On Thursday the major U.S. indexes rallied above their prior day’s close. The Dow gained 211 points (1.2%), The Nasdaq composite gained 48 points (1.03%) and the S&P 500 advanced 21 points (1.03%).

On Wednesday’s the S&P sold off into the close and traded down to 2020 in the overnight session. Thursday’s rally broke-out above the prior day’s high and stalled at the 2058 price level.

Overnight S&P future traded relative “flat” ahead of today’s jobs data.  On the release of today’s data the rally in the S&P futures continued, with the S&P trading up to 2064, modestly above the 01-21-15, 01-07-15 highs.

Thus far, the S&P is up 45 points. There has yet to be a minor pull-back (10-14 points).

What might be deemed as near term support, i.e. the most recent day session low at 2030 is significantly below the current high? The previous day session highs (02-03-15, 02-04-15) are located at 2044 and 2048.

During Thursday’s rally there was a minor 8 point pull-back to 2048. Thus, the S&P has extended the trading range to the upside and appear to have resumed the climb the wall of worry mode.

In other words, astute observed will notice that following each initial “run”, long periods (1 to 3 hours) of 2 to 3 points HFT Market Marker algo patterns dominated the auction.  These periods of Market Marker Algo dominance impose limiting constraints on the market development.

Current reference points above the January highs are: 12-31-15 high at 2068; 12-28-14 all-time record high at 2089: prior record high at 2078.

 During Wednesday’s session S&P futures consolidated at within the parameters of Tuesday’s trading range for the majority of Wednesday’s session.

At Wednesday’s open S&P pulled back to 12 points below yesterday’s high 2044 and re-tested support at yesterday’s low 2034. The opening range pull-back was followed by a re-test of yesterday’s high and a minor 2 points higher high up to 2046: 14 points above the opening range low.

During the mid-day session price auctioned down 10 points below the opening range high 2046. The pull-back to 2036 was followed by at re-test of the opening range high. S&P futures made another minor 2 points higher high, trading up to 2048.

However, the rally up to 2048 marked the end of the buying interest. Late in the day S&P futures sold down below the 2048 high, traded below the mid-day low, as well as the opening range low, finishing the session at 2029.

At the open of the Globex session, the selling pressure continued. As of this post, S&P futures have sold off 26 points from today’s closing range high 2048 , pulling back down to 2022.

Coming into Wednesday’s session we stated thatIn the current

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Overnight S&P futures traded within the narrow parameters of yesterday’s closing range, pulling back modestly to 2034 after rallying up to 2044 at the close.

In the previous session, the broad benchmark index, sold off at the open trading down to test support at 1973: the 12-16-14, 01-16-15 lows. The S&P held support and rallied back up to the 2000 price level. Later in the day, price auctioned above 2000 and traded up to what had been near term resistance at 2020.

During the previous overnight session, S&P futures pulled back to 2008, before extending the rally up to 2028. The upward momentum continued at yesterday’s open. The S&P traded up to 2036, pulled back to 2021, auctioned back up to the opening range high and made at higher high.

On 01-27-15, the S&P encountered resistance at 2048. Currently the January high is 2062. The all-time record high is at 2088-2090.

The price action indicates the S&P is on the trajectory to re-test the January high.  However, the recent failures to trade above the 2062 price level and the extreme down-side price excursions which followed is likely to have resulted in hesitation on the part of market participants willing to buy the S&P above the current low.  

In other words, the extreme down-side price excursion sell-off has to some extent eroded confidence. Every major short covering rally has been followed by an equally major sell-off.

Ideally, we would like to see the S&P pull-back and hold support before continuing to short cover any higher. In the current context, yesterday’s day session low at or near 2020 and or the pre-market low at 2018 would be reasonable pull-back levels. The overnight low at 2008 might be expecting