Today’s setup: end of the month and holiday bullish bias and channel support versus disappointing economic data here and abroad (and, that war thing in Ukraine that the “market” doesn’t seem to care much about.)

One wildcard is Japan.  The latest data was, again, horrid.  But, there’s increased talk of doubling the country’s pension plan’s allocation of stocks.  No economic recovery? No problem.  The carry trade should be safe for a while longer.

ES has backtested the falling white channel and seems to be offering good support.  We’ll see if it holds after Chicago PMI and consumer sentiment come out at 9:45 and 9:55am.  Note the small purple IH&S and the fact that ES is — if it holds — back above the large red IH&S neckline.

SPX is a little more straight-forward.

UPDATE:  11:55 AM

The bulls/algos have carried the day thus far, completing another IH&S that targets SPX 2012.20.  The short-term downside case isn’t totally kaput, but that’s a VERY deep retracement (purple 1.146.)   The Monday holiday sheds a bullish light on things, as major resistance smashings are often accomplished on holiday weekends.

Of course, they also represent a greater potential risk of something ugly happening that upsets the applecart.  So, I’m not a big fan of holding a long or short position over a 3-day weekend.  Last, note that ES and SPX are about to tag their .886’s, so we could get a head-fake sell off from here.  Trade safe.