S&P 500 Index Opens Lower As Credit Suisse Sees Near-term Correction

Summary:

The S&P 500 index has opened lower on mixed data, and may be up for a short-term correction, according to analysts at Credit Suisse.

The FOMC minutes released on Wednesday contained a lot of dovish language. Still, they retained content showing that some policymakers wanted tapering started later in the year instead of 2022. This made for a lower open, which showed up as a bearish gap on the daily chart. The bulls have been able to claw back some of the day’s losses, but the S&P 500 remains well off the pace at -0.83% currently.

Credit Suisse has been appraising the index’s performance and expects an initial capping of the uptrend at 4362/4368, with a downward correction finding support at 4315/4314, then 4298/4288 if the prior support gives way. Credit Suisse did not rule out a summer correction to 4257 if 4286 gave way. The bank maintains its bullish outlook, projecting the price to extend to 4400 and even 4436/56 once the correction was over.

Technical Levels to Watch

The 78.6% and 88.6% Fibonacci extension levels (4368.25 and 4408.11) are close to the targets set by Credit Suisse for the uptrend move.

However, if a correction proceeds from today’s down leg, we can expect targets at 4301.3, 4275.94 (28 June low), 4257.90 and 4220.63 to come into the picture, depending on the extent of the correction.