The S&P 500 is sitting right at the trendline that extends from the March lows, and is also right at the 20DMA, which is a reasonable place to be after drifting above that moving average for the past couple weeks. Market internals suggest that this pullback may be about finished, providing a setup for some further upside; breadth and on balance volume improved on Friday. At the same time, options sentiment is still bearish, and a few technical indicators (CCI, for one) flashed sell signals on Friday.

1395/1400 remains the key area on the S&P, 13100 is the level to watch on the Dow, and the Nasdaq needs to break above 2000 to keep the bullish thesis intact. We’re looking for a retest of the March lows sometime this summer.

We posted a bit more than normal last week, so make sure you didn’t miss any of these:

• Calendar Options: Five Things You Need to Know About Calendar Spreads
• Introducing Calendar Options
• How Vega Can Deceive You: Part I
• How Vega Can Deceive You: Part II
• Bonus Trade Review: Calendar Spreads - Plus, The Importance of Risk Management

Reversal Readings

DIA - 2.74
SPY - 7.04
XLF - Financials - 4.14
XLV - Healthcare - 0.78
IYR - Real Estate - 3.09
RTH - Retail - 0.44
XLY - Consumer Discr - 8.44
DBA - Agriculture - 99.16
DBC - Commodities - 99.84
IYT - Transportation - 8.82