S&P futures continued to trade within the parameters of Monday closing range during the overnight globex session: between the low at 2100 and the high at 2108.

The major U.S. benchmark indexes closed mixed on Monday. The Dow close at 18116: down – 23 points (0.13%). The Nasdaq Composite close at 4960: up +5 points (0.10%) and the S&P 500 finished at 2109: down -0.64 points (0.03%). On the NYSE, declining issues (3820) outnumbered advancing issues (2889): -54% to +41%.

On Monday, we expected to see S&P futures pull back below Friday all time record high and re-test support at or near the prior high 2098-2100.

Indeed at the open, the S&P sold down to 2100 before attempting to re-test the high at 2108. S&P futures traded up to 2106, pulled back to 2100 and auctioned back up to the high at 2108 into the close.

To the extent that support holds at the prior high 2100-2098, there is the potential for range extension up to the 2120 price level, with the extreme price excursion estimate at 2135.  However,

apart from the technical parameters the rational for the rally is of some concern in as much as there appears to be no fundamental or economics catalyst to support the bullish optimism.

While the financial media has attributed Friday’s rally to the EU everting a crisis in Greece by extending the bailout, the situation is fundamentally the same and the extension does not improve the economic condition which has led to the crisis.  The U.S. economy continues to muddle along: underperforming and the recent corporate earnings revisions do not support current valuation in the S&P 500 components.

The rally appears to be driven by QE on the part of the Central Banking Cartel, which appears to have ignited a global currency war. In other words, equity markets are moving higher because the value of the currencies (purchasing power) are is declining.

The situation increases the risk of buying narrow range (under 10 points) pull-back below the high.

On Friday, the S&P pulled back the distance of a daily range (17 to 23 points) below the previous high 2098-2100.  Thus, in the near term 2084-2080 is deemed support. Below the lower edge of the current trade cluster there is additional support at 2036 and 2020.

It should be noted that on 02-02-15 the S&P futures traded at 1970. The S&P is up 138 points (6.8%) above the February low.