Last week’s new S&P 500 high is rather an extension of the Feb./March rally and not a new broad-based breakout, UBS technical analysts Michael Riesner and Marc Muller write in note.
- Market vulnerable to pullback into next week, which UBS would see as beginning of broader and potential distributive tactical top building process
- On the upside, strong resistance zone at 2080-2090
- On the downside, re-break below last week’s breakout level at 2056 would be negative into next week; key support remains at 2022
- Longer term, UBS still sees potential significant pull-back into June/July, towards re-test of key support zone of 1820/1800
- On sectors, UBS cautious on energy and commodity sectors; health care/biotech are breaking out, which UBS sees as start of a more significant rebound
- European stock indexes remain weak and continue to trade in its consolidation/pullback pattern of the last 2 weeks
- Given oversold conditions of European indexes and anticipating the euro to pull back into 2Q, UBS sees potential short-term bounce vs. U.S. market
- Commodities have started a new tactical down-leg: CRB topped out in late March, with fresh short signal