After a string of sessions marked by the market holding key support for three straight sessions before the remarkable reversal last Friday, and continuing yesterday, the spurt may run out of steam.   So, the question now is can new support levels hold to build a base for another leg higher.  Of course it's one thing to rebound from the kind of drubbing stocks took in September, and another to rally back to the old highs.  On that note, the market will need leadership based on fundamentals.

PepsiCo (PEP) posted a strong earnings release this morning, beating estimates on both the top and bottom lines.  Earnings per Share (EPS) of $1.35 were $0.09 better than the consensus estimate.  The stock is indicating to open higher.

We just received the latest read from the government on the August goods and services trade deficit of $48.3 billion.  This was the highest deficit since March of this year.  A strong dollar continues to weight on exports, which were at the lowest level since 2012.  A reduction in overseas sales of U.S. produced petroleum and industrial supplies attributed to the bulk of the decline.  Overall, year to date, the trade deficit increased $17.6 billion, or 5.2%.  August exports were $185.1 billion, $3.7 billion less than July.  Imports were $233.4 billion, $2.8 billion more than July imports.  Imports have seen an increase largely from the shipment of the latest iPhones and consumer electronics, which were up a whopping 30% to $9.01 billion.  This report didn’t move the market much as the estimates called for goods and services deficit of $48.5.

Key parameters from here on the DOW:

• Resistance 16900
• Support 16400

In some ways, I'd like to see support tested before resistance.  Either way, let's see if there's consolidation this morning.