On Wednesday, after rallying up to 2118, at or near the maximum likelihood expectation level at 2120, S&P futures made a 10 point pull-back, trading down to 2108, before attempting to auction back to re-test the high. Buying interest waned as the S&P traded up to 2115 into the close.

Overnight, S&P futures sold down to 2010, before auction back to 2115. The narrow range development continues with the S&P trading in the up 2 points, down 2 points HFT market marker sequence for prolonged period of time, without attracting sufficient buying interest to sustain the rally.  

However, on the NYSE advancing issues (3657) outnumbers declining issues (3012): 51% to 46%. Thus, it would appears there are still more buyer willing to initiate positions at the high, than there are sellers.

On Wednesday, Fed chair Janet Yellen appears before the House of Representatives' Financial Services Committee. While Yellen talked about a solid and improving economy, she provided no solution to the disappointing labor force participation and anemic wage growth. Yellen said it would be several months before the Fed would boost rates. The Federal Reserve has not raised rates since 2006.

Thus, QE in the form of zero interest rate appears to be the primary source of capital fueling the rally. 

Friday’s pulled back below the previous high 2098-2100 has established near term support at 2084-2080. Below the lower edge of the current trade cluster there is additional support at 2036 and 2020.

In other words, the current rally above the 2084-2080 price level (+35.50 points) is due

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