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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The Precise Take – ES pushes just above major resistance ahead of Employment Situation Friday

Big Picture Analysis:  Yesterday’s gain in the equity indexes was impressive, with the ES able to close inside a major resistance area, with nominal highs above it this morning after the weekly Jobless data.  1082.25 is the 50% retracement of the entire August down leg, which we mention because these major retracement levels have stopped the ES cold many times over the summer.  Should the ES open and push above early, then it will be a major accomplishment for the bulls.  If the ES sells off from this level, a push below 1074-76 could gain momentum and put the shorts in control again.  After yesterday’s big gain, and with tomorrow’s monthly Employment Situation, we could see some early volatility, especially around the housing report at 10:00 am, but the markets should settle down in the afternoon.

Trading Today:  The upper end of the projected range contains weekly R1 and the overnight high, from 1083.75 to 1084.75.  If it is broken, the area from 1089.00 to 1089.75 is the next target and would be the likely maximum bound.  The lower end contains the day-session-only pivot and price action from yesterday, from 1074.75 to 1075.25.

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The Precise Take – Equities bounce from support as summer draws to a close

Big Picture Analysis:  Yesterday, the third test of 1037 was a charm–for the time being–as a strong close yesterday precipitated an overnight rise to test Monday’s opening area in the low 1060′s.  We would expect shorts to re-exert at the 1069-71 resistance area or 1077-81 area.  The risk markets are friendlier overnight, with the US Dollar down, and the Euro up, against their major crosses.  The three day US Labor Day weekend lies ahead with some major reports in the interim, beginning with ISM today at 10:00 am.  We may not get an intermediate term trend underway until traders return next Tuesday, so be on alert for continued reversals.

Trading Today:  The upper end of the projected range contains the new monthly pivot and day-session-only R3, from 1069.00 to 1071.00.  The 1062.25 to 1063.75 area is also strong resistance and contains the daily R2′s and previous price action.  The lower end contains yesterday’s high and day-session-only R1, from 1053.50 to 1055.25.

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The Precise Take – ES again testing 1037–three times a charm?

Big Picture Analysis:  Yesterday’s short term downward trend channel breakout in the ES failed, with equities grinding down all day, and lower overnight.  The ES is once again testing 1037 support, with a low likelihood of it holding.    Even the much lauded Treasury futures downward reversal on Friday has itself been nearly reversed.  The Euro is strong against most currency crosses overnight, save the Swiss Franc, which ominously broke 1.3000 support.  It looks as though preference for risk is being withdrawn across the markets, with the leaders broadcasting the potential for more.  Today features five economic reports, though none is as big as tomorrow’s ISM or Friday’s Employment Situation.

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The Precise Take – ES attempting to rally on breakout

Big Picture Analysis:  The Bernanke speech did not disappoint in terms of volatility Friday, as the equity indexes managed yet another early morning turnaround, this time to close at their highs.  Again, we have the possibility of a rally, as support held twice last week at 1037 and the ES has broken out of its downward channel (below), but there are several obstacles that shorts can use to kill any rally attempt.  There are inklings that the debt situation in Europe could start grabbing headlines soon, and the Bank of Japan has been shown to be ineffectual in attempting to reign in Yen strength.  Accordingly the Euro and Australian Dollar are down materially.  The one positive is the huge reversal in long term Treasurys Friday–the big one we had been waiting for (though we must admit we had nearly given up), with the T-Bond futures down nearly three big points.  A Treasury market slide won’t by itself create an equities rally, but it can certainly help at certain key times.  Big news items this week include Wednesday’s ISM Manufacturing Index and Friday’s Employment Situation.  The key range to watch the next few days appears to be 1055 to 1081.

