S&P 500 saw an intraday break of the 4115 YTD low but with the market then holding next flagged support from the May 2021 lows at 4061/57. With the FOMC tomorrow, economists at Credit Suisse suspect the market pauses for now, but with the broader risk still seen lower.

Resistance for recovery is seen at 4170 initially

“With daily RSI momentum not confirming the latest move to new lows and with the market managing to close back above 4115 together with the key FOMC announcement on Wednesday we suspect we probably see the market hold in for now. Indeed, we wouldn’t rule out a fresh consolidation phase.” 

“Bigger picture, our bias stays lower and we look for a sustained break of the 4115 Q1 low in due course for a fall back to 4063/57. Beneath here can see support next at the 50% retracement of the rally from October 2020 at 4026 and eventually we think the 38.2% retracement of the entire 2020/2021 uptrend at 3855/15.” 

“Resistance for recovery is seen at 4170 initially, above which can see strength back to 4208, then the 38.2% retracement of the sell-off from late April at 4235. Tougher resistance will be expected at the 13-day exponential average and recent price gap at 4270/88.”