S&P 500 Index to stop its advance after surpassing the 4200 level – Credit Suisse

S&P 500 has reached the 4200 level and although the underlying trend remains seen strong with a series of near-term tactical overextension signals in place the Credit Suisse analyst team’s bias remains to not chase further strength for now. Instead, a consolidation/corrective phase is set to emerge within the core uptrend.

See: 

• S&P 500 Index: Investing at all-time highs pays off – JP Morgan

• S&P 500 Index: Earnings optimism set to constrain the upside – CE

Consolidation/corrective phase to emerge from 4200

“S&P 500 has now achieved our Q2 objective of 4200 and with a range of ‘red flags’ and overextension signals in place and with OnBalanceVolume still not confirming the new highs we do not look to chase strength beyond here for now. Instead, we continue to look for a consolidation/corrective phase to emerge.” 

“Big picture, we maintain our core bullish outlook and will view a consolidation/correction, if indeed even seen as a temporary and healthy pause within this core uptrend.” 

“Support remains seen at 4176 initially, below which can see a fall back to the 13-day exponential average and price support at 4153/50. A close below here would be the first sign in our view we are indeed set to see a consolidation phase with support then seen next at 4124.” 

“Below the 4118 recent low though remains needed to mark a near-term top to clear the way for a deeper setback with support then seen initially at 4097/96 and then 4068.” 

“A weekly close above 4200 can see the trend stay directly higher with resistance seen next at 4225, with tougher resistance expected at 4256/60.”