April 25, 2010

The Broad Benchmark U.S. Index, the S&P 500 resumed its13-month rally by closing the week at a new 52 week high.

Friday, April 19^th, witnessed the equity markets declined after the SEC charged Goldman Sachs with fraud.

However, this week market participants were focused on the 85 components of the S&P 500 that reported first quarter earnings.

Most exceeded expectations. However, the number that beat revenue expectations was impressive. The number of companies that missed on their top line were few and only modestly below expectations.

Broad base positive bias carried over to the small-cap stocks, as evidenced by the Russell 2000 outperforming the S&P 500 with gains 3.8% versus 2.1%.

Cyclical sectors advanced this week, led by energy (+4.2%) and consumer discretionary (+4.1%), while noncyclical sectors underperformed, most notably health care (-0.9%).

First quarter earnings will continue to dominate the headlines next week.

There will also be two major economic events on calendar next week. The major event will be the release of the FOMC rate decision and policy directive on Wednesday: followed by the first quarter GDP report released on Friday.

The U.S. Treasury auctions will resume following a two-week break. There will be an $11 billion 5-year TIPS auction on Monday, followed by $118 billion of 2-, 5- and 7-year Notes during the middle of the week.

Technical Perceptive

The April 16^th decline found support on Monday, as demand enters the market at 1180.

The 1180 reference points goes back to April 8^th rally off 1170, where price pull-back during J-period. On late April 9^th the S&P June futures found during B-period support at 1183.

On Monday, buying interested established a new base of support for this current phase of market development, as responsive buying was consistently present during the mid-day session probe to 1180. J-period witnessed a short covering rally through Monday’s range with price trading up to 1196 at the close.

On Tuesday; the S&P traded above the previous day’s high, re-tested the April 16^th high at 1206 and closed the session at the high of the day.

Wednesday, the S&P traded up to 1207 at the open, and traded down to 1195, before closing back within the previous day range.

The secondary reaction to the ret-test of resistance at 1207, which was observed Wednesday, continued during Thursday session. The S&P opened below Wednesday’s settlement and sold down to 1186, modestly above Monday’s low.

The selling pressure pause at the low during remained of the opening range. There was no re-test of the of the A-period low. During H-period, the failure to make a lower low gave way to a short covering rally, which continued through M-period at which point the S&P traded up to the prior day’s high.

Friday, the S&P found minor support at 1201, the low of prior day’s settlement range.  The price action consolidated between opening range: 1201 A-period low, 1210 B-period high. Late-in-the day, price broke-out above 1210 and traded up to 1213.  The S&P June Futures close the 1212, a new 52 week high.

Technical Reference Points for June S&P Futures Contract

Up-side target for Q1 earnings season is 1221, the September 2008

Resistance

1213, April 25^th High, June Futures, new 52 Week High [1217 CASH]

Support

1186, April 22nd Low

1180, April 19^th Low

1171, April 8^th Low

1161, March 31^st Close

1156, near term support March 26 Daily Low

1148, Major Support March 22nd low, the FOMC Low

1136, March 15th Daily Low

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