The Precise Take – ES attempts to hold on at highs ahead of Retail Sales Monday

Leaders Analysis:  We may sound like a broken record, but 30 Year T-Bonds are still on the verge of a breakout.  The fact that it has not yet occurred may portend weakness; however, their recovery yesterday after the tepid 30 Year auction was impressive.  The EuroYen finally broke to the downside after consolidating for several days, which is equities bearish.  If T-Bonds do break to the upside today, we have likely seen the equities high until the EuroYen trades down to its 200 day moving average again.

Medium Term Analysis:  Two consecutive closes under the daily pivot has been the death knell for the last three rallies, so longs will want to close above today’s pivot at 1090.25, especially ahead of Monday’s Retail Sales report at 8:30 am.  We wrote earlier in the week that if equities looked weak Friday (today), shorts would start piling in ahead of next week’s news calendar (also options expiration).  Accordingly, it’s likely do or die for the rally today.

Trading Today:  Yesterday’s strong close in light of the day’s losses allowed an overnight run to closing VWAP (actual overnight high of 1092.00).  The daily pivot at 1090.25 up to 1092.00 also includes yesterday’s market profile point of control and serves as a key area to watch today.  As we wrote above, longs want to close above the pivot.  The 8:30 am reports have not moved the markets much, so Consumer Sentiment will likely be the catalyst today.  With price near both yesterday’s settlement and the daily pivots, we…

Continue reading here.