The S&P futures are reversing course premarket on Tuesday after the U. S. released disappointing PPI and Retail Sales data points. The PPI numbers show the collapse in consumption resulting from the economic downturn is taking its toll on producer prices.

As a result, the fear of deflation is creeping back into the picture, signaling the improvement in PPI over the past two months may have just been a head-fake.

The Retail Sales numbers send the same signal, which raises concern that the concept of an economic recovery as a whole may be a head-fake.

However, this is all speculation until we receive further confirmation from future data releases. The negative economic data is overshadowing better than expected earnings from Goldman Sachs and the fact both Citigroup and Bank of America logged considerable gains yesterday.

Nevertheless, the S&P's rally is falling short of February highs, implying the uptrend has its work cut out for it over the near-term. We wouldn't be surprised to see the S&P futures dip back below our 3rd tier downtrend line today.

The S&P's correlations all reflect uncertainty among investors. The rally has been exceptional, but investors still have a voice in the back of their minds questioning whether the economic recovery is legitimate after several well-renowned economists disputed analyst claims of a turnaround.

Therefore, investors may wait until the earnings season unfolds and the government releases its results from the stress tests of financials before making any more serious additional commitments in either direction.

The S&P futures have surely made impressive strides to the upside by breaking through all of our foreseeable near-term downtrend lines.

Therefore, if the futures can manage to weather the storm and hold above our 3rd tier downtrend line, the argument for the upside will be all stronger.

Furthermore, if the S&P futures can break through February highs we could witness accelerated gains in the near-term. Fundamentally, we find supports of 839.75, 834.75, 829.5, 825, and 818.5. To the topside, we see resistances of 845.25, 850.5, 856.25, 862.5, and 869.25. The S&P futures are currently trading at 842.75.

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