The Precise Take – Leaping higher

Big Picture Analysis – Yesterday’s initial disappointment after Durable Goods was quickly reversed, and many US equities indexes made new closing highs.  This morning’s ECB LTRO went smoothly, with the final take at 529.5 billion euros gross and 311 billion euros net–a bit lower than some analysts expected, but in the end, it was not a market mover.  Today continues a packed news week, with GDP having already been released and surprising to the upside, Chicago PMI (often out of consensus) at 9:42 am EST, Bernanke speaking in front of Congress at 10:00 am, EIA Petroleum Status at 10:30 am and the Fed’s Beige Book at 2:00 pm.

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The Precise Take – Durable Goods disappoints

Big Picture Analysis – Yesterday’s selling was short lived, as the overnight selloff in the ES was reversed and it closed at new highs.  As we write, one of the more disappointing economic reports in some time has been released, with Durable Goods coming in well below expectations.  Given the high degree of complacency and overbought status, the market remains vulnerable to a sharp pullback.  However, we might see bulls again find value and support the ES at 1363.25 to 1363.75 or 1360.00 to 1360.25.

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The Precise Take – Exercising caution

Big Picture Analysis – Headline risk out of Europe has the ES testing 1354.75 to 1355.25 support.  Below, and we might see a quick trip down to the 1349.75.00 to 1350.25 area, where value longs will need to assert.  Below, and we might have the makings of a short term correction.  If this early weakness proves to be another buying opportunity for longs, we would not want to be caught short above 1363.50.  Pending Home Sales at 10:00 am EST could be a market mover if out of consensus, though the Dallas Fed Survey is unlikely to be in any event.  Looking ahead, tomorrow is Durable Goods, Wednesday is GDP and the ECB’s LTRO auction and Thursday is ISM Manufacturing.

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The Precise Take – Testing highs

Big Picture Analysis – Yesterday’s early weakness was bought, and the ES has tested it’s early week highs overnight.  Absent a big miss today in Consumer Sentiment at 9:55 am EST or New Home Sales at 10:00 am, we might expect higher highs.

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The Precise Take – Consolidating

Big Picture Analysis - Jobless Claims at 8:30 am EST this morning and the EIA Petroleum Status report at 11:00 am are the reports to watch today.  Bulls will be looking to break up through the downward sloping flag structure on the 135 minute, but a break of 1352-53 could see a quick test of the low 1340′s.

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The Precise Take – Basing higher

Big Picture Analysis - With renewed focus on housing, Existing Home Sales at 10:00 am EST could be a market mover, but only if out of consensus.

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The Precise Take – Filling the gap

Big Picture Analysis - Overnight, the ES filled Sunday’s pre-holiday gap up.  While price continues to push higher, we are heading into some seasonal headwinds this week in the form of Treasury supply from the 2, 5 and 7 year auctions.  We’ve also read some other bearish seasonality studies.  Not that this means price must decline, but it simply makes sideways to downside price action more likely than ordinarily.

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Update: Leading Indicators is out today at 10:00 am.  Consumer Sentiment is next week.

The Precise Take – Markets flat after CPI

Big Picture Analysis - Yesterday’s Philly Fed beat cleared the way for the bulls to add to their positions, tacking on some impressive gains for the day.  Though not the most likely scenario, we are on alert for an expanding terminal top, given the elevated daily range and price pattern on the daily chart of the ES.  However, more likely is some consolidation and a launch higher, with 1350 serving as strong support.   Ahead of the three day weekend, today is options expiration, which has bearish seasonality early and bullish seasonality late.  However, Consumer Sentiment today at 9:55 am could end up driving the markets if it comes out of consensus, which it often does.

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The Precise Take – Tighten stops

Big Picture Analysis - While each minor dip in this rally has proved a favorable long entry, yesterday’s range expansion and lack of volume support from approximately ~1325 to 1335 (see the 135 minute chart, below) warns of the potential for a quick and precipitous drop if the overnight lows in the ES do not hold.  The Philadelphia Fed Survey released at 10:00 am EST today will likely be a market mover.

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The Precise Take – Still pressing higher

Big Picture Analysis - It looked like trend channel support (in the 135 minute chart, below) might give way late yesterday, but statements out of China in support of Europe fed a hockey stick rally into the close for the US indexes.  Additional gains were tacked on in Asian trading, with the ES reaching 1358.00 and backing off toward ~1350 support, as we write.  Today, we have the Housing Market Index at 10:00 am, EIA Petroleum Stats at 10:30 am and FOMC Minutes from the last meeting at 2:00 pm EST.

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