A one-day near-1% correction is all we got last week. Markets seemed poised to head lower than they actually did as the S&P 500 futures dropped to 1,171 in Wednesday (4-7-10) night's trading session. Instead of trading down from pivot to support however, the futures rallied back and the S&P 500 Index closed above pivot on Thursday, which means the uptrend remains intact for now.
Volume remains anemic with volume on down-days higher than on up-days. At 16.06, the Volatility Index (VIX) recorded its lowest reading since October 9, 2007 on Tuesday.
Even though the market is extremely overbought, pivot points and percentR point towards slightly higher prices early this week. The S&P 500 should open above the weekly pivot, which is at 1,190. Resistance for the week is at 1,205 and 1,213.
Support levels for the week are 1,187 and 1,173. Resistance for the month continues to be 1,232 while support rests at 1,154, 1,128 and 1,081. It is likely that the S&P will spike above 1,200 before retracing some of its recent gains. Various earnings reports will be released this week. "Buy the rumor, sell the news" might be the theme for this earnings season, as it was in January. Following some early week strength we could see late week selling that spills over into next week with a potential downside target of 1,154.
Bullish sentiment tracked by AAII increased slightly to 42.9%. Bullish sentiment tracked by II edged higher to 48.9%. While both readings are elevated, they are below the January extremes and point towards higher prices, likely later on in April/May.
