S&P 500 Index: Scope for a fall of 3.7% from the peak to 4568/66 – Credit Suisse

The S&P 500 maintains its bearish “reversal day” from just shy of the 4750 level. With daily MACD momentum having already turned lower last week and with weekly RSI momentum holding a bearish divergence, analysts at Credit Suisse continue to look for a correction lower to 4568/66 – the 38.2% retracement of the October/November rally.

Uptrend to take a breather

“With a bearish ‘reversal day’ in place from just shy of our 4750 Q4 objective and with daily MACD momentum having already turned lower last week and with weekly RSI momentum not confirming the latest highs we continue to look for a correction lower/consolidation to emerge.” 

“A close below the 13-day exponential average and low of last week at 4674/73 remains needed to add weight to our view and indeed if this can be achieved on Friday this would also see a bearish ‘reversal week’ established. This should then reinforce our call for a fall to the 4634/31 recent low/23.6% retracement.” 

“Below 4634/31, which we look for, would see a near-term top established with support then seen next at 4589 with our corrective objective at 4568/66 – the 38.2% retracement of the October/November rally – which would represent a fall of 3.7% from the peak.”

“Resistance moves to 4701 initially, with 4732/50 now ideally capping.”