The SP needs to break out of this resistance, or risk falling into a trading range, with the potential downside of a broadening top that fails and breaks lower.
The unemployment claims and same store sales tomorrow will provide some input, but the eyes of traders will be on the Non-Farm Payrolls report. I have not worked up any forecasts for it yet, but there was some concern since Larry Summers was talking the number down, based on the northeastern US snowstorms.
Was he calibrating the markets view, or setting it up, in the style of Robert Rubin who like to play the markets this way? We will know in a few days.
The pit traders are looking for an upside move to 1130, and it will take some positive jobs data to get it.
But for now the question is if the rally is consolidating its gains, or weakening for a more serious correction, or even a breakdown. Since it reached our trading objective of a 50% retracement of the big decline, the resistance here is highly significant according to any number of technical schools from Richard Russell's Dow Theory to Fibonacci retracement levels.