Technical Analysis – US 100 index within breathing distance of all-time high

Marios Hadjikyriacos, XM Investment Research Desk

The US 100 stock index (cash) enjoyed a very powerful rebound in recent weeks, posting higher highs and higher lows above an upside support line drawn from the March lows, and is now approaching its all-time high of 9,751. Adding credence to the improving technical picture, the 50-day simple moving average (SMA) just crossed back above the 200-day one, forming a so-called ‘golden cross’.

Short term oscillators are on board with a mostly positive outlook. The RSI – already above 50 – is close to testing its 70 line, whereas the MACD continues to hover above its red trigger line.

If buyers stay in charge and manage to penetrate above 9,620, a harder battle might be fought near the record high of 9,751. If they breach that key hurdle as well, then we would be entering uncharted waters, and it may be up to psychological round numbers to halt the advance. The 10,000 handle could be a tough obstacle in this case.

On the downside, a pullback could find immediate support near the crossroads of the 9,350 level and the aforementioned upward-sloping line. If broken, the focus would turn to the 20-day SMA currently at 9,169, which has been a durable support barrier during this recovery. Even lower, a decisive break below the 8,950 region would be needed to turn the outlook to a more neutral one, from positive right now.

In sum, a new record high above 9,751 would likely add fuel to the rally, whereas a move back below 8,950 could shift the bias to a more neutral one.