- Summary:
- Credit Suisse projects a lengthy short-term consolidation for the S&P 500 index, which has 3896 as the price ceiling, and potential floors at 3784 and 3723.
Credit Suisse is back on the analytical train, giving out insights as to the movements in the S&P 500 index. The bank expects the index to stay within a lengthy consolidation phase, with 3896 seen as the key resistance within the near-term downtrend. The bank expects 3784 and 3723 to become additional targets on a sequential break of 3808/3804, with 3694/3678 (late January low) serving as additional support if 3723 gives way.
Credit Suisse also projects resistance at 3847/3852, with 3881 also serving as an upside barrier on clearance of 3847/3852. 3950/3951 comes into the picture if 3915 stays intact, suggesting an end to the correction and resumption of the uptrend.
So what is happening with the S&P 500 index? The stimulus bill has been passed, which should have been an index-positive factor along with the steady pace of coronavirus vaccinations. However, the rise in bond yields continues to be a diminishing factor for the US markets, as it causes investment capital to shift from stocks to bonds.
The counteracting effect of both fundamentals means that the S&P 500 index could remain range-bound, with a clear trend only emerging if one of the fundamentals breaks down in favour of the other.
Technical Outlook for S&P 500 Index
The daily chart shows that price has rebounded after yesterday’s drop, but this rebound has met resistance at the descending resistance trendline. This caps price at 3893.0, close to Credit Suisse’s 3896 price target. Only a break above this level would allow bulls to target the 3950.4 all-time highs, with a possible extension to 4005 if this level is surpassed.
On the other hand, a retreat from the present price level allows 3870.0 and 3823.9 to become sequential downside targets. 3765.1 and 3721.2 complete potential support levels which presently look a bit far-fetched.
S&P 500 Index; Daily Chart
