The U.S. stock market indexes gained 0.7-1.0% in a volatile session on Friday, as investors reacted to better-than-expected unemployment data, hoping for an optimistic start of the quarterly earnings releases season. The S&P500 index was the highest since the day Fed Chairman Ben Bernanke spoke about a possible ending of the “Quantitative Easing” program, with Friday’s daily high at 1,632.07. The market violated the 50% retracement level of its May-June downward correction, getting closer to the important 61.8% Fibonacci retracement level at 1,638.72. The index is testing the May-June downward trend line now, as we can see on the daily chart:

Expectations before the opening of today’s session are positive, as the main European stock markets are up 1.0-2.0%, despite some further concerns about the ongoing sovereign-debt crisis. The beginning of the above-mentioned quarterly earnings releases season in the U.S. seems to be the main bullish driver here and a clear breakout above the downward trend line at the opening of the cash market trade cannot be excluded. In the short term the S&P500 futures contract (CFD) remains in an uptrend. The potential resistance zone is at 1,640-1,650, marked by the upper boundary of the early June consolidation, and the nearest support is at around 1,615, as the 15-minute chart shows:

Thank you,
Paul Rejczak