Summary:

• US500 posts fresh all-time high at 2506
• Price moves above big psychological level at 2500 
• 2497 could offer support to any dips

The Wall Street open has seen US stock markets open at record highs with the recent strong run higher showing little sign of faltering. The market just edged above 2497 at the end of last week to record a highest ever closing level and this may now provide support if price pulls back. 

 The US500 has moved higher to trade an all-time high of 2506. Source: xStation

There also appears to be a longer term break higher in play with the market adding to the gains seen after price breached 2480 last Monday. The move looks similar in some ways to the one seen back in May when the market broke above 2405 and hasn’t been below it since. 

 The market has been in a prolonged uptrend during 2017. Source: xStation

 It is impossible to select any swing levels above price given that the market is moving into uncharted territory, so some may look to oscillators to reveal overbought conditions. The relative strength index (RSI) on a daily chart is currently at 68, which is still below the 70 level that is the most widely accepted definition of an overbought market. However, there may be something amongst bears in the longer term trend of the RSI. Since hitting a year-to-date peak of 75.4 back in March, this overbought conditions have steadily unravelled with a series of lower peaks on the RSI. This may be seen as an indication that the buying momentum is on the wane and that each subsequent thrust higher isn’t as strong as the prior one. 

 The RSI has diverged from price in recent months which cold be seen as a sign of declining momentum. Source: xStation

This divergence between the RSI and price on its own is probably not a strong enough signal to warrant short positions, but should we get a candlestick reversal pattern int he coming sessions then there may be an opportunity for the shorts.