While Credit Suisse analysts remain bullish on the S&P 500 index, the break of the gap support at 3.585 on Wednesday is adding weight to the eye for further consolidation in the near term and a test of the support at 3.519 / 09.
Key Comments:
“The S&P 500 experienced a strong pullback at the end of the session on Wednesday when the movement stopped before the current high of 3,645, without reaching trend resistance since February, now at 3,669, adding weight to our view of a more cautious bullish stance, secured by a growing number of over-extension measures, with 88% of the S&P 500 stocks above their 200-day average and the market at the upper end of its ‘typical’ extreme. ”
“With the support of the bullish gap at 3.585 broken, we are now looking for a greater movement in short-term range and a deeper pullback with support seen at 3.553. What we are still looking for is better support, starting at the 13-day exponential average at 3.531 and that extends to recent lows and the price gap prior to Pfizer’s initial vaccine announcement in 3.519/09, which we continue to expect to hold to form a potential bullish ‘pennant’ pattern. ”
“Resistance initially moves at 3,589, followed by 3,618 / 19. It is still necessary to rise above 3.629 to clear the way for a retest of the current maximum in 3.645, and then climb to trend resistance from February, now at 3.669“.
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