Pre-open eMini SP 500 Morning Report 1.12.10

This is a guest post from Precision Capital Management

The Precise Take – Equities losing momentum overnight

Leaders Analysis:   The EuroYen forex cross has strongly rejected the ~134.5 resistance area as it has traded down to moving average support overnight.  The US Dollar has struggled to make a corresponding up move, though it is respecting support.  30 Year T-Bond futures are at the upper end of a trading range and have broken out of the downwards trend channel only by moving sideways.  However, if they can close above 116’5, they have a chance to move to at least 118 to 118’16.  Long term Treasury auctions over the next three days can provide volatility.  All in all, the leaders have turned from equities bullish yesterday to slightly equities bearish today.

Medium Term Analysis:  Equities have lost some momentum during the light news period that extends into tomorrow.  Given the leaders stance, sideways to downside action is more likely until we get a bullish catalyst.  Retails Sales Thursday and CPI Friday have a chance to provide this, but they could also just as easily be bearish.

Trading Today:  The ES is down just over 10 points overnight, the weakest overnight performance since Dec 17 09.  After an extended move up, the day session that follows this pattern usually has a nominal new low with a high at or below the day’s value area.  The ES has traded to just above strong pivot confluence from the weekly pivot at 1132.25, monthly R1 at 1132.75, and daily S2 at 1133.25.  We will consider a long from this area, but will wait…

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