The Precise Take – Risk markets react favorably to Employment Situation report

Big Picture Analysis:  It’s been an eventful summer, though not evident looking at the net price change from the end of April.  After a better than expected (though within the characteristically wide consensus range) Employment Situation report, the ES is up 6% off Tuesday’s low.  Any short term equities bull that got long this week is sitting comfortably now, and any bear that got short is sweating.  Those that had an opinion but are flat will probably sit out the three day weekend and wait to see what Tuesday brings.  With the ES overbought and having hit major weekly and monthly pivot confluence, the possibility exists that high volume short covering after the opening will be used to cover existing long positions.  Though this doesn’t necessarily mean the rally is over, we would be especially weary with longs unless and until there is a strong bounce from either day-session-only R1 (1093.50) or R2 (1097.75), or until 1105.00 is broken to the upside.  As expected, all risk markets are flashing bullish signals, with long term Treasurys putting in what (for the second time in as much as a week) looks like a definitive top.

Trading Today:  The upper end of the projected range contains weekly R2, day-session-only R3 and monthly R1, from 1103.50 to 1105.00.  The lower end contains overnight price action and day-session-only R1, from 1092.00 to 1093.50.

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