Pre-open eMini SP 500 Morning Report 4.19.10

This is a guest post from Precision Capital Management

he Precise Take – Markets still skittish after Friday’s news

Leaders Analysis:  Risk aversion has continued overnight, as the EuroYen is down from Friday, having briefly broken support and now just above it again.  The US Dollar Index rallied to just above, and is down slightly to, its 20 day moving average and long trend line resistance.  Long term Treasury yields are at support.  It’s possible each could reverse from here, but if the reversals do not come in the first half of the day, more than likely we will get continuance over the next few days with a bearish bias for equities.

Medium Term Analysis:  Without getting into the merits of the SEC/GS news that sparked the decline Friday, the question is whether this will be quickly discounted, allowing equities to resume their uptrend, or whether uncertainty will gain momentum and lead to a more material correction.  The ES’ long term high volume level at 1182.75 was bought aggressively Friday and was the low of the day.  To make the case for a quick reversal to the upside in equities, we would like to have seen more bullishness in the leaders overnight and for Friday’s low to hold.  It was violated only marginally this morning (actual low 1181.50), but the longer price trades in Friday’s lower range after the open, the less likely the quick rebound scenario becomes.  Ideally, the ES will show strength in the first hour and close above Friday’s settlement of 1190.25.  Besides regulatory impact speculation, earnings releases should dominate…

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