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The aggressive collapse in the S&P 500 has extended below, and remains still capped by its pivotal long-term 200-week average, analysts at Credit Suisse report.

Key quotes

“The pivotal long-term 200-week average is typically the maximum drawdown we witness when we are seeing aggressive corrections within multi-year bull trends, as has been seen on many occasions.”

“Even the 1987 crash was contained at this average. The notable exceptions are clearly the 2000/2002 and 2007/2009 bear markets, and indeed back in 1973/1974.”

“If we see the index hold below this critical average on a sustained basis, there is clearly a risk we may be seeing a more significant bear trend develop.”

“Near-term, we expect some consolidation/recovery post the Q1 collapse, but we look for renewed weakness later in the quarter.”