Yesterday's weaker than expected CPI data kept a bid under the market and pushed through the initial resistance zone before the market open, leaving a gap above the prior day's RTH high. This zone acted as support once broken and was the launching point of another strong rally which took out the April high (2718.50).
With the 130 point low to high range of the month so far, shorts have continually been forced to cover, accentuating the moves higher. One thing that seemed odd yesterday was that despite the strong price rally, underlying stock momentum showed on the NYSE TICK was not particularly strong. Volume was fairly low too at just 1.1m contracts. If the rally is to continue the really major test above in my view is the 2742.25-45.25 zone which represents a key breakdown area from mid-March. Ahead of that the 2732.00-34.00 zone was also a pivotal area from March which could see sellers step in again.
Overnight so far the range is 2716.25-26.75 versus settlement at 2718.75. I'm using 2718.50-20.50 as a micro bull/bear zone on the day timeframe. Acceptance either side of that zone today could help establish the dominant side, though clearly all the short term trends remain bullish within a very large range. My zones of interest for today are below: