S&P 500 has seen an aggressive rejection from a cluster of resistances at 3902/12. Analysts at Credit Suisse look for a retest of key support from the 200-week average at 3620/19.

Strength has been a temporary bear market rally

“S&P 500 has seen an aggressive sell-off on increased volume from the late September high, falling 63-day average and 50% retracement of the fall from September at 3902/12. The magnitude of the rejection and break of near-term support at 3804 is seen to reinforce our core view recent strength has been a corrective bear market rally only, with an important peak now in place, although we would see this rejection further confirmed if sustained post the payrolls report this Friday.” 

“Support is seen next at the 38.2% retracement of the October/November rally at 3751, below which should see a fall to support next at the 3652/47 late October low and then a retest of the key 200-week average at 3620/19.” 

“Resistance is seen at 3802/04 initially, with 3840 ideally capping to keep the immediate risk lower. The 3894/3912 zone though is clearly expected to remain a major barrier.”