The S&P 500 rally is losing momentum at the 3394 record high. With a daily RSI momentum divergence now in place, the risk for a correction lower is growing steadily, according to the Credit Suisse analyst team.
“With daily RSI momentum now holding a small bearish RSI divergence and with the market above what we see as its ‘typical’ extreme (10% above its 200-day average, currently at 3370) the risk for a correction lower continues to grow.”
“Support at 3355 needs to hold to avoid this to keep the immediate risk higher for a challenge on the 3394 record high. Beyond here can see an overshoot to potential trend resistance, today seen at 3415, which we would look to cap at first.”
“Below 3355 can further increase the risk for a correction lower for a move back to the recent low and 13-day average at 3326/17. Only a close below here though would suggest a correction lower is finally underway, with support then seen next at 3271.”
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