S&P 500 Index: Corrective rebound may already be over, bearish outlook reinforced – Credit Suisse

S&P 500 has gapped sharply lower on increased volume. Economists at Credit Suisse look for a retest and break of 3594/84 for an eventual fall to their 3235/3195 core objective.

Price gap from Friday at 3707/3745 to cap

“An extremely poor end to last week has seen the S&P 500 gap sharply lower on increased volume post the payrolls report and this has seen an ‘island top’ reversal left behind to suggest the corrective rebound may already be over.” 

“We look for a retest of pivotal flagged support from the rising long-term 200-week average and current cycle low at 3594/84. Whilst this should again be respected, we continue to look for a sustained break in due course. Our core objective though remains at the 3235/3195 support cluster, which includes the 38.2% retracement of the entire uptrend from the 2009 GFC low.” 

“Resistance is seen at 3682 initially, with the price gap from Friday at 3707/3745 now ideally capping.”