Market Showing Some Weakness this Morning Following Four Days of Gains

Following four straight days of gains and seeing the ES break out above its upper range resistance at 1390, we head into this week with a bit of bullish sentiment. At the same time though, there remains solid resistance overhead. My bias is slightly toward buying dips, but I expect choppy markets to continue and I am confident selling key resistance levels as well.

The ES has moved 50 points off the lows from back on April 10th. As we see some selling today, I expect the 1386-1390 area to provide at least some short term support on the ES. A move back up to make a double top  (1419.75 ES) or close to it is a solid possibility in the coming week.

The market had no problem shaking off bad news last week, we'll see if it can do the same this week. We'll begin with Spain, which has technically fallen into recession with a -.3% GDP being reported earlier today. The news isn't quite as bad as it sounds though, as the -3% GDP was actually better than expectations, but the S&P also downgraded 16 Spanish banks. Spanish unemployment is now at 24.4%, that is a quarter of the population and is a very ominous sign for Spain. You have to remain concerned at the European situation looking forward. It is just a matter of time before European headlines begin dictating price action to the downside again...