10:21 am EDT:  After a failed rally to just under the daily pivot/gap area, the ES sold off sharply down to precisely the 1063.00 market profile highest volume point of control (also in between the daily S2′s), from which it has rebounded.  Value longs are coming in here, and this will be the important level to watch for the day.  If we get another test of 1063 and see rejection of it with broad participation in market internals ($Tick > 800, etc.), we will look for longs.  If not, we are looking for shorts, especially in the 1067.00 to 1068.50 area.  Below combined session S2 at 1062.00, we have no support until day session only S3 at 1055.50, so swing longs should pay heed.

The Precise Take – ES showing signs of weakness at highs

Leaders Analysis:   Gold has advanced strongly overnight on another down leg in the USD that has created fresh lows in many of the crosses.  However, equities have not been able to take advantage of the USD weakness.  The other leaders are consolidating.  With the bond markets open again today after being closed yesterday, we will likely see some movement, and would not be surprised to see 30 Year T-Bond futures advance off support (and yields abate off resistance), even if equities manage to advance.  Accordingly, we are not looking to the 30 Year as a leader today.

Medium Term Analysis:  The S&P 500 cash still lingers near the September high and the ES was only able to post a nominal new high yesterday.  Equity longs need to get the ball rolling to higher highs ahead of tomorrow’s Retail Sales report, or risk a double top failure (assuming of course, the report is bearish, which is the likely scenario).  If the headline number can be spun as neutral, equities may still be able to advance.  If it’s outright bullish, we would expect a significant trend day up.  Also JPM reports earnings tomorrow, and we would be surprised to see anything other than an “upside surprise,” which could act as a bullish counterforce to any weakness.  Also, significant is the release of the FOMC Minutes, which traders will look to for clues on tightening, though we expect they will find little of significance.  Goldman reports Thursday along with the CPI release, and Friday is opex with Treasury Int’l Capital and Industrial Production.  All in all, a busy week, though an upward trend will likely be underway by tomorrow, if it materializes.  A failure to break highs in the S&P 500 by tomorrow will be suspect for longs.

Trading Today:  The ES has been trading under yesterday’s closing VWAP overnight until just before 8:00 am when it traded to yesterday’s market profile point of control and sold off.  Accordingly, sellers have been in control and longs will need to…

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