The S&P has hit important support at 2636 and this remains a key technical level to look for a rebound, according to David Sneddon and his team at Credit Suisse in London.
Sneddon says the 2636 level (the weekly trendline from the February 2016 lows) is crucial. It has already acted to contain yesterday’s weakness (see Chart) and in his opinion remains a strong support level. His base case view is that it will hold, especially given longer term indicators remain supportive of the idea that recent declines are corrective.
In the event of a recovery, Sneddon expects the S&P to come up against initial resistance at 2699, beyond which he thinks the immediate downward pressure would ease.
However, Sneddon warns that a close below 2636 would be very bearish, because it would break the uptrend from 2016. He says below 2636, support can be found at 2623 (the 23.6% Fibonacci retracement of the 2016 to 2018 rally) and then 2557 (the 40-week moving average and notable low).