S&P 500 rebounded 2.6% on Monday after falling to a year-to-date low at the end of last week. Periodic rebounds are to be expected but the 3900 level is set to prove a tough barrier, analysts at Société Générale report.

Holding 3636 is crucial for persistence in up move

“S&P 500 briefly violated the lows of June at 3636 but has quickly clawed back above denoting a false break. It is worth noting that similar price action occurred in June when the index failed to establish below the trough of May and experienced a phase of rebound.”

“Gap-up on daily chart points towards possibility of a bounce.”

“Recent pivot high at 3900 is first layer of resistance. If this is crossed, the bounce could extend towards recent bearish gap near 4040 and 4120.”

“Defending 3636 would be crucial for persistence in up move.”