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

Monday’s Market Development

Coming into Monday’s session we note that the developments during Sunday’s Globex session; the two approximate 10 points rotations above the January lows, indicate the likelihood that support would hold at the January lows,

We inferred that the minor 10 point retracement, along with the “pause” in the selling pressure did not a guarantee the overnight low would not be re-tested. Indeed, we felt that there was still the possibly of a re-test of the low and a lower low with the initial downside target the  01-16-15 low at 1970 and the 12-16-14 low at 1960 are the next potential support levels.

At Monday’s open after trading up to the overnight high at 1997, S&P futures sold below the overnight low at 1983 and pulled back to 1973, before rallying back up to 2004.

The “run” up to 2004 was followed by a pull-back to 1984, at or near what had been the overnight low.

Later in the day S&P future traded above the opening range high. A short covering rally ensued and price traded up to near term support at the 2020 price level.

Monday’s market development was consistence with the inference posted in this morning market briefing. The inference was based on the similar development that followed the 01-16-15 and the 12-16-14 price discovery at the 1960-1970 lows.

It should be noted that while the S&P found support at 1973, it was in

After selling off below 2016 on Friday and pulling back to 1986 at the close, S&P futures traded modestly lower at the open of Sunday’s Globex session, trading down to 1983.

Following the minor pullback to  1983, S&P futures traded up to 1996, before pulling back again to 1987. The re-test of the low at or near 1885 price level held support and S&P futures traded up to 1998 before pulling back to 1989.

As of this post:  developments during Sunday’s Globex session;the two approximate 10 points rotations above the January lows, indicate that support at the January lows continue to hold.

However, the minor retracement is not a guarantee that low will not be re-tested at Monday’s open.

The approximate 10 point rotation is more accurately be deemed a “pause” in the selling pressure that developed during Friday late in the day sell-off.

There is still the possibly of a re-test of the low and a lower low.  The 01-16-15 low at 1970 and the 12-16-14 low at 1960 are the next potential support levels.

Currently the 1998-2000 price level is the up-side break-out point. A break-out above 1998-2000 is likely to trigger yet another short covering rally.

Near term resistance is located at Thursday and Friday’s fractal highs at or near 2020.

The major U.S. benchmark indexes ended Friday’s session in negative territory. The Blue Chip Dow 39 closed down 251 points (1.45%), the Nasdaq Composite ended down 48 points (1.03%) and the broad benchmark S&P 500 ended down 26 points (1.30%).

Friday’s sell-off down to 1985 put the S&P at or near the January 16th low and down 77 points (3.7%) below the monthly high.  

S&P futures traded up to 2062 on 01-09-15, before selling down to 1970 on 01-16-15. The S&P recovered from the 1970 sell-off and traded back up to 2062 on 01-23-15.

However, there was no buying interest above the 01-09-15 high. Indeed the market development that followed would suggest that long positions in the January trading range have been liquidated.  

Friday’s late in the day sell-off increases the likelihood that the 01-16-15 low at 1970 will be re-tested, along with the possibility of a re-test of the 12-16-14 low at 1960 and the potential for a lower low.

The market developments in the last three days of the month are particularly concerning.

On Wednesday, following the FOMC announcement S&P futures sold off below the opening range low at 2016, below the prior day’s low at 2012 and traded down to 1988.

On Thursday, the market development