This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
I would keep position sizing small until the index can break above 2,072 and then would think about adding to the trade.
From here a move to the all-time high of 2,092 would be my first clear target (based on the break) and I feel it would make sense adding to long positions again if the index can print a new high, as the market could feasibly go on to test 2,116 (the trend resistance drawn from the April 2011 high).
If we look at stochastic momentum, we can see the bulls are in control and momentum is moving higher. The RSI is also moving nicely above 50, so this could suggest a test of 2,092 is on the cards.
Fundamentally, there is a growing bearish case but from a purely technical view I feel traders could look at long US 500 Cash trades and cut back on positions on a break of 2,042 and 2,025.