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Since the start of the year as the markets took off after gapping higher, we ran right into 1420 being the last level of defense of 1441 which is the highs from May of 2008 of what this rally has had in the crosshairs. Since hitting this last level of defense the market has consolidated and over the past week as we went into a holiday weekend, the market reversed lower. This shook out longs from the market and led to break the rising channel from the beginning of this year. On Monday buyers slowly started to come back from their vacation, but were not able to get the market back within the channel. This is now the goal for these buyers to regain control and resume their trend prior to the holiday reversal, to get back within this daily channel and work through the 1400-1420 resistance level. It will be challenging to move past this however by doing so the trend resumes and the market can once and for all shoot after the 1441 level to complete its target. Old highs at 1377 level are offering the market support as the market retests where it broke out from and tries to find this support. Failure to hold these old highs leaves the 1365-1338 range in sight. Buyers are slow to come back but as the market tests its 50 day moving average for the first time since December, it should offer support to build a base and bounce off.
