This is a guest post from Precision Capital Management
The Precise Take – Equity futures down overnight on financial reform and sovereign concerns
Leaders Analysis: The correlation between equities to the US Dollar flipped back to negative this morning and, until it becomes more consistent, it won’t be much of a guide. For what it’s worth, it should be able to rally and test the last swing high at 81.91. Long term treasury yields are flat, but have further downside until they reach support. The EuroYen is down, but at support. For this reason, the leaders are equities neutral.
Medium Term Analysis: Yesterday was ho hum until news regarding the impending derivatives legislation was released in the afternoon. While the ES respected critical support at 1194.75 to 1195.00, it has broken it marginally overnight. Ideally for the bullish case, it will rally early and not break this area again in the day session. Otherwise, we could test the 1182.75 high volume level again. It looks as though the ES will not be able to clear critical resistance at 1215.75 this week. Going back to August, 2009, the last week of every month has been sideways to down, so it would not be unreasonable to expect…
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