S&P 500 pushed sharply higher yesterday. The 4091/4128 zone is key, as a break above here would similarly signal a deeper corrective recovery, economists at Credit Suisse report.
Risk of an eventual breakdown below 3855/15 stays elevated
“Key now going into the weekly close and month-end is the price high and gap at 4091/4128. Only a closing break above here would confirm a short-term base to signal a more profound recovery, which we would be inclined at this point to view as a ‘bear market rally’. If a base is confirmed, we would expect the market to extend the recovery to the 63-day average at 4277/4314.
“We would be inclined to view any recovery as corrective, as the medium-term technical picture is not particularly constructive. Therefore, the risk of an eventual breakdown below 3855/15 stays seen as elevated, with first near-term support seen at 3932/25, below which would remove the recent upward pressure.”