1:09 pm EDT:  2 Yr was overwhelmingly subscribed and is now putting pressure on equities.  Will not fade long at S1s.

10:21 am EDT:  Volatile trading early, though you would not know it from the price range.  Consumer Confidence erased the mild positive of Case-Shiller and flushed out the weak longs as the ES has sold through yesterday’s lows, almost down to the daily S1′s at 1055.50 (actual low of 1057.00).  The ES will probably see resistance up to 1065.25, and we would still use a retracement down as a buying opportunity, but not below 1055.50.  Target is the daily pivot at 1072.00.

The Precise Take – ES looking to pause after two distribution days

Leaders Analysis:   The major reversals yesterday in the markets are widely noted and point to US Dollar strength and equities weakness.  All we would add is that the intraday reversal in long term Treasuries that we updated on yesterday, particularly 30 Year T-Bond futures was erased and they closed on their lows as well.  This is significant with the 2, 5 and 7 Year auctions this week.  Long term yields are in a clear uptrend now after bouncing off the 200 day moving average on Oct 2.

Medium Term Analysis:  After two material down days and having found support around the 1063.00 point of control, a bit of a bounce is probably in the cards.  With four market moving reports before GDP on Thursday, watching price reaction will be key.  Markets are not discounting bad news the way they were just a few months ago, and GDP is probably the only catalyst this week that could provide an upside surprise strong enough to take equities to new highs.  Shorts have been beaten up over the last eight months, but they appear stronger now, so medium term we remain bearish.

Trading Today:  Case-Shiller Home Price Idx is at 9:00 am.  Barring a disaster, we prefer to be long early into the daily pivots in confluence with yesterday’s closing VWAP, 50% retracement of yesterday’s move, and minor point of control at 1072.00 to 1074.00, where we will protect any profits and consider reversing short.  However, if both reports are bullish, there is a decent chance for a… 

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