S&P 500 Index: Support at 3890/82 needs to hold to avoid a bearish reversal week – Credit Suisse

The S&P 500 is struggling to hold its move above the 3900/3930 resistance zone as rising bond yields finally look to start to weigh on the market. The market is seen at a potential key inflection point, especially with yields expected to rise further yet and the Credit Suisse analyst team is alert to the potential formation of a bearish “reversal week”.

Key quotes

“Support at 3924 needs to hold to keep the immediate risk higher for a move back to 3950/51, above which we see resistance next at the top of the daily Bollinger Band at 3972/75, with this expected to cap at first.” 

“Below 3924 would warn of a move back to 3914 initially, with critical then the lows of last week and 13-day exponential average at 3890/82.”

“A break below 3890/82, especially on a closing basis this Friday would see a bearish reversal week confirmed to suggest we have seen an exhaustion point for the rally, clearing the way finally for a corrective/consolidation to emerge. We would see support then next at 3871, then 3847/37.”