Pre-open eMini SP 500 Morning Report 5.14.10

This is a guest post from Precision Capital Management

The Precise Take – Equity futures down after failure at key resistance

Big Picture Analysis:  Equities could not get going early yesterday, and the ES finally sold off hard into the close, trading as low as 1144.25 overnight.  In retrospect it was the cash S&P 500 50 day moving average and trend line that trumped those of futures, and that was indeed where equities stalled.  We’ve redrawn the lower yellow trendline on the chart below accordingly.  Friday has been the worst performing day for equities for some time.  A break of 1142.50 could gain momentum to the downside.  However, should it hold, the leaders are currently painting a different picture (below).

Leaders Analysis:  The US Dollar Index broke last week’s high overnight, but has backed off minor pivot resistance at 85.87.  While we were inclined to believe yesterday that it should get significant follow through, looking to the Euro, which comprises 57% of the Index, has bounced from major pivot support, which sets up a potential false breakdown for the Euro and the converse for the Dollar.  For confirmation, we’ll look to 85.87 in the Dollar and 1.2400 in the Euro, holding into Monday morning.  The EuroYen is up from minor support, so the leaders are equities bullish for today as long as the key support and resistance levels hold in the Euro and Dollar, respectively. The latter is a giant caveat, so…

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