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The Precise Take – Equity futures consolidating ahead of Bernanke speech

Big Picture Analysis:  GDP had been sufficiently talked down that this morning’s revision for the worse was supportive of equities.  Now, attention turns to Bernanke’s speech released at 10:00 am, though Consumer Sentiment released 5 minute prior could also cause some movement.  Per below, it’s evident the ES is still in its downward trend channel, but is basing in the blue value area.  A push above 1059 is needed to generate momentum, which sets up a move to the 1080-81 first major resistance area.  While 1040-41 is support, a break of 1045 today probably signals it will not hold.  While the Yen is weaker against most crosses, which is generally supportive of equities, 10 Year futures are treading sideways.  It would be uncharacteristic for them to top in this fashion, so we should be alert to the possibility of another up move, which would weigh on equities in the coming days.

Trading Today:  The upper end of the projected range contains price action near yesterday’s high, from 1058.25 to 1059.25.  The lower end contains yesterday’s settlement and 4:00 pm close, from 1044.75 to 1046.25.  If the lower end is reached, it has less a chance of holding the later it is reached.

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The Precise Take – Equity futures up on Jobless Claims, ahead of weekend financial summit

Big Picture Analysis:  Yesterday, the ES managed a bounce off what was major support prior to the break of the 1035-40 area on June 29.  As we write, bulls are also taking advantage of a moderately less-bad jobless claims report.  The first major upside target is the 50% retracement of the August down leg in confluence with the 50 day moving average at about 1081.  The last of the week’s large Treasury auctions is over today at 1:00 pm EDT, which was favorable to equities the prior month.  We have been waiting for a large reversal in the 10 Year to signal its massive bull run may be over, which would be supportive of equities.  Yesterday was close, but did not quite cut it, however.  The first revision to Q2 GDP is released tomorrow pre-market and, thereafter, Bernanke speaks at Jackson Hole, with many expecting hints of further easing.  Expectations of GDP have lowered significantly in the past weeks, so Bernanke could hold the key to…

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The Precise Take – Equity futures down again overnight on disappointing Durable Goods

Big Picture Analysis:  Yesterday’s early plunge down to 1044.00 in the ES on the Home Sales report had the makings of a multiday reversal, but proved to be only an intraday bear trap, as the ES hit 1041.00 on this morning’s Durable Goods report.  Some major technical levels were taken out in the leaders yesterday, which suggests more downside in equities, even if there is a brief respite.  A big downside reversal in long term Treasury futures will be an equities bullish sign to watch out for.  The ES is now entering the early July base, which should slow the decline and perhaps allow for an oversold pop.  The caveat is that the markets are susceptible to bad news and a…

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The Precise Take – Equity futures tumble overnight after failing to hold critical support

Big Picture Analysis:  After a quick run-up on yesterday’s open to kiss the 50% retracement of last week’s range, the ES headed down and closed below critical support at 1069.  Overnight, the 1055.50 first target was reached and then some (low of 1051.50).  The leaders are similarly ugly, with the EuroYen at lows not seen since September 2001, and 10 Year T-Note futures to new highs (never having closed below the 125’15 trigger).  Given the whipsaw nature of the markets over the summer, it would be reasonable to soon expect a sharp reversal to the upside to shakeout late shorts.  Our best guess is on a test of the 1045-48 support band from late June/early July price action; however, longs are risky today with this much downside momentum.  If 1045 goes, next major support is 1018-25.  Only above yesterday’s settlement of…

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The Precise Take – ES below trading range on opex

Big Picture Analysis:  Yesterday, the ES closed just above the lower end of its 1070 to 1100 range, but broke it overnight.  We’re willing to entertain the possibility that this is a shakeout; however, for the bulls to avoid another down leg to the 1018 to 1025 support area, they will need to assert control early today.  As far as the Fed’s Treasury purchases yesterday, they amounted to an above average $3.5 billion, but there was no immediate or delayed effect with respect to equities.  Until more data is generated, there is no pattern to trade.

The Euro is down about 1% against both the US Dollar and Yen, also down again against the Swiss Franc.  We were looking for a close in 10 Year T-Note futures below 125’15 to confirm a top.  Instead, they have…

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