S&P 500 Index to extend its fall for a test of the 4328/18 zone – Credit Suisse

S&P 500 managed to recover off its lows on Thursday but economists at Credit Suisse remain of the view a corrective phase is underway. A close below 4425 today would see a bearish “reversal week” established to add further downside pressure. 

See – S&P 500 Index to decline 10% and end the year at the 4000 level – Morgan Stanley

VIX to see a base above 25.09 to warn of a test of the May high at 28.93

“It is quite possible we may see a bearish ‘reversal week’ if we see a close below key support at 4225 today, further increasing near-term bearish pressures. This is in addition to the broader ‘risk-off’ signals with a base in the USD now seen in place.” 

“We look for a retest of 4368/64, below which is expected to see a test of what we look to be better support at 4328/18 – the key rising 63-day average and the 38.2% retracement of the rally from May. Our bias would be to look for a floor here. A close below 4318 though would instead warn of a more protracted correction lower.” 

“Resistance stays seen at 4418/19 initially, with 4424/28 ideally capping to keep the immediate risk lower. We shall though maintain an immediate tactical bearish bias whilst below 4462.” 

“The VIX maintains its close above its 200-day average and above 25.09 would see a base to warn of a test of the May high at 28.93.”