S&P futures have pulled back below Friday’s high at or near the extreme price excursion level at 2010, the up-side estimate noted coming into Friday’s session. 

Coming into Monday’s open the pull-back to 2101 is modestly. We would expect to see the S&P re-test the prior high at 210-2098.

On Friday, S&P futures pulled back 17 points below the prior high at 2098 and traded down to 2084, before auctioning up to re-test Thursday’s high.  We noted coming into Friday’s session that we expected to see a pull-back equal to an average daily range: 17 to 23 points, before the S&P re-test the high and attempted to extend the trading range higher.

Indeed, later in the day, the S&P, along with the other major U.S. benchmark indexes: the Dow and Nasdaq broke out above their prior highs and rallied up to close at new all-time highs.  At Monday’s open all three Major Indexes has “gapped” below their previous close.

According to the financial media Friday’s rally was attributed to the EU extending the terms of the Greece’s bailout. Hence, the break-out can be categorized

S&P futures continued trading within the narrow range parameters which have development following the rally up to the maximum likelihood expectation target at 2100.

Despite several attempts to extend the trading range high, price discovery continued to encounter a lack of buying interest above the 2100 price level. During each rally up to 2097-2100 the order flow event consistently indicate buy program waning.

While the broad benchmark S&P 500 bullish optimism has auctioned up to yet another all-time record high, there has been only modest range extension above the prior all-time high at 2088.

During Wednesday session advancing issues (3790) outnumbered decking issues (2904): 53% to 41%. Yet the S&P 500 closed down -0.6 points (0.03%) and the Dow 30 finished down -17 points (0.10%).

Earning season is above the wind down and recent economic data indicates that the U.S. economy is simply muddling along: i.e. under performing.

Therefore, we see little in the way of catalysts to continue the rally higher. We expect to see the sell-off from the new all-time record high and pull-back in search of support.

Minor support is located at average daily range pulled back level between 2080-2076. Near term support is located at 2058-2060: the 02-11-15 low. Key

Overnight S&P futures traded within the narrow range parameters between 2099 and 2094 that developed during Tuesday’sclose.

At the open of Tuesday’s session, despite the minor pull-back to 2082 during the Monday’s overnight globex session, S&P futures rallied back to re-test the holiday high 2093-2095 at the open.

While the order flow events continued to indicate a lack of buying interest above 2095-2098, there was no significant selling pressure. S&P futures traded in a narrow 2 point HFT market maker range for the majority of the trading session.

On the NYSE advancing issues (3499) modestly outnumbered declining issues (3240): 49% to 46%. The major U.S. benchmark indexes posted minor gains, The Dow close at 18047: +28 points (0.16%). The Nasdaq Campsite closed at 4899: +5 points (0.11%) and the S&P 500 finished the session at 2100: +3 points (0.16%).  

Apparently, there is still a sufficient number of un-informed market participants willing to buy the new all-time record high despite the S&P being up 129 points (6.5%) above it January, February lows and the narrow 2 point HFT market maker algorithm is perfectly designed to take advantage of their lack of insight.

While we do not take delight in the misfortune of others, the very term “all-time record high” should raise some concern in the minds of those considering buying the high.

Trading is a zero sum game. For every buyer there is a seller and for every seller there is buyer. At what price (trade location) a market participants choose in enter the market is at their discretion.  Buying the market

Over the holiday weekend S&P future extended the trading range, auctioning up to 2095: 36 points above near term support at 02-11-15 low: 2058-2060.

Following the rally up to 2095, S&P futures sold-off 14 points below the 2095, pulling back to 2081, before attempting to re-test at 2093-2095 during the Monday’s overnight session. The order flow events during the re-test indicated a lack of buying interest (buy programs waning) and as of this post selling pressure has auctioned S&P futures down to 2089.

At Friday’s close, the Dow ended the session up 46 points (0.26%) closing the week at 18019. The Nasdaq Composite was up 36 points (0.75%) to close at 4893. The broad benchmark S&P 500 finished the week at 2096: up 8 points (0.41%).  On the NYSE advancing issues (4369) outnumbered declining issues (2340): 61% to 33%.

All rallies end when the auction failed to attract new buying interest and or all those who wanted to buy the high have done so. At that point the market either “pauses” at the high and or sells off. Minor pull-backs, like the one witnessed during the holiday ceased to hold support. A relative discount is typically required in order to attract new buyers.  Once it has been established that there is no buying interest above the new high, the market will display the pattern of longer term range development.

In other words, an average daily range discount (17 to 23 points) will no longer be sufficient. Near term support levels will be breached and major support will be re-tested. Often a