The Precise Take – Equities attempt to hold on to gains on the close of the month

Leaders Analysis:  Big reversals yesterday in just about everything and overnight, mostly consolidation.  30 Year T-Bonds look poised for another test of the upward boundary of the downward trend channel, so we will watch them closely today to see if they can break out (equities bearish) or reverse down (equities bullish).

Medium Term Analysis:  We wrote toward the close yesterday that it would take a near perfect storm for bulls to reach new highs in the S&P 500 and that the deck is stacked against them.  However, they have pulled many rabbits out of their hats, so here’s how a rally would need to unfold.  Today and Monday are key because they contain the most likely negative reports–Chicago PMI, Consumer Sentiment and ISM Manufacturing–for nearly two weeks.  The second week of November features no major report until Thursday, and even then, nothing likely to be interpreted too negatively if equities are up.  The third week is much more difficult and begins with Retail Sales on Monday at 8:30 am, then PPI, Industrial Production, CPI and Housing Starts.  Back to the present, if bulls can get over this two day hump, and FOMC next Wednesday and Employment Situation next Friday support, there is a chance of another short covering rally with new material highs.  As we have written before, FOMC is unlikely to say anything that rocks the boat, and many of their policy changes are being announced in separate press releases.  Barring the perfect bull storm outlined above, we still expect sideways to down action for November.

Trading Today:  As we write, the two 8:30 am reports have not moved the markets much, so the two reports prior to 10:00 am today will be the catalysts if they are out of line with expectations.  We prefer to be…

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