S&P 500 Index to see a correction to the rally from late October – Credit Suisse

The S&P 500 Index has completed a large bearish “reversal day” on increased volume to raise the prospect of a correction to the rally from late October, with key support seen at 3640/33, per Credit Suisse. 

Key quotes

“S&P 500 has tested and rejected our next objective of a cluster of Fibonacci projection resistances in the 3765/85 zone for the completion of a large bearish ‘reversal day’ on increased volume and with a bearish RSI momentum divergence also in place we now look for a correction to the rally from late October.” 

“Support is seen at 3680 initially, then 3663, with more important support seen at the December lows and ‘neckline’ to a potential top at 3640/33. Only below here though would see a top established to raise the prospect of a more concerted correction lower with support seen next at 3594/90, then 3578, with more important support seen at the 63-day average at 3563, ahead of which we would look for signs of a more important floor.” 

“Resistance is seen at 3708 initially, with the immediate risk seen lower whilst below 3727/33. Above can ease the threat of a setback for a fresh look at 3765/85.”