Markets: Your Must-Read Morning Report 7.8.10

The exclusive Markets Morning Report is supplied by Precision Capital Management.

The Precise Take – Up, up and away?

Big Picture Analysis: Yesterday’s breakout in the ES got considerable follow through, allowing it to close at its monthly pivot.  Just as it opened on June 21 in a major 50% retracement area (at the time, from the April 26 high), it will open today near the 50% retracement from its June 21 high.  One scenario posited last week and followed up on earlier this week was that the shorts would be chased out from an easy ride down from the break of the ~1040 neckline on the large head and shoulders pattern.  Until the ES clears the ~1110 level, this could still be the case.  Nearby, there is strong resistance up to 1073.00.  Accordingly, near term gains should be viewed with a healthy skepticism.

Leaders Analysis:  Long term Treasury yields broke upwards yesterday, albeit at a slower pace than equities and, overnight, the 30 Year is progressing towards its intermediate term downward sloping trendline that has held since early April, except for June 21.  The EuroYen is up strongly over its 20 day moving average, with its 50 day in sight.  The US Dollar Index is respecting yesterday’s low, primarily on its strength against…

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