Pre-open eMini SP 500 Morning Report 1.11.10

This is a guest post from Precision Capital Management

The Precise Take – Equities to gap up Monday, on schedule

Leaders Analysis:   Overnight, the EuroYen advanced to the early Dec 08 pivot high and the US Dollar Index gapped down through ~77 support and is now testing the 61.8% retracement (76.84) of the breakout from the 75.88 level.  If support breaks, a retest of the large congestion area of 74.17 to 75.88 is likely.  This would allow for an easy continuation of the move up in equities.  Also, the Nasdaq 100, which had been lagging, finally caught up Friday.  All in all, the leaders are strongly equities bullish, though there is a possibility of a reversal here given the stance of the US Dollar Index and the EuroYen.  This would not necessarily lead to a reversal in equities, but would make large material gains less likely.

Medium Term Analysis:  There is little way in terms of scheduled news until Thursday’s Retail Sales and Friday’s CPI, though Alcoa kicks off earnings season after the close today.  Friday is also options expiration.  If the longs are going to continue the run-up, they have little resistance through Wednesday. 

Trading Today:  Friday, the ES was able to close on a strong note at the upper end of the projected range, and has continued the move overnight up to just shy of day-session-only R2.  Given the bullish seasonality of Mondays recently, the ES should be able to reach…

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http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_January_11_10.pdf