10:37 am EDT:  ISM came in with a Goldilocks reading of down slightly from January, but within consensus, which is bullish for equities because too-strong would have rallied the Dollar and too-weak would have hurt confidence.  The Dollar and T-Bonds are down, but curiously, so is the EuroYen, perhaps out of Eurozone weakness.  Accordingly, while further gains in the ES to weekly R1 at 1116 are in the cards today, a trend day up is unlikely.  To facilitate further gains today, we would want to see VWAP hold around 1109.  Otherwise, a test of the lower end of the projected range is likely, from 1102.00 to 1103.50.  We’ll have to issue the standard caveat regarding surprise political news (which has occurred frequent recently), but otherwise, we don’t see an impediment to an equities rally over the next few days as there is no major news until Friday’s Employment Situation.

The Precise Take – Equity futures higher overnight ahead of ISM

Leaders Analysis:  After selling off to its 20 day moving average Friday, the US Dollar Index rallied strongly overnight on British Pound weakness to the upper end of its two week range.  The EuroYen traded first up, then down, and is at Friday’s low.  The 30 Year T-Bond yield closed decisively below long term trend line support Friday and is up marginally on the open.  A continuation of the trend down in yield (and up in the futures) does not preclude equities gains, but a concurrent US Dollar rally would make any equities gains more difficult to come by.  With ISM Manufacturing today, the direction could be set into Friday’s Employment Situation report.  For now (at least until 10:00 am), the leaders are slightly equities bearish.

Medium Term Analysis:  The ES was strong enough overnight to test the most recent swing high at 1112.75 and subsequently traded down on the US Dollar rally.  However, it is accepting in the green value area (below).  If it continues to accept here or rally after ISM today, the next…

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