The situation at 1030 am

Here is a five minute chart of today's e-mini day session. The market has rallied to within a point of the January 6, 2009 high at 942.75 (basis March '09 contract) (higher dashed red line). I though this would be the high of the day, but the market showed strength right from the open. So I am revising my range estimate to 930-950 (blue rectangle).

However, I think a brief reaction is underway, partly because the market has rallied to an old top and partly because I see a minor buying climax on news (red arrows). A reaction as big as the last two on the way up would be 10-12 points (purple rectangle) and would bring the market down to the day session low near 930. The May 8 top at 929.50 (electronic trading only) is another reason to expect support near 930.

Looking further ahead I think we shall see the e-minis rally to 979, the midpoint between the 666 low and the 1291 high in mid-September of 2009. As you know I think the rally from the March low is the first leg of a bull market. It is not unusual to see a first leg carry the market up 50% or more from its bear market low. A 50% move in this case would put the S&P at 1000. So the rally is getting closer and closer to a normal stopping point, but I don't think we are there yet. One clue - today's volume has so far been quite moderate, no sign of a buying climax on a daily bar basis. I think we shall see at least one such buying climax before this initial move off of the 666 low is complete.