A Pause That Refreshes

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The S&P lost a modest 0.4% on Tuesday. Most other indexes were lower, as were most advance-decline lines. So, by most definitions, Tuesday was a “down day.” However, volume was lower than that seen on Monday and, by our reckoning, upside volume outstripped downside turnover. All of this suggests that Tuesday’s reaction was a simple case of profit-taking after Monday’s solid gain. There was no evidence of a meaningful reversal.

So, we remain of the view that higher highs are likely in the days (and weeks) ahead. Until proven otherwise, pullbacks such as Tuesday’s will be approached as pauses within a still unfinished uptrend,

We have pointed to 897-919 as a resistance area, but 944 is our main focus since a rally through that benchmark will confirm a reversal of the entire 2007-2009 decline. In that regard, it is not a stretch to suggest that other resistance levels are relatively irrelevant. We believe that 944 will be violated.
Nearby support is at 885-875 and below, but key support relative to the current upleg from the April 21 low is at 848-847.