S&P 500: Wait concrete signs of floor to buy – Credit Suisse

The S&P500 drawdown has extended further following the completion of a short term bearish ‘wedge’ continuation pattern. Analysts at Credit Suisse do not recommend re-entering the market until a clear floor is seen.

Key quotes 

“The market looks set to break below the start of the lower end of our extreme zone at 2747/22 and reach 2641/2594, the 200-week average which is the key ‘make or break’ inflection point for the market.” 

“A break would suggest we are moving into a proper bear market drawdown, which typically only occurs during recessions.” 

“We note that the next and just initial support levels would then be seen at 2347, the December 2018 low.”

“Medium-term momentum is now oversold, positioning is more neutral, 2641/2594 is clearly a very important support and breadth and volume measures also stay supportive.” 

“We would not advocate re-entering the market until we see concrete signs of a floor.”