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S&P 500 has confirmed its flagged “head & shoulders” base above the mid-September highs and 61.8% retracement of the fall from September at 3429/44 and analysts at Credit Suisse look for a resumption of the core uptrend. 

See – S&P 500 Index: Rate scare to benefit recovery stocks – Morgan Stanley

Key quotes

“The S&P 500 has as suspected easily reversed its bearish ‘reversal day’ from Tuesday and has pushed above key resistance from the mid-September highs and 61.8% retracement of the fall from September at 3429/44 (although on noticeably low volume). This suggests the flagged ‘head & shoulders’ base is now in place and with daily MACD momentum having already turned higher we look for a resumption of the core uptrend.” 

“We see resistance at 3495 initially ahead of the 78.6% retracement of the September fall at 3507. Whilst we would look for this latter level to cap at first, we look for a break in due course for a move to 3565 next and eventually the 3588 high. We note though the ‘measured base objective’ is at 3653.” 

“Support is seen at 3428 initially, with 3419 now ideally holding to keep the immediate risk higher. A break can see a pullback to 3395/85, but with better buyers expected here.”