Tuesday's strong candlestick pattern for June S&P was a good indication that this market was ready to retrace some of the decline. This morning's price action is approaching the 38% retracement (1419) of that decline and the reaction there will be a good clue as to the sustainability of this bounce.
It does not appear that the market has the momentum required to break through that hurdle today, especially ahead of tomorrow's important NFP report. As long as the contract can hold near that level, however, it will have a strong chance to break through it over the next few trading days.
In the larger picture the market managed to bottom, at least temporarily, from the 38% retracement of the rally since the June 2006 lows so if it can extend this bounce just a bit over the next day or two it will be a strong indication that the weekly bullish trend is still influencing the market.
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