S&P 500 Index to test the major support centered on 3209 - Credit Suisse

FXStreet notes that S&P 500 has seen a sharp fall on high volume, breaking below the uptrend from June to increase the risk that the market may be forming a double top. Only below 3209 the index would see the double top confirmed, but if seen, it would open the door for a move to the 200-day average at 3130, per Credit Suisse. 

“The S&P 500 has gapped sharply lower on markedly increased volume for a break below its uptrend from mid-June and whilst the market remains in its range from September for now, current price action increases the risk we may now in fact being seeing a more important topping process. This is seen reinforced further when we look at the weekly RSI momentum which looks to be already holding a large ‘head & shoulders’ top should we close the week at these levels, which is clearly concerning given momentum tends to be a leading indicator.” 

“Whilst resistance at 3306/11 caps the immediate risk is thus seen lower with support below 3269 seen at 3228 next, then more importantly at 3209/3199, which includes the key September low. Whilst we look for an attempt to hold here, a clear and closing break would suggest we have seen a significant top established, exposing the 200-day average, currently at 3130.”