S&P 500 futures are back at all-time highs after months of historic volatility and a 55% surge from the lows. Given everything that’s happened in the world, it’s mind-boggling to think going long on the S&P 500 on Feb. 19 and doing absolutely nothing would be only a bit shy of breakeven this morning. Nonetheless, the V-shaped recovery has largely manifested, and now the question is whether it can be sustained. The market finds itself facing a line in the sand for the /ES at 3397.50, only about 30 points away as of this morning after a breakneck run of 11 green candles in the past 13 trading days. During this same time, the contract has edged above the upper line of a Rising Wedge pattern and now is within striking distance of reaching the 3400 level. Examining the RSI, momentum looks to be slowing this week as the contract continues to test the overbought region of 70, but a break above this level may herald further bullishness. An upward move could find resistance at the upper boundary of the Linear Regression 50% Channel, near 3488. If we see a rejection and stocks start to tumble, look for support near 3280 at the confluence of the 21-day EMA and the lower line of the Rising Wedge beginning in mid-May.
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