10:31 am EDT:  Next resistance is contract highs in confluence with trend channel resistance and day-session-only R2 (1128.50 to 1129.50), then monthly R1 at 1132.75.

Green lines are the same since the prior posting of this chart around Dec 22, yellow are new.

10:17 am EDT:  As the leaders suggested, there was a test of the ~1125 area, but it came much sooner than expected, with traders not waiting for the bullish ISM report.  The ES traded to the upper end of the projected daily range pre-market and easily exceeded it after the open.  In general, when the projected range is broken early, there is a good chance of a trend day developing.  The ES is now testing highs and, if it accepts here (which it is currently doing), it should be able to launch to new highs.  However, if weekly R1 at 1123.00 is broken to the downside, it is a sign shorts are piling in and it means new highs are less likely.

The Precise Take – Overnight, equities recover from Friday’s selloff on weaker US Dollar

Leaders Analysis:   The EuroYen forex cross is now using previous resistance (50 day moving average) as support, and has exceeded last week’s high overnight.  Commodities, in general, are up overnight as well on a weaker US Dollar.  Accordingly, the leaders are still equities bullish.

Medium Term Analysis:  Despite the selloff on Thursday’s close, after the highest volume level for the ES (red histogram below) was reached, the ES was bought aggressively.  After today there is not much news until Friday’s Unemployment Situation.  Bullish seasonality and the leaders suggest at least a retest of the ~1125 area; however, longs will need to prove they are in control by closing over the weekly pivot of 1116.25.

Trading Today:  ISM at 10:00 am is the major news item of the day, and the day’s direction (if one develops) will likely be determined thereafter.  Until then, we play the projected range and, perhaps, thereafter, depending upon…

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