The US 30 cash index has enjoyed a strong rally since the March 15 low of 31,426, in line with other main stock markets. It managed to overcome some key levels with relative ease, but the rally appears to have stalled around the 33,650 area. This move higher felt like a relief rally with the bulls now preparing for the next leg higher.
The Average Directional Movement Index (ADX) continues to indicate a strong trend in the market as it is hovering at the highest level since the November 2022 upward move, bringing joy to the US 30 bulls. But the stochastic oscillator is once again ready to spoil the party. It is wandering at its overbought (OB) territory and battling with its own moving average (MA). A break below both the OB and MA could infuse confidence in the bears to take over the market and dictate the next move.
Should the bears manage to break the October 1, 2021 low of 33,518, they will be faced with the 100-day simple moving average (SMA) at 33,380. More importantly, the 33,028-33,091 range, defined by the June 21, 2021 low and the 50-day SMA, awaits them lower.
Should the bulls maintain the upper hand in the market and successfully clear the 33,518-33,754 range, they would set their eyes on the August 16, 2022 high at 34,280. Higher, a break of the 34,930 and 35,901 levels, set by December 13, 2022 and May 10, 2021 highs respectively, could be a significant signal that the bearish medium-term trend has potentially ended.
To sum up, the recent bullish short-term trend in the US 30 cash index appears to have stalled in a busy area. Bulls would love another move higher, but the technical picture is not as a straightforward as they would have hoped for.
