Technical Analysis – US 500 index’s sideways shift fades below 200-MA

Anthony Charalambous, XM Investment Research Desk

US 500 stock index (Cash) is attempting to reclaim the 200-period simple moving average (SMA) after dipping below it in the previous session. The recent horizontal glide in the price after the pullback from the three-and-a-half-month top of 3,233, has been dwindling as negative tensions build.

The neutral-to-bearish tone in the 50- and 100-period SMAs and the negative bearing in the Ichimoku lines further back the deteriorating view. Additionally, the price remains below the cloud and the vital 200-period SMA. However, a contradicting picture is painted within the short-term oscillators, which reflect hopes of further improvement. The MACD, in the negative region and below its red trigger line looks to retake it, while the RSI hovers after a bounce near the 30 level. Furthermore, in the stochastic oscillator, the %K line has completed a bullish crossover at the 20 mark endorsing positive moves.

Should the 200-period SMA curb upside moves, early limitations could occur at the 2,995 low. Pushing under this level, sellers may challenge the key 2,933 border from June 15, which happens to be the 61.8% Fibonacci retracement of the down leg from 3,396.64 to 2,183.95. A step under could rest at the 2,909 hurdle, otherwise a dive in price could meet the 2,815 barrier ahead of the 50.0% Fibo of 2,789, located around the 2,766 trough.

To the upside, initial resistance could arise from the 200-period SMA coupled with the red Tenkan-sen line at 3,047. Pushing higher, congested restrictions from the cloud’s lower surface until the 76.4% Fibo of 3,110 could halt buyers’ efforts. Should these obstacles be conquered, an area of tops from 3,156 – 3,168 may come into focus. If buying interest remains, the 3,233 high could then draw attention.

Overall, in the very short-term, in spite of the recent strengthening negative signals, the index holds a neutral-to-bullish bias above 2,933.