Pre-open eMini SP 500 Morning Report 5.19.10

This is a guest post from Precision Capital Management

The Precise Take – Risk at the Rubicon

Big Picture Analysis:  The bearish signals are adding up and we are quickly approaching the time at which institutional as well as retail bulls will throw in the towel.  It was at this point in early July 2009 and February 2010, when the bulls came through at the last minute and sparked short covering rallies that became sustained.  To wit, the S&P 500 issued a major sell signal yesterday in the form of the so-called death cross, the cross of the 20 day moving average under the 50.  It was just after the same occurrence in July and February that the short covering rallies began.  We have been looking for signs of a potential bottom this week up through as late as today.  Yesterday’s late day weakness after news of the German naked short selling ban may have been too damaging, however, as the ES is now accepting below its lowest established value area (below, purple).  If the ES cannot accept above 1126.00 very soon, we could be in for…

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