S&P 500 Index: Defending 3930/3880 is crucial to avert a deeper pullback – SocGen

S&P 500 has revisited the 3930/3880 support zone. Economists at Société Généraleanalyze the index's technical outlook.

Scope for a short-term bounce

“Formation of a daily bullish engulfing pattern highlights the possibility of a short-term bounce.”

“Recent bearish gap at 4090 is the first layer of resistance; overcoming this can lead to an extended up move towards 4218 and perhaps even towards last August's high of 4320/4370.” 

“Defending the 200-DMA at 3930/3880 – which is also the descending trend line drawn since last year and the 38.2% retracement from October – is crucial to avert a deeper pullback.”