The Precise Take – ES needs to show strength after most bullish report of the year

Leaders Analysis:  The EuroYen is shooting above its 20, 50 and 200 day moving averages and long term yields are following.  The US Dollar Index has not moved much overall and continues to form a wedge pattern.  We’ll look to it for ultimate confirmation.

Medium Term Analysis:    The slide late yesterday was not completely unexpected ahead of today, but was a bit delayed as all the bad news was out in the morning with Bernanke’s reconfirmation hearings, the weak ISM non-Mfg reports and some bearish statements by the White House press secretary regarding unemployment.  It looks like the White House has faked out the shorts, though, as there was an actual downtick in the household survey to 10.0%, while actual non-farm payroll losses are the best since Dec 07 at -11,000.  If the ES manages another rally into early next week, watch out for a sharp correction possibly late Tuesday or early Wednesday ahead of the 10 Year auction.  Long term yields have just exploded and the pattern in previous months has been for equities to struggle around important auctions, thus elevating demand.  M2 money supply declined as reported by the Fed yesterday, so the long term liquidity problems in the general economy that we have been noting remain.  Were we long term investors, we would be using equities strength to liquidate holdings this December. 

Trading Today:  The ES has rallied nearly 15 points to 1114.00, and we now want to see the value area of 1108.00 to 1108.75 supported early after the open.  The ES should be able to rally to new highs today.  If it closes below the daily pivot of 1104.25, then the rally is in jeopardy because…

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