Since out last writing on April 4th, the equity markets did fall to our support levels and then rallied to new highs. Basis the June futures contract we stated the S&P 500 would find support at the 805 area. On April 8th it did find support in that area and then rallied into the 870 area.
The Dow Jones futures contract (basis the June contract) is once again looking a bit overbought. However it is possible for a market to stay overbought for many months before finally consolidating. Early into the week we could see the market consolidate. This would coincide with a large number of companies reporting earnings this week. For the stocks that have reported quarterly earnings so far, we have seen some positive surprises, especially for the large banks. But the markets may take a more cautious stance this week and consolidate as more data is released.
The next major resistance is about 8300 to 8450 and pushing into the 8600 area. There is support in the 7950 area. If the market breaks below 7730 then the contract may be heading to the next major support level 7590.
The S&P 500 (basis the June contract) has support in the 855 to 845 area. The next major support level is near 820. If the market breaks below 820, we could be looking at consolidation into the 790 to 770 area. Major resistance is in the 836 to 890 area. As we are in that price range and the market is showing overbought signals, consolidation this week would be plausible. If the market should continue to move higher the next major resistance level is 905.
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