Fundamentally, technically, and from a policy perspective, stocks are running into resistance - we think 1360 to 1400 on the S&P 500 will be tough to breach as ongoing policy uncertainty from the Eurozone, China, and the US weigh on investor confidence. Last week we suggested a cap at 1360 over the next month and although that level was breached, the break was not decisive. We take some comfort in the fact that while last week's earnings announcements reflected slowing global growth, the S&P 500 posted a slight gain.

David Fuller's view Wall Street has been a relative strength standout so far this year, with the S&P 500 Index currently showing a gain of 8.14%. Only Mexico 14.79%, Colombia 14.80%, Chile 8.41% (particularly strong 1Q for these last two), Thailand 14.29, Singapore 17.53%, The Philippines 22.87% and New Zealand 9.71% have bettered the S&P in USD this year to date (note: while the percentages above are in USD, the charts have been shown in local currencies).

Nevertheless, while the S&P has ranged higher since early June and the daily chart above shows more upside than downside dynamics, progress has been laboured recently. This need not be a concern if the Index can hold above this month's earlier reaction low at 1325. If that goes, the pattern will deteriorate and a break of the early-June low near 1266 in the next few weeks would signal another August-September slump. Conversely, while the S&P's reaction lows continue to rise, it will obviously be the overhead resistance that is being tested.