Technical Analysis – US 500 show signs of fatigue
- US 500 stock index flatlines near all-time high
- Overbought signals detected, price trades near key resistance
The US 500 stock index held steady near its all-time high of 6,027 for the second consecutive day after the headline US CPI inflation data came in line with expectations, showing a modest increase of 2.6% year-on-year.
Technically, the latest rally halted near the ascending line which connects the highs from July 2023 and July 2024 and the 161.8% Fibonacci extension of the July-August downfall, raising concerns that the uptrend might be nearing a peak. Both the RSI and the stochastic oscillator are flashing overbought signals, indicating that the upleg is overstretched.
If downward pressures resurface, the previous high of 5,870, along with the 20-day simple moving average (SMA), could act as support. The 50-day SMA and the rising trendline from August could provide a helping hand slightly lower at 5,760, while the 5,670 region may act as a final line of defense before a potential negative trend reversal.
On the flip side, if the index can break decisively above the 6,000 mark, it could pave the way towards 6,100, and then the 6,200 level.
In summary, the US 500's recent rally appears to be losing steam, with the bulls showing signs of exhaustion. A break above 6,000 could signal a continuation of the upward trend, but for now, caution is warranted as the market faces a key hurdle.
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