Pre-open eMini SP 500 Morning Report 6.15.10

This is a guest post from Precision Capital Management

The Precise Take – Equities attempting to discount sovereign risk

Big Picture Analysis:  When judging the strength of market, an easy test is to see how traders react to surprise news, either in the form of an unscheduled major announcement or a scheduled report that is not in line with expectations.  Friday’s Retail Sales was well below expectations, and yesterday’s shock of the day was that Greek debt is now officially junk status.  In both cases, the initial reaction was down, but Friday’s day session was an up day, bucking a multi-month bearish seasonality, and overnight, the ES has recovered more than half of yesterday’s range.  That the ES is net up after both these events is short term bullish.  What will give us confidence (and we are not quite there yet) in the bullish case is for scheduled news to become greater price drivers than unscheduled, with daily ranges continuing to contract.  The ES has yet to clear critical resistance, which is the 1099 to 1105 area, and until it does we remain cautiously bullish.  A nasty selloff on bad news that closes the ES below its 20 day moving average at 1077 would probably turn us short term bearish, depending on the confirmation of the leaders.  Another thing that warrants caution is that Friday is quadruple witching options expiration, so there is greater possibility of

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