- US 500 index is edging higher, a tad below the 50-day SMA
- Bulls are feeling more confident following strong tech earnings
- Momentum indicators are mixed at this stage
The US 500 cash index is trying to record its third consecutive green candle today as the bulls are probably feeling relieved following the recent strong tech earnings and the lack of a significant upside surprise in last week’s PCE report. The US 500 index is apparently preparing to test the 50-day simple moving average (SMA) as the market’s focus has firmly turned to Wednesday’s Fed meeting.
In the meantime, the momentum indicators are mostly mixed. The Average Directional Movement Index (ADX) is edging lower, signalling the end of the recent bearish trend, and possibly pointing to quieter sessions ahead. Similarly, the RSI is back at its midpoint area, confirming the market participants’ decision to stay on the sidelines ahead of this week’s big events. Interestingly though, the stochastic oscillator is moving aggressively higher and building a gap from its moving average. Should this move pick up pace, it would be seen as a strong bullish signal.
Should the bulls remain confident, they would try to overcome the 50-day SMA at 5,129 and then gradually set sail for the April 1, 2024 high of 5,282. If successful, they could have the chance to record a new all-time high.
On the other hand, the bears are trying to retake market control and keep the US 500 index below the 50-day SMA. They could then push it gradually lower towards the busier 4,973-4,976 range, which is populated by the 100-day SMA, the February 2, 2024 high and the May 24, 2023 ascending trendline. Even lower, the January 4, 2022 high at 4,818 could prove stronger to overcome than currently anticipated.
To conclude, market participants are preparing for this week’s key events starting with the Fed decision on Wednesday that could determine the short-term outlook in the US 500 index.
