Pre-open eMini SP 500 Morning Report 5.27.10

This is a guest post from Precision Capital Management

The Precise Take – Risk tolerance slowly returning

Big Picture Analysis:  After a weak afternoon yesterday and bumpy start on the overnight open, the ES rallied over 35 points to 1092.00, and has backed off on a downward revised GDP report.  To continue the discussion from yesterday, to begin a rally with a chance of success, the ES still needs to break out of its current value area (red) at 1093.50 and accept in the next higher (purple), above 1100.50.  It has also formed an inverted head and shoulders, with a neckline at the upper bounds of the value area.  Should it break, the target coincides with the high volume level at 1126.00 is an easy first target.  A close below 1061.00 means the bears are in control and points to lower lows.  Monday is a US holiday and most traders will leave early tomorrow.  With liquidity still depressed, it could be easy to…

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