Good Morning:

• My view remains that the S&P 500 futures are on the way to testing the February highs at 4575, with resistance at 4552, which is the important 62% retracement of the recent decline.
• If there are several closes above the February highs, the market is likely to test the all-time high from January. That could establish the top of a new trading range or lead to new all-time highs.
• Meanwhile, Junk Bonds may be rolling over. Junk prices typically lead the stock market.
• Last week’s Consumer Confidence meltdown figures virtually ensure that a recession looms. Similar declines in the past always led to recessions. But it will be a while before it actually arrives – perhaps months from now.
• Also, interest rates are testing their long-term downtrend lines this week. A break of the 40-year trend could be negative for stocks.
• Day trading for the next few sessions may not be advisable unless you are trading a particular strategy. The end of the month and calendar quarter is Thursday.
• Institutions will be reshuffling and rebalancing large funds, creating unexpected cross-currents that may distort usual market indicators.
• The balanced overnight activity also led to some price exploration of new swing highs.
• The overnight low stopped just a little past halfback, which tells us that buyers are still in control and that the low might be weak.
• Today’s volatility forecast anticipates another tight trading range (0.69% up or down from the open). If you are going to day trade today, support is at 4510 and 4500. Resistance is at 4552 and 4575.
• I posted Charts and Key Levels for subscribers. The Weekly/Monthly Navigator will be combined and available later this week.

A.F. Thornton