Pre-open eMini SP 500 Morning Report 4.7.10

This is a guest post from Precision Capital Management

The Precise Take – Equity futures down again overnight on stronger Dollar

Leaders Analysis:  Overnight, the EuroYen is reached its 20 day moving average, its first downside target.  If it is going to continue its intermediate upward trend it should bounce either here or a bit lower at stronger support from fib and 50 day moving average confluence.  The US Dollar Index has been tricky lately, with its correlation to equities flip flopping from one day to the next.  On Friday’s strong employment numbers, it rose with equities; however, since then, including overnight, it has reverted to being negatively correlated.  After spiking up Monday, long term Treasury yields have backed off and have a bit of room to weather a slightly disappointing auction today or tomorrow.  For the third day in a row, and admittedly being incorrect the prior two, the leaders are slightly equities bearish today.

Medium Term Analysis:  The ES has been locked in a tight trend channel (below in green), stair stepping higher for six days, not unlike the first week of January.  This morning, it has just barely pierced the lower end.  So far, not materially, but were it to continue, we would likely see at least a test of the upper end of the large value area beneath at 1171.50.  Despite a slew of minor news items over the next few days, there’s nothing major until next Wednesday’s CPI and Retail Sales.  As long as the trend channel holds, we should see…

Read the full report: