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The price action in the S&P 500 Index implies that the corrective rebound witnessed since the end of March has run its course and the next leg lower could be in the making in the coming weeks, per Rabobank.

Key quotes

“The corrective rally from the March 23 low run out of steam around the Fibonacci 61.8% retracement level at 2934.49. This is a critical pivot around which markets tend to swing and start moving in the opposite direction.  Another crucial element supporting this short-term technical scenario is that recent gains fit into the rising wedge, which is a bearish pattern.”

“Given that the second leg lower should at least match the length of the initial wave, the S&P 500 Index may fall below the March 23 low at 2191.86 in the near-term.”

“For short-sellers, it is an opportunity to establish positions in anticipation of a new leg down driven by another wave of negative news dominated by rising joblessness and bankruptcies.”