Technical Analysis – Is that a dead cat bounce in the US 100 stock index?
November 2, 2023 2:28 pm
US 100 gains bullish impetus after bouncing near 200-SMA
Short-term bias shows improvement, but uncertainty remains
A bullish reversal or a dead cat bounce?
The US 100 stock index (cash) picked up steam on Wednesday, extending its bounce off a five-month low of 14,057 to a high of 14,833.
The price is currently aiming for a close above its 20- and 50-day simple moving averages (SMAs) after avoiding a drop below the long-term 200-day SMA last week. That said, its latest rebound is looking more like a dead cat bounce than a genuine bullish trend reversal. The short-term resistance trendline coming from July’s peak and the extension of the broken 2023 support trendline could still trap bulls within the 15,195-15,480 area, preventing a continuation towards the 2023 top of 15,931 and the 16,000 psychological mark.
The technical indicators have changed direction to the upside, but the RSI has yet to climb above its 50 neutral mark, while the stochastic oscillator is already flirting with overbought levels, pointing to fragile buying dynamics.
A pullback beneath the 20-day SMA could see another test near October’s support area of 14,430. Slightly lower, the 14,000-14,200 zone could be of greater importance. A decisive step below that floor would squeeze the price below the 200-day SMA and the short-term bearish channel, likely causing a freefall straight into the 13,670-13,500 area.
In summary, the US 100 stock index is not out of the woods, despite its latest exciting rebound. The series of lower highs and lower lows that started in mid-July are unharmed, suggesting that any bullish waves could only be part of the downward trajectory.
US 100 gains bullish impetus after bouncing near 200-SMA
Short-term bias shows improvement, but uncertainty remains
A bullish reversal or a dead cat bounce?
The US 100 stock index (cash) picked up steam on Wednesday, extending its bounce off a five-month low of 14,057 to a high of 14,833.
The price is currently aiming for a close above its 20- and 50-day simple moving averages (SMAs) after avoiding a drop below the long-term 200-day SMA last week. That said, its latest rebound is looking more like a dead cat bounce than a genuine bullish trend reversal. The short-term resistance trendline coming from July’s peak and the extension of the broken 2023 support trendline could still trap bulls within the 15,195-15,480 area, preventing a continuation towards the 2023 top of 15,931 and the 16,000 psychological mark.
The technical indicators have changed direction to the upside, but the RSI has yet to climb above its 50 neutral mark, while the stochastic oscillator is already flirting with overbought levels, pointing to fragile buying dynamics.
A pullback beneath the 20-day SMA could see another test near October’s support area of 14,430. Slightly lower, the 14,000-14,200 zone could be of greater importance. A decisive step below that floor would squeeze the price below the 200-day SMA and the short-term bearish channel, likely causing a freefall straight into the 13,670-13,500 area.
In summary, the US 100 stock index is not out of the woods, despite its latest exciting rebound. The series of lower highs and lower lows that started in mid-July are unharmed, suggesting that any bullish waves could only be part of the downward trajectory.
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