The S&P has finally broken above the key and much talked about 875 level. This was the last 'reaction high' in February before the market fell sharply to create the hellish low at 666 on 6 March.
Since then we have witnessed an extraordinary rally where the market has been positive for seven consecutive weeks, and is on course to post its eighth positive week.
However the past few weeks have been very subdued and trading is in a tight range. Strangely enough, Wednesday's dire GDP number provided the spark required to get the buyers back in the market and the 875 level was breached that evening.
However the key now, from a technical standpoint, is two consecutive closes with at least a 2% move above that level to confirm the break. If this occurs, 875 should then act as a firm support level to provide the springboard for a surge toward the next big resistance level at 944.
Whether this level is attainable remains to be seen! Technical analysts believe history has a way of repeating itself. So I think back to this time last year when every single economic indicator was coming in worse than expected but the market continued to rally. Eventually, it got to the point where everyone started to believe the worst was over, but in actual fact that was when the worst began. A similar story may happen again. The old adage 'sell in May' will be talked about a lot in the next few weeks – last year though, this sell-off didn't happen until the last week of May.