The Precise Take – ES maintaining support into end of quarter

Leaders Analysis:   The EuroYen forex cross bounced off its 200 day moving average overnight with equities following as we would expect.  30 Year T-Bond futures (continuous futures contract) are at very strong resistance at the 121 to 122 area.  Accordingly, if we are to see a reversal in the markets, with equities ending the correction and resuming higher, and with T-Bonds reversing down from resistance, we expect it this week, possibly as late as Friday on the Employment Situation Report, which has generated great strength in the 2009 rally.  If T-Bonds were to close above 122 or the EuroYen below its 200 day moving average, we would expect this to weigh on equities and see a longer correction.

End of Quarter:  No major news items today, and we are closing the quarter as of tomorrow.  The previous two quarters also ended on Tuesday.  March 30 (Monday) was a large distribution day and June 29 (Monday) was a small range net up day.  March 31 was a net up day that closed in the middle of its range and June 30 was a small range net down day.  All in all, it looks like end of quarter paint taping is a bit less likely than end of quarter profit taking, so we will be cautious with longs until Wednesday.

Trading Today:  After slightly breaking Friday’s low, which was the bottom of the current market profile value area (see shaded gray box in chart below), the ES has recovered overnight.  The new long term point of control after Friday is the 1042.50 area, which we will watch closely today.  If the ES trades below 1033.00 (strong Fib support), we will likely see…

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