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S&P 500 has been capped at resistance at 3426/27 and the completion of a small bearish “reversal day” still maintains the risk for a deeper corrective setback towards 3280/60, economists at Credit Suisse inform.

Key quotes

“The S&P 500 rebound has been capped at its 13-day exponential average, 38.2% retracement of its fall and price resistance at 3417/27 and the subsequent sharp fall post the Fed has seen a small bearish ‘reversal day’ established to maintain the view the market stays seen at risk to a deeper corrective setback/consolidation.”

“Support remains seen at 3375 initially, with a break below 3341/39 needed to maintain the threat of further corrective weakness and a move back to 3310 then our “ideal” correction target of a cluster of supports seen starting at the 63-day average at 3287 and stretching down to 3260/59.” 

“Resistance moves to 3404 initially, then 3418/20, with a break above 3426/29 needed to see a near-term base has been established to ease the threat of a deeper corrective setback, opening the door to a move back to 3479/82 next, where we would look for a fresh cap for now for further near-term ranging.”