S&P 500: Support at 3330/28 holds to maintain an upside bias for a test of resistance at 3425/29 – Credit Suisse

S&P 500 maintains a near-term base to suggest the worst of the price fall in the corrective phase may be behind us and analysts at Credit Suisse stay biased higher for a deeper recovery to 3425/29. Notwithstanding, they look for this to then cap and for correction to extend further in time as the market moves into a consolidation phase ahead of the US election.

More:

• S&P 500: Three critical policy disappointments behind the correction – Morgan Stanley

• Implementing national lockdowns to lead to a new bear market for stocks – Charles Schwab

• S&P 500 Index: Near-term correction, long-term recovery – Morgan Stanley

Key quotes

“A choppy intraday session on Wednesday but with high-level support at 3330/28 still holding, with the 13-day exponential average now also just above here at 3335 and with a near-term base in place our immediate bias stays higher.”

“We continue to look for 3330/28 to continue to hold with resistance seen next at the 50% retracement of the September fall at 3390, then what we look to be tougher resistance, starting at the mid-September highs at 3425/29, with the ‘measured base objective’ at 3437 and with the 61.8% retracement of the fall from September at 3444. Our bias remains to look for a fresh cap here for now for a lengthier period of broader sideways price action to develop ahead of the US election.” 

“Support is seen at 3354 initially, with 3330/28 ideally continuing to hold to keep the immediate bias higher. Below can see a fall back to 3298/93, but with a break here needed to negate the base to raise the prospect of further sideways ranging, with support next at 3279.”