S&P 500 remains well supported for now and the spotlight remains on the 4200 level. Economists at Credit Suisse continue to look for a cap here and for a corrective/consolidation phase to emerge.
See: Four reasons to consider European equities – Morgan Stanley
Volume is still not confirming the S&P 500 highs
“Below support at 4118 is needed to mark a minor top to add weight to this view for a fall back to 4068, then 4034/20, where we would then look for a fresh floor. Below though would warn of a more protracted correction lower and a move towards the 63-day average, currently at 3958.”
“Big picture, even if correct, our bias would be to view a pullback/correction from 4200 as temporary and corrective, with a clear break in due course seen opening the door to a move to 4260 next, then 4350.”
“We can often see 10%-15% above the 200-day average as the upper extreme for the S&P 500, which is where the market currently resides.”
“OnBalanceVolume for the S&P 500 remains unable to confirm the new highs and holds a bearish divergence, warning the trend is losing ‘buying power’, adding weight to our view we are approaching a potential peak.”
“95% of S&P 500 Stocks are above their 200-day average highlighting the “market” as a whole remains overbought, adding further weight to the view the risk for a pause/correction is growing.”
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