Pre-open eMini SP 500 Morning Report 5.12.10

This is a guest post from Precision Capital Management

The Precise Take – Markets consolidate as tensions slowly ease

Big Picture Analysis:  The leaders were painting a bearish picture yesterday morning, but the ES was strong until the late afternoon as it sold off into the close.  Our test for overcoming bearishness was acceptance above 1161.75, which occurred.  However, it looks as though the critical level was a bit higher at 1169.00, which is the confluence of a long term high volume level, the 50 day moving average, the lower trend line from which the breakdown occurred last week (yellow, below), and the top of its new trend channel.  The ES has formed a range since Monday open of 1141.00 to 1169.00, and a break in either direction should get follow through into next week.

Leaders Analysis:  The 30 year yield as been consolidating and hugging its 200 day moving average for three days.  It is positively correlated with equities and could give a leading signal today.  There’s a 10 year auction this afternoon and the 30 year tomorrow.  Though other factors are dominating market action now…

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