The Precise Take – ES testing contract highs with little news impediment

Leaders Analysis:  Both 30 Yr Treasury Bonds and the EuroYen appear as though they want to break to the upside.  Unfortunately, they are generally inversely correlated, so we will watch them to see who wins to give an idea when and if the ES can break to new highs. 

Medium Term Update:  The main news today is the 10 Yr Auction at 1:00 pm, with nothing else until Thursday’s weekly Jobless report at 8:30 am, a 30 Yr Auction at 1:00 pm and the Treasury Budget at 2:00 pm.  The ES is currently trading in a relatively undeveloped value area marked by the 1084.25 point of control, and we would not be surprised to see it filled in a bit before attempting to head higher.  As we wrote yesterday, next week begins with Retail Sales at 8:30 am and longs will have wanted to push to new highs by then to discourage shorts on what will likely be a bearish report.

Trading Today:  Given the (still) overbought short term status of the ES, we’re willing to carefully short two areas if the ES heads higher: (1) by the daily gap in confluence with yesterday’s high at 1091.75 to 1092.00, not giving it more than a point, and (2) by the confluence of weekly R2, day-session-only R1, contract highs from 1097.50 to 1099.00.  Combined session daily R1 at 1100.75 provides a protective stop for 2, but note it is above contract highs, so we will not…

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