This is a guest post from Precision Capital Management
The Precise Take – Can ES shrug off a GDP disappointment?
Leaders Analysis: The EuroYen finally broke above its 20 day moving average overnight, with no major resistance now until the confluence of its 50 and 200 day moving averages, 2 big points higher. T-Bond and T-Note futures broke support yesterday and sold off further overnight. The US Dollar Index remains strong, however, that does not seem to be an impediment to equities as of late. We have not mentioned gold recently because of its inverse correlation with the US Dollar, which seems stronger than the positive correlation gold has had with equities this year. Accordingly, the setup remains strong for further gains in equities this week.
Medium Term Analysis: Yesterday’s low volatility melt up continued overnight, as the ES drifted higher overnight with no correction beyond VWAP until GDP at 8:30 am this morning. GDP was revised materially to the downside, but we expect traders to buy dips given the highly bullish seasonality this week. NYSE $Tick has quieted down, so day trading opportunities are fewer. The Nasdaq 100 made a new high for 2009 yesterday, and the S&P 500 and Russell 2000 (both cash) are at highs.
Trading Today: The 81 min chart we posted yesterday demonstrates the consistent channel trading of the ES this month. If the pattern were to hold perfectly, the ES would…
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