S&P 500 has gapped lower for a clear break of support at 4118 and the completion of a top. Economists at Credit Suisse look for further weakness to a cluster of supports at 4041/20 but look for a hold here.
VIX has cleared its 200-day average warning of a further rise to 31.90, potentially 35
“We stay biased lower for a test of support next at the 38.2% retracement of the March/May rally at 4041. We see scope for an overshoot beyond here into the price gap from early April, now also the location of the rising 63-day average at 4034/20, but with our bias to look for a floor here to define the lower end of the aforementioned consolidation range.”
“A close below 4021/19 though would suggest we are set for a more concerted phase of corrective weakness with support then seen next and initially at 3989/81.”
“Resistance moves to 4091 initially, above which can see a move back to 4110/12, with the “neckline” to the top at 4135/36 expected to cap for now. We shall though maintain a tactical bearish bias whilst below 4152/62.”
“The VIX has surged higher for a close above its 200-day average and we look for a further rise to 31.90, then 34.90/35.”
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