The US 500 index (cash) gave up all its gains on Tuesday, which reached an almost one-month high of 3,430, to close lower following Trump’s stimulus comments.
In the four-hour chart, the 50- and 100-period simple moving averages (SMAs) provided a strong footing, keeping the upward pattern in the very short-term picture intact and the price within an ascending channel.
Should the 20-period SMA give way, the index could take a rest around the 3,412 resistance region before targeting the upper bound of the channel at 3,430. Moving higher, the barrier around 3,450 could be another place to watch.
Still, the momentum indicators continue to reflect some caution, suggesting that downside corrections cannot be ruled out in the near-term, as the MACD remains below its red signal line, the RSI is hovering around its 50 neutral mark, while in Ichimoku indicators, the red Tenkan-sen is flattening above the blue Kijun-sen.
For the bears to take full control, however, the index should close decisively below the channel and its 50- and 100-period SMAs currently around 3,340. Such a move would feed concerns that the uptrend may have peaked, and it is time to change direction to the downside, with traders likely waiting for a confirmation below 3,309. If the latter fails to hold, the sell-off may pick up steam towards 3,270.
It is also worthy to note that the 50-period SMA has crossed above the 100-period SMA after the 20-period SMA achieved a similar feat in late September, further strengthening hopes that the market may keep correcting the freefall from the 3,588 record high.
In brief, the US 500 index is maintaining a positive outlook in the very short-term picture although some weakness cannot be excluded yet. A decisive close above the 20-period SMA could push for more gains, while a drop below the channel could trigger new selling.
