The slide on the Standard & Poor’s 500 Index yesterday that broke a four-day rally will continue until it reaches a support level at 1,080, according to the head of technical analysis at Credit Suisse Group AG.
The decline yesterday on the S&P 500 left the benchmark for U.S. equities at 1,091.84, within 1.1 percent of its next major support level, said Credit Suisse’s David Sneddon. If the gauge fell through 1,080, the next support would come toward the 1,050 level, he said. Sneddon is advising clients to add to short positions on the index.
“Bearish pressures look to be resurfacing,” said Sneddon in a phone interview today. “We’re looking for the rally to fail here and to move lower in the next week.”
U.S. stocks last week snapped three weeks of declines as better-than-estimated growth in private employment and manufacturing increased optimism that the world’s largest economy will avoid slipping back into recession. The S&P 500 remains 10 percent below this year’s peak in April.
In a short sale investors borrow securities to sell in anticipation that they will be able to purchase them back cheaper before having to return the loan