• US 500 stock index nears 2022 record high as it extends year-end bull run

• But upside momentum appears to be waning

• Is a near-term correction on the cards?

The US 500 stock index (cash) made further progress towards surpassing its all-time high of 4,817.51 on Tuesday but was nevertheless unable to crack the 4,800 level. The index is trading marginally lower on Wednesday, with the momentum indicators reflecting this weakness.

The RSI has flatlined just above the 70 overbought mark, while the %K line of the stochastic oscillator appears to be losing steam as it crosses into the overbought zone above 80. However, it remains positively aligned with the %D line, so some further upside is possible before sellers take over.

If the bullish bias doesn’t fade in the coming days, a break above the key 4,800 level, which coincides with the 138.2% Fibonacci extension of the July-October downleg, is possible. Achieving this would set the stage for new record highs, with the bulls likely to next target the 161.8% Fibonacci of 4,920.55.

However, a failed attempt to recapture the 4,800 handle for the first time since January 2022 could spark a corrective move lower. In such a scenario, the 123.6% Fibonacci of 4,726.72 could initially provide support before the 20-day simple moving average (SMA) in the 4,660 region comes into view. Lower down, the July peak of 4,606.98 could halt the decline. If not, a drop towards the 50-day SMA just below 4,500 would become probable.

Summing up, US 500’s bullish picture in the short term is at risk of faltering. But any setback is likely to be temporary and a fresh record high could be all it takes to secure a longer term uptrend.