11:25 am EDT:  It was bound to happen sooner or later, and the first distribution day in nearly a month is upon us, with the US Dollar advancing through resistance and the EuroYen through support.  After opening a few ticks from Wednesday’s high, the ES headed down, barely pausing at the daily pivots, and easily breaking yesterday’s low.  1155.50 to 1165.50 is now a sell area.  Last week’s high of 1152.00 in confluence with the daily S2′s is currently providing support, but an eventual move down to the daily S3′s is possible (1149.25 to 1150.25).

The Precise Take – Equities maintaining amidst Dollar rally

Leaders Analysis:  The US Dollar Index has surged further to strong trend line resistance, and the EuroYen is just barely holding on to support.  Equities have held their ground, however, and for the same reason as yesterday (leaders at inflection points), the leaders are equities neutral.

Medium Term Analysis:  Not much to add from previous days’ commentary.  Equities are at highs, a bit overbought and today is opex.  Next week is quiet until GDP on Friday.  The Treasury auctions could depress equities a bit.  Monday will be a big test.  With no news, will traders…

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The Precise Take – Markets calm after flat CPI

Leaders Analysis:  The leaders threw us a big curve yesterday, but correlations appear to have righted overnight, with the EuroYen and ES falling, then rising in synch, and the US Dollar Index following inversely as well.  With the EuroYen at support and the Dollar at resistance, the leaders are equities neutral for today.

Medium Term Analysis:  CPI was a non-event this morning, so focus will be on tomorrow’s quadruple witching options expiration.  Next week is news-light until Friday’s preliminary GDP for Q4 2010, though there are some large Treasury auctions in the middle of the week.  The latter is notable because the only stumble in the equities rally that began in February was concurrent with the same auctions in the final week of February.  Besides being overbought, there’s really nothing else…

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11:52 am EDT:  All the leaders continue to be equities bearish, yet the ES progresses higher.  This divergence should be resolved by end of day or tomorrow at the latest; however, the longer the ES hovers around the daily R1′s from 1162.25 to 1163.00, the less we like shorts from this area.

The Precise Take – Equity futures extend gains overnight, but leaders at inflection points

Leaders Analysis:  The US Dollar finally reached 79.53 support overnight, the 38.2% retracement of its January to February rally, which also coincides with long term pivot and 50 day moving average support.  While it could eventually reach the 50% retracement at 78.97, it should bounce here first.  Similarly, the EuroYen and 30 Year T-Bond yields are at potential reversal levels, so the leaders are equities bearish today.

Medium Term Analysis:  Yesterday, the ES cleared critical resistance at 1152.75 and is up materially overnight, having reached precisely the March contract high of 1159.50.  This should pave the way for higher prices, however, not necessarily immediately.  Given the leaders’ stance, we expect to see at least a test of…

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The Precise Take – Equity futures back up to highs ahead of FOMC Announcement

Leaders Analysis:  The leaders are mostly consolidating ahead of today’s announcement.  Notably, gold is up and the EuroYen has a bit more room to advance to resistance.  Accordingly, the leaders are slightly equities bullish.

Medium Term Analysis:  The levels we were watching yesterday were 1140 and 1147.  After the ES traded below 1140, it looked like the chances of the rally continuing were diminished.  However, the strong rally and close just under 1147 kept the rally strong.  Ideally for longs, the ES would clear monthly R2 at 1152.75 prior to close.  Even if the expected profit taking occurs post-announcement, it would…

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11:48 am EDT:  After rallying a bit on the open, the ES sold off one tick short of closing VWAP and just found support around combined session daily S2 at 1136.75.  This should hold until at least 1:00 pm, when the Housing Index report could move the markets again.  ~1141 is now a sell zone unless the report comes out much more bullish than expected.   It looks like scenario #2 from the morning report is unfolding, where we get a double top pattern on the FOMC Announcement tomorrow, with the ES going sideways to down into early next week before attempting to head higher.   As of today, this is still pretty speculative and we’ll have a better idea if this plays out by close tomorrow.

The Precise Take – Markets quiet ahead of full news week

Leaders Analysis:  After breaking its consolidating wedge to the downside Friday, the US Dollar Index is retracing a bit as expected.  The EuroYen is down marginally, and 30 Year T-Bond yields are down, but at support.  For today, the leaders are equities neutral.

Medium Term Analysis:  Tomorrow, the FOMC meets and is the first one day meeting in recent memory.  This in itself shows the Fed is a bit complacent; however, the ramifications aren’t relevant to trading over the next week.  We don’t expect any waves, and with CPI Thursday and options expiration (quadruple witching) later this week, there will be plenty of news to influence equities.  Given the bullish FOMC seasonality from the close of the day prior (today) to just after the announcement, the best scenario for swing longs is to trade above 1147.00 by tomorrow’s open and clear major resistance at 1152.75 prior to or just after the announcement.  Then, after consolidating Wednesday…

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The Precise Take – Equity futures spike higher on Retail Sales

Leaders Analysis:  The US Dollar Index broke down through its consolidating wedge and has reached support.  While we expect it to go lower next week, there is a good chance it will retrace upwards a bit first.  The EuroYen has traded up to its 20 day moving average and 30 Year T-Bond yields are up after going down on yesterday’s 30 year auction and hitting support.  Because of the extended moves into support/resistance and possibility of reversal, for today, the leaders are slightly equities bearish.

Medium Term Analysis:  As of Monday, we will switch to the June 2010 contract.  Yesterday’s afternoon rally finally produced the breakout from the January high, which was continued overnight and extended on the Retail Sales report.  The spike up on the report into strong resistance and subsequent retracement is a bit bearish, and given the overbought status of the ES, we would not be surprised to see…

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The Precise Take – Equities still consolidating near highs

Leaders Analysis:  The leaders are mostly quiet overnight, and are equities neutral.  Focus will remain on the US Dollar Index’s consolidating wedge. 

Medium Term Analysis:  Yesterday, the ES tested to the tick the January 1148.00 high.  If we were to compare the current rally to that of July 2009, yesterday would be Tuesday, July 21 and today would be the July 22 inside day, with tomorrow the strong break up through resistance.  We note this because of…

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