Thinning Air, Declining Volume

Well so far this rally up from the lows just won't roll over. As and when it does the higher highs on SPX and NDX yesterday are suggesting that equities will then make a higher low and move higher. I've marked the next resistance levels in the 1204/5, 1220 and 1230 areas on the daily chart. What's also worth noting is the declining volume as equities have rallied from the lows:

The other resistance level of significance that SPX is very close to (from the ES overnight) is the monthly 20 SMA at 1209. This is worth watching as once there was a monthly close below that trendline in the last two bear markets this MA was only retested once each time (and held each time) before the next bull market began and broke back up through it:

The futures have been very strong overnight, though they're retracing some overnight gains at the moment. All of them look overbought and extended here. ES broke up through 1200 overnight:

 NQ broke up through 2300 overnight:

TF tested the last swing high (and potential IHS neckline). TF has been relatively weak as ES and NQ broke the last swing high earlier this week:

EURUSD broke up overnight after the slovaks voted no to the EFSF expansion last night. Votes are a funny thing in Europe though, as only yes votes carry real weight. With no votes the europeans just tend to vote again and again until they get the answer they want. No date has been scheduled for the next vote but there's some talk of another vote on Friday. No doubt the slovaks will be thrown a bone or two for voting yes in due course, though what hasn't excited much comment is that even the expanded EFSF falls some way short of an adequate size.

On 30yr treasuries the 138'21 support level and potential neckline is being retested. If it breaks we'll probably see a run to the next support shelf at 135 and if that were to happen equities would most likely rise as treasuries fell:

I think that's unlikely though, equities are overbought on the 60min charts, the trendline setup looks weak, and reversal for retracement looks likely sooner rather than later. There's a full moon today and a bradley turn date, both of which suggest that we should be watching for reversal here. The Gap Guy likes the odds for a gap fill today.