halt their advance might be the 10,500 area – this being a round psychological figure. If penetrated, resistance might come next from the 11,000 handle. Higher still, a more durable region may be found between 11,500 and 11,650, the latter being the 161.8% Fibonacci extension of the February-March collapse.

In the negative scenario, the bears would have to pierce back below the 10,155 zone first. If successful, their next target might be the 9,800 level, where the 20-day SMA is also located. This SMA provided reliable support every time the market dropped in recent weeks, so it may be a tough barrier to crack. If broken, the intersection of 9,380 and the 50-day SMA – currently at 9,327 – could halt any further declines.

Summarizing, the outlook seems categorically positive. For that to come into doubt, sellers would need to punch below 9,380 and the 50-day SMA.