S&P 500 Index: 4625 to try and cap for a fall back to retest support at 4453/50 – Credit Suisse

The S&P 500 has recovered strongly for a break above its downtrend from early January to retest of its early February high and 61.8% retracement of the January sell-off at 4591/95. We see scope for a move above the early February high and 61.8% retracement of the January sell-off at 4591/95 to test the 63-day moving average (DMA) at 4625, but with a fresh cap looked for here. 

Close below 4453/50 to mark a more important turn lower again

“With daily MACD momentum having turned higher, there is a risk for a break above the early February high and 61.8% retracement of the January sell-off for a deeper recovery yet to test the falling 63-DMA, currently placed at 4625.”

“Our bias remains for the 4625 level to prove a major barrier and for the broader risk to then turn lower again in line with our broader ranging view.”

“We note though the continued similarities between now and 2018 and if we were to continue to repeat this path this suggests a move to the 78.6% retracement of the January collapse at 4691 cannot be ruled out.”

“Support is seen at 4548/47 initially, then the lower end of the price gap from yesterday morning at 4522. A close back below here can ease the immediate upside bias for a fall back the key price pivot and 20-DMA at 4453/50. A close below here is needed to mark a more important turn lower again.”