S&P 500 - Aug 1, 2011 - BMO

This is 60-min SP futures

Sunday evening session, futures had a gap up and have held strong so far.

Headline, courtesy of marketwatch.com, reads this

and this

This is the URL to the article

http://www.marketwatch.com/story/washington-reaches-sweeping-budget-deal-2011-07-31

This, so far, overnight, has been the knee-jerk reaction that I have been mentioning and expecting. If it holds, the current mid-term uptrend can gather energy and try to resume. If it fails, it may get really scary, at least in the short term, in the equity market.

A knee-jerk reaction here can involve a good dose of squeezing the late, news-drive shorts. Question is whether bulls can carry after that has settled?

Friday’s low is a must hold. That said, a steady hold of 1290 area can be a sign of strength

More important is to get the swing and short-term uptrend as I discussed on weekend’s post

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