10:17 am EDT:  Longs did their job early as they needed to, with the ES having reached the weekly R1 target of 1108.25 quite easily.  Next resistance is 1116.50 (daily R3′s), then weekly R2 in confluence with a huge 50% retracement (1124.75 to 1126.25), not pictured.  Only a very unlikely close below 1096.00 puts the rally in jeopardy today.

SPY is benefitting from very little overhead supply in this area:

The Precise Take – ES testing highs at beginning of packed news week and opex

Leaders Analysis:  Gold continues to press to new highs as the US Dollar has fallen back to support.  The EuroYen forex cross is up marginally.  Only 30 Year T-Bond futures disagree with equities strength, as they have now decisively broken up through downward trend channel resistance.  As we have been writing, this usually correlates with sideways to downward action in equities, with the correlation sometimes lagging a day.

Medium Term Analysis:  The free news ride is over, as the markets must contend with some of the most difficult items in the news calendar this week, including Retail Sales (as we write), PPI, CPI, and various housing reports.  In addition, options expiration is this Friday, and this has been the week in previous months when rallies have topped.  So, while new highs are in the cards early this week, swing longs may want to pull up stops.

Trading Today:  As we write, the headline number for the much dreaded Retail Sales report came in above expectations; however, there was a material revision of the prior month for the worse.  In addition, the concurrent Empire State index came in very low, which appears to be limiting upside action.  Early trading will be key today for longs, as the past two afternoons have been weaker than the mornings.  As long as the confluence area of Friday’s high of 1096.00 and the daily R1’s at 1097.50 hold, we have a bullish bias and believe…

Continue reading here.