The S&P futures continued their selloff yesterday as well-regarded economists, including Dallas Fed's Fisher, flooded the wires with negative outlooks concerning the health of the economy and solvency of banks. Although the present pullback has been brisk, it hasn't been supported by high volume or U. S. economic data. Regardless, the selloff has taken the wind out of the rally's sails.

The S&P futures went as far as to dip below our 1st tier trend line. However, investors will need very negative news on the earnings or data front to send the futures back below the critical 800 level.

That being said, the rally in the S&P futures has been disappointing by failing to eclipse our 3rd tier downtrend line and February highs. As a result, the futures are creating the possibility of a return to the devastating downtrend of the economic crisis. Focus will remain on corporate earnings until Thursday's trade balance and unemployment claims release.

On a positive note, economic data releases are showing signs of improvement in Britain and the EU, adding to speculation that the economic crisis is subsiding. Conversely, Japan's economy continues to unravel with no signs of a bottom.

Correlation wise, crude futures have crashed below our 1st tier uptrend line and the highly psychological $50/bbl. Since crude and equities have been tightly correlated, the deterioration taking place in the fundamentals of crude futures are a bit concerning. On the other hand, gold and the 30 Year T-Bond futures continue tier respective lines. Therefore, the S&P's correlations are painting a mixed picture, highlighting the uncertainty prevalent in the markets right now.

Pushing the distortion aside, everybody's asking the same question: `Is the economic crisis really over?' While economic data points in the U. S., EU, and Britain are showing signs of stabilization, they could easily be a pop up on the way down.

Therefore, investors are on guard to see if the all around rally can materialize into something more than a bear market rally. Fundamentally, we find supports of 815, 809.25, 804.75, 799.75, and 794. To the topside, we see resistances of 821.5, 829.5, 834.75, 840.25, and 845.25. The S&P futures are currently trading at 816.50.

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