The S&P 500 has suffered a sharp setback from the upper end of its “typical” extreme and with the VIX holding a base and US Breakevens retreating from medium-term resistance the threat of finally a correction lower stays seen high, with key support seen at 3413/3397, economists at Credit Suisse report.
Key quotes
“Despite the fall yesterday though key supports remain intact still at last week’s low, the 23.6% retracement of the rally from May and price and gap support at 3413/3397, with a move below here needed in our view to confirm a corrective phase is finally underway. Indeed, if we were to close below here today this would add further potency to the likelihood of a corrective downturn as this would also see a bearish ‘reversal week’ established. If seen we would then see support at the late August low at 3355 initially and eventually and we think more importantly at a cluster of supports at 3285/55.”
“Above 3495 is needed to ease the immediate downside bias for a move back to 3527/38, with tougher resistance then seen at 3565.”
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