US 500 Index – Buyers and Sellers Continue to Battle it Out

Since the high of 6101 on December 6th, the US 500 index has entered a period of choppy sideways price activity, reflecting a 2 month timeline when buyers and sellers have been in balance. This range has faked out those traders looking for a fresh series of all time highs or for moves back down to lower levels which were last seen in the middle of 2024.

This sideways activity highlights where buyers of the index, found towards the lower extremes of the range around 5760/5800, while being able to halt further price weakness and push prices higher again, are unable to overcome the strength of selling pressure encountered towards the upper extremes of the range, currently located between 6100/6120. It’s here that fresh sellers materialise again and have been able to turn price action lower.

It’s not like the US 500 hasn’t had some volatility drivers during this period. The Federal Reserve (Fed) have paused interest rate cuts, President Trump has initiated a series of trade tariffs on global trading partners, DeepSeek disrupted the AI party, earnings season, the list continues. However, so far nothing has managed to shape sentiment enough to see a clear trend develop.

Today’s focus is likely to be on US CPI data, which is released at 1330 GMT. Traders came into the year with a sensitivity to US inflation and that hasn’t gone away, especially given last week’s fall in consumer sentiment which was driven largely by concerns around price rises over the next year.

An above market expectation print in the CPI reading may be seen as a negative for the US 500 index, as it could take Fed rate cuts later in the year off the table, while an in line or lower print, could help to maintain the current status quo for price moves.

Defining the Range:



For the US 500 index, upper extremes of the range can potentially be defined by drawing a trendline connecting the December 6th 2024 high at 6101, with the January 24th 2025 all-time high at 6118, and extending it forward. This outlines a possible higher resistance level which currently stands at 6129.

A parallel line can then be drawn using the December 20th low at 5973, which suggests 5803 may be the potential lower extreme of the current sideways range.

Looking forward, while much will of course depend on future market trends and sentiment, traders may find it useful to watch how these 2 levels are defended over an important US economic data release such as today's US CPI, given that a closing break of either level is required to potentially suggest the next directional move.

Upside Potential:

Closes above 6129, while no guarantee it will result in a sustained phase of price strength, could be a catalyst to extend what may still be classed as a long term uptrend pattern in price.

Downside Potential:



A negative reaction to the US CPI data and subsequent close under the lower limits of the range at 5803, might reflect a more extended period of price weakness and possible deeper retracement of the positive uptrend pattern which has been evident since October 2022.

If that were to be the case, support initially may be found at 5726, 5605 or even 5484, all of which can be seen on the chart above.

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