Here is an hourly chart of the cash S&P going back through the start of this rally from the March 6 low. As I told you in my last post I think that this reaction has a good chance of stopping at the highest purple dotted line you see on this chart. This is midpoint support based on the reaction we saw in early April and also the level at which this break would equal the size of that early April break in the e-minis (which was bigger than in cash because both extremes were made outside the day session in electronic trading).
While I think a good rally will start from 825 I have to entertain the possibility that it will end at a lower top. This is worth thinking about especially because the market has had no rallies on the way down from 872 thus far. If the rally from 825 does end at a lower top (probably one in the 845-50 range) then the next step down would carry the e-minis to 805 or so (lower of the two purple dotted lines). This is midpoint support defined by the late March reaction. A drop that low would make this reaction the biggest one since the March 6 low.
I have marked with the red dashed line the midpoint of the entire rally thus far- it stands at roughly the 771 level in cash. While I don't expect this drop to get anywhere near that line I also think that any penetration of that level would mean that the market would be on its way to 700 or even lower.
Having spoken only of reactions in this post, I want to reiterate my view that this market is going to hit 940 before it drops near to or below 771.