The Precise Take – Equity futures pullback overnight as Fall trading begins

Big Picture Analysis:  Traders return en force this week to help decide whether the fledgling rally has legs or not.  Signs of institutional leadership have emerged at various times over the summer, only to evaporate amidst a backdrop of record high stock correlations–the effect being that everything going up or down in unison provided many false signals.  Such institutional bullish leadership has emerged once again, and correlations have abated slightly, such that we have the inklings of a sustainable rally.  While there is no major scheduled news this week, bulls will want to get things moving as concerns over European debt are making headlines again.  The Japanese Yen is materially stronger against the major crosses and appears to be the currency to watch.  The EuroYen is down 1.6% and suggests equities upside will be limited today.  Three big long term Treasury auctions are featured this week, with the first today as the 3 Year is auctioned at 1:00 pm.  Any big movements in yield should have a positive correlation with equities.

Trading Today:  The upper end of the projected range is from 1103.50 to 1105.00 and contains Friday’s settlement, monthly R1 and Friday’s high.  If price breaks above 1105.00, bulls are much stronger than anticipated today.  The lower end contains Friday’s low and the overnight low, from 1093.75 to 1095.25.

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