The Precise Take – ES warns of susceptibility to weakness

Leaders Analysis:   The leaders were outright bullish on equities right up until the Wells Fargo downgrade late yesterday that led to the larger selloff.  Overnight, they have not moved much and are not giving any further signals.  When all markets turn on a dime so easily, we must question the strength of the prevailing trend. 

Medium Term Analysis:  With earnings season nearly completed, looking ahead to the news calendar, there is little to get excited about.  The ES is not as easily able to shrug off bad news as it was earlier in the year, so it will likely take more than one more upside surprise to restart the rally.  Given the dubious nature of many of the headline statistics, this is more than a trivial possibility.  However, if that does not occur, bulls may not regain control until the FOMC Announcement on Nov 4 or the monthly Employment Situation report on Nov 6.  Longs will have regained control if the ES accepts above 1088.50, the highest volume point of control for the week in confluence with the 61.8% retracement of the recent move down.

Trading Today:  Overnight, the ES found support at Fib confluence at 1072.00.  As we write, the ES surged mildly on the weekly Jobless report.  Preferred early trade is to…

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