The S&P futures are strengthening after better than expected Durable Goods Orders and New Home Sales data releases.  Additionally, numbers from the EU over the past two days are pointing towards a pickup in business activity in the European region.  All of the news is creating yet another faceoff with our 3rd tier downtrend line, which is proving to be quite a challenge this month. 

However, if the S&P futures can brave to close above the 3rd tier on our 4-hour, then we could see large near term gains.  Despite the upbeat data releases, investors may wait until the Treasury releases the stress test details later in the trading session before deciding whether to commit fully to the upside.  Huge gains in crude and the EUR/USD combined with a large pullback in the 30 Year futures are indicating a breakout in the S&P futures is likely.  However, the present breakout out gold and a drift downwards by the USD/JPY are making bulls second guess the optimism.  After all, only yesterday we saw disappointing Existing Home Sales and weekly Unemployment Claims data.  Therefore, it’s easy to understand why the bulls are guarded. 

On a positive note, we have made it through most of the earnings season without a complete collapse in equities.  Therefore, investors could be showing the worst has been priced in for now with huge gains taking place in technology, the sector usually leading stocks out of a downturn.  We have a positive outlook for the S&P futures for the time being.  We placed a new near-term uptrend line on our chart to give investors idea of where the critical defense lies. 

Fundamentally, we find resistance of 860.75 with 2nd tier and top end waiting at 866.25 and 872.75, respectively.  We don’t find any other near-term resistances, always a positive sign.  To the downside, we see supports of 853, 846.5, 840.25, and 833.5.  The S&P futures are currently trading at 857.00.

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