The S&P 500 Index continues to struggle to hold its move above 3900/3930 as rising bond yields weigh on the market. Indeed, rising US real yields stay seen as a key risk to the equity rally and the market is seen at a potential key inflection point, and the Credit Suisse analyst team is alert to the potential formation of a bearish “reversal week”, with key support seen at 3890/85.

Key quotes

“Key support remains seen from the lows of last week and 13-day exponential average at 3890/85. This needs to hold to avoid a ‘reversal week’ and keep the immediate risk higher for a move back to 3950/51, above which we see resistance next at the top of the daily Bollinger Band at 3975/80, with this expected to cap at first.” 

“Below 3885, especially on a closing basis this Friday would see a bearish ‘reversal week’ confirmed to suggest we have finally seen an exhaustion point, clearing the way for a corrective/consolidation to emerge. We would see support then next at 3871, ahead of 3852 and then 3830.”