The equities markets began to rebound last week but investors are urged not to read too much into the move. The move is due more to a lack of news than a change in fundamentals and will likely result in another selling opportunity as the Q2 earnings reporting season draws near. The first major reports of the season are already in but the peak of the cycle won't come for two more weeks when the Big Banks report. Between now and then, however, is a major economic hurdle in the form of the PCE price index and it is expected to be a hot one. If the market can not rationalize the data the major indices could easily reverse last week's gains.

Turning to the chart, the S&P 500 closed the week below a major resistance target near 3,950. This target is coincident with the short-term EMA and the mid-point of a downsloping channel and it could easily cap gains in the near to short-term. If the market can not get above this level, it may not matter how cool the PCE price index or hot the earnings turn out to be.