• US 500 shows some signs of running out of steam

• Outlook positive above 20-day EMA

The US 500 stock index (cash) could not sustain gains above Thursday’s closing price of 5,081 on Friday despite a flash spike to a record high of 5,111, forming a shooting star candlestick with a long upper wick at the top of the uptrend instead.

The candlestick pattern could be a cautious sign that the bears are around the corner, but traders will monitor today’s trading actions to get some confirmation, as the RSI and the stochastic oscillators have yet to peak in the overbought zone.

The former resistance trendline from December 2022 and the support trendline from October’s low could immediately halt a potential downfall within the 5,020-5,050 territory, while the 20-day exponential moving average (EMA) could prevent an outlook deterioration. If the latter gives way, the price could plunge towards its 50-day SMA at 4,867 and perhaps reach the January 31 floor of 4,850.

If the market turns green again, the price will have to speed above the 5,160 level and out of the short-term bullish channel in order to examine the resistance trendline at 5,250.

In brief, the US 500 stock index could lose some ground after surging to a record high last week. Yet, traders may find the declines attractive as long as the price holds above the important 20-day EMA.