S&P 500 Index: Consolidation phase into the FOMC with resistance at 4430/50 capping – Credit Suisse

The collapse in the S&P 500 has extended to the 38.2% retracement of the rally from October 2020 at 4213 and the aggressive turnaround higher has seen a near-term bullish reversal pattern complete. Strategists at Credit Suisse look for a consolidation phase into the FOMC on Wednesday, but with 4430/4450 ideally capping.

VIX set to challenge the October 2020 high of 41.16

“We look for a consolidation/recovery phase to emerge prior to the FOMC this Wednesday. We thus look for a test of resistance at 4430/50 – the key 200-day average and 38.2% Fibonacci retracement of the January collapse – but with our bias for this to cap for a phase of consolidation, ahead of a retest of 4213/4164.” 

“Whilst we will look for evidence of a floor at 4213/4164 again, should weakness extend we would see scope for further weakness to 4057, potentially 3855/15.”

“A close above 4450 would be seen to mark a further stabilization, with resistance then seen next at 4477 ahead of 4495.”

“VIX continues to surge higher and we look for a test of 41.16/36 – the October 2020 high and 38.2% retracement of the 2020/2021 fall. Beyond here, and we would then see scope for a move to 50.”