Your MUST-READ Morning