The S&P futures posted an incredible rally on Tuesday fueled by Citigroup claiming itself profitable thus far in 2009. The financials surged with Citigroup and Bank of America climbing an astronomical 38% and 28%, respectively.

The movement was backed by solid volume, allowing yesterday's rally to become a possible 1st step in a permanent bottom. The S&P is trying to follow through on Wednesday, trading up over 1% pre-market. However, before we get too excited, we must realize there are multiple layers of downtrend lying in the road ahead.

Furthermore, we still haven't seen an upturn in significant economic data or a confirmation of stabilization from other major banks. In fact, this morning UBS reported an $18 Billion loss for the 2008 fiscal year, larger than analyst expectations. Further tempering the excitement is bad news out of China. Exports fell a whopping 25%, far exceeding analyst expectations of a 5% decline.

The news of plummeting Chinese exports reflects the lack of global consumption and demand. Therefore, the economic downturn seems to be heating up. Remaining in Asia, Japan's Core Machinery Orders showed a decline of a 3.2%. Hence, Japanese production and exports are declining as well, confirming the news out of China concerning demand.

In Europe, German PPI fell more than expected and the country's Factory Orders plummeted. In other words, the EU is experiencing deflation and is being hit by the lack of consumption worldwide. Putting all of the news together, we notice a common theme. Global production and consumption are deteriorating at a rapid pace. Therefore, there is certainly enough negative data to counteract the optimism out of Citigroup.

Correlation wise, crude futures experienced an odd selloff Tuesday despite the rally in equities when the two normally exhibit a positive correlation in such moments. Additionally, 30 Year T-Bond futures are recovering above March lows while Gold is fighting with the highly psychological $900/oz level. On the FX side, the Euro, Yen, and Pound correlations didn't participate fully in the equity rally.

Hence, commodities and currencies haven't committed to a U. S. recovery yet. Therefore, we wouldn't be surprised to see some profit-take this afternoon. Fundamentally, we find resistance of 722.75 with additional resistances hanging at 732.75, 740, and 750. The 700 level becomes a key psychological cushion in the near-term. To the downside, we see support of 710.25 with additional supports sitting at 703.25, 693.25, and 685.75. The S&P futures are currently trading at 723.50.

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