The Precise Take – ES up strongly at beginning of US holiday week

Leaders Analysis:  Friday, the leaders came close, but did not signal a change from equities bullishness.  Overnight, the US Dollar is down after closing Friday at its 20 day moving average resistance, the EuroYen is up after closing at its 200 day support, and 10 Year T-Notes have fallen from resistance.  Only 30 Year T-Bonds are lagging and holding on at resistance.  There are some major Treasury auctions this week, beginning with the 2 Year today, so the 30 Year will be key to watch.  We have not commented on gold much lately because its relentless march upwards has caused it to lose its correlative value, but will note that gold is testing all time highs in both the Canadian Dollar and the Euro, which makes for a natural resistance level.

Medium Term Analysis:  We wrote late last week that longs would want to push to new highs ahead of tomorrow’s GDP revision and Durable Goods on Wednesday.  Tomorrow also features Consumer Sentiment and the FOMC Minutes.  Currently, the ES is up just over 1% in overnight trading.  Given the bullish tendency of the US Thanksgiving holiday week, new highs today are still a possibility by GDP tomorrow.  Of the 14 days in the 2009 rally where the overnight market has been up > 1%, 4 were reversed strongly and closed below the day session open.  Accordingly, the reaction to today’s only major news item at 10:00 am should be monitored closely to see how the day will unfold. 

Trading Today:  We would be early buyers down to strong support from 1095.00 to 1096.75, which includes Friday’s combined session high, the weekly pivot, combined session R1 and day-session-only R2.  There is still decent support from Friday’s day-session-only high and R1 from 1092.75 to 1093.50, but the ES will have given up a bit too much of its gains for…

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