Pre-open eMini SP 500 Morning Report 4.15.10

This is a guest post from Precision Capital Management

The Precise Take – ES at a critical juncture

Leaders Analysis:  The EuroYen forex cross, as a proxy for global risk appetite, was not able to join US equities in their rally and is down materially overnight after failing to take out its April 5 high.  Long term Treasury yields have found moving average and trend line support, and look as though they may be mounting a test of their April 5 high, which is also critical long term resistance.  The US Dollar Index kept its historical inverse correlation to equities yesterday and was down, but could not take out Monday’s low.  Overnight, it has retraced yesterday’s range (which is the entire week’s range) to the upside.  It could very well reverse again here to the downside.  So, based on the EuroYen having further downside potential, the leaders are slightly equities bearish for today.

Medium Term Analysis:  The ES has now entered the July to mid-September 2008 range of about 1200 to 1310.  There is still resistance up to 1215.75, but if the ES can power through in the next few days, preferably by Monday close, there is much more upside potential that could be realized quickly.  Yesterday’s rally was impressive and had market internals to back up this possibility.  Another scenario is that the ES stalls here or possibly after marginal new highs up to 1215.75, then corrects to the downside.  Even in this situation, however, the ES should eventually be able to…

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