The S&P 500 reached 4350 in the first quarter of this year. Although Credit Suisse economists see room for more strength to the “normal” extreme of 4420/50, they are beginning to detect signs of overextension again, and their bias remains for a cap below 4450 and a summer consolidation to develop, ideally a correction down rather than a sideways phase.
“The S&P 500 has continued its uptrend to our next target of 4350, as expected. We would still allow for a move to the ‘normal’ extreme of 4420 (15 percent above the 200-day average), which is slightly shy of our 4436/56 Q3 ob “”Effective.”
“With momentum failing to confirm the recent climb to a new high, our base case remains to expect for a cap in the 4420/4450 zone and a new consolidation phase to emerge, maybe with a correction down of around 5% this time.”
“We remain bullish on a 3- to 6-month timeframe and would regard a pause below 4450 (if witnessed) as a correction.”
“Support initially moves to 4288/78, then to the 63-day average, which is currently at 4193, which we hope to hold. Only a drop below 4164 signals a more determined period of corrective weakness.”/n
