Your MUST-READ Morning Stock Futures Cheat Sheet: Battening down the hatches

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The Precise Take – Battening down the hatches

Big Picture Analysis:   The recent structural weakness in the market that had been masked by trendless, choppy trading in the indexes is beginning to make itself known, as the first downside target of 1072 (early August low in the December ES contract) was reached, as we write.  VIX broke resistance to the upside, HYG broke support and the 30 year T-Bond yield just opened to new recent lows (2.70%!).  The Belgian bank, Dexia, was partially nationalized overnight, and MS and BAC options are pricing in restructuring.  This is the point at which to become very defensive on both sides, as bearish fundamentals have the potential to be counteracted by rumors of intervention.  In that regard, we note Bernanke testifies before Congress today at 10:00 am.  However, given the European calendar for EFSF negotiation, we do not see a resolution in the near term.  Meaning, bounces should be shorting opportunities until a deal is inked or a capitulation bottom shows up on the charts.

Trading Today:   See below for support and resistance areas.  We estimated some lower price action levels from a non-point adjusted continuous futures chart of the ES and triangulating with SPY.  Major support areas are the September and July 2009 lows, 1035-45 and 1000-15 (basis ES).

Today’s  Scheduled News (all times EDT)

Major Market Movers
Bernanke Speaks at 10:00 am

Minor Market Movers
Factory Orders at 10:00 am

Tomorrow’s Scheduled News

Major Market Movers
ADP Employment at 8:15 am
ISM Non-Mfg at 10:00 am

Minor Market Movers
EIA Petroleum Stats at 10:30 am

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