S&P 500 has surged higher again and the market stays on course for the 4200 level. As economists at Credit Suisse have consistently highlighted though the market is now seen at an “extreme” and tactically overstretched and remain alert to a consolidation/corrective phase, ideally from 4200.

See – S&P 500 Index: Expectations for earnings consistent with rotation resuming soon – CE

The market stays seen at its “typical” extreme

“We continue to see a range of ‘red flags’ to suggest the market is tactically overstretched, with the market above what we see as its “typical” extreme - 15% above its 200-day average. Importantly, Volume/OnBalanceVolume is still not confirming the new highs and daily RSI momentum is now also not confirming the new highs and we maintain our view we are getting close to a peak to this phase for the emergence of a consolidation/corrective phase.” 

“We still look for further strength yet though to 4175/79 and ideally our 4200 Q2 objective. Our bias remains to look for more concerted signs of a top here. Should strength directly extend, we would see resistance next at 4225/30.” 

“Near-term support moves to 4152, with a break below 4125/21 now needed to warn of a minor top for a fall back to 4096/86, potentially 4068, with more important support seen starting at 4038/34.”


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