The S&P futures are mellowing out Tuesday after yesterday’s impressive really past the key 900 level.  The important move came after Pending Home Sales blew by analyst expectations, signaling the housing market could finally be stabilizing.  With the general results of the stress tests leaked and seemingly priced in, the S&P is making a confirmation that the uptrend and economic recovery may be for real.  Meanwhile, the Libor Rate is finally back below 1%, showing credit fears are easing and banks can finally lend to one another at a reasonable rate. 

To add to the positivity, economic data points from China to Britain are sending the same message that manufacturing and consumption are recovering.  Therefore, analysts are increasingly hopeful that the worst of the economic crisis is behind us.  

However, before we get ahead of ourselves, yesterday’s large percentage gain wasn’t backed by the significant volume one would expect when attacking such a critical psychological barrier.  Therefore, we could witness muted gains/profit taking in today’s session as investors await tomorrow’s non-farm employment change and stress test Thursday.  One should not underestimate the importance of 900, meaning we could see retracements towards this level in the near-term should the futures should jump above.  Additionally, we should consider the scale of the run the S&P has made of late, and some investors may be interested in taking some profits.  

Near-term hesitation aside, the S&P futures continue to run along our uptrend and we have little reason to change our bullish outlook trend-wise right now.  The GBP/USD made a strong bull move of its own yesterday while crude approaches its yearly highs.  Therefore, the correlations and economic data releases are all falling in line behind the horns of the S&P.           

Fundamentally, we see resistance of 905.  To the downside, we find supports of 898, 889.25, 881.25, and 877.  The S&P futures are currently trading at 897.75.

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