Not much time, so see below.  Max expected range is 913.00 to 926.00.  Secondary expected range of 914.50 to 922.50.  Should be low volatility until 8:30 am report tomorrow.  Price closed at today’s point of control and will likely oscillate to other POC’s overnight.

$Tick volatility as measured on a 1 min. chart has dwindled to ~150, the lowest level since June 24, which was curiously also the last time the NYSE advance:decline ratio posted > 4.0.  That day saw higher prices early, which reversed to close slightly lower with a strong up move the next day.  The significance of low volatility in the $Tick, which measures how many issues on the NYSE are simultaneously upticking or downticking, is that there is virtually no resistance to the seemingly aimless driftings of the markets now.  Bulls and bears are not fighting it out.  Besides the NYSE routing failure on June 12 that caused this measure to be artificially low, the last time we saw these levels were in the last week of 2008, a holiday week largely absent of human traders.  The following week, into Tuesday January 6, 2009, we saw a break of December highs with more follow through to the upside, then posted an interim high that day that held for nearly six months until June 1.  As Sam Clemens said, though history doesn’t repeat itself, it often rhymes–so, we put this out to caution as to possibilities.

As long as 918.00 holds, we’re still bullish because of the breakout to the upside of 926 (high 929.00); however, this has become a scalpers market and the rest of us may wait until $Tick volatilty gets above 250 again before jumping in.  923.00 is VWAP and Fib confluence, so it makes a decent long entry.  We’re not looking for shorts above 918.00 until we get to 935-940 (unlikely today).

Also, gold has reversed sharply, which is a bit bullish for equities; however, a break above 951 for Dec 09 is needed to spook the shorts.

10:16 am EDT:  The 10:00 am reports haven’t created much of a stir, with the ES hitting the 924.75 countertrend high from the morning report of 924.75 (however, as it was on news, there should have been no standing orders there).  Though market internals are the most bullish since last Wednesday (which still ended flat), volatility and volume are low, and there has not been a definitive break on volume of the 904-926 range (corrected from morning report of 904-924).  Accordingly, shorts can still fade the 924-25 area, but should not hang around above 926.  Longs not already in the market may want to hold out for 916.00 or 909.50.

The Precise Take – Looking to complete shortened week with eye on tomorrow’s NFP report

Unfortunately, our computer cannibalized our nearly completed report and destroyed the backup 5 minutes prior to deadline, so we present the following thoughts in bullet form:

• NFP days have marked important turning points
• Possible head and shoulders on the daily
• 904 to 924 is the ES range with low volatility expected as long as the range holds
• Consumer Confidence worse than expected yesterday could be a bellwether of the end of the gr**n sh**ts era.
• Gold about to test June lows.  A break is bearish for equities as the inflation meme could die.
• T-Bonds held 61.8% retracement
• Another large funding announcement by the Treasury tomorrow at 11:00 am.
• Continued success in Treasury auctions this week.

Continue reading here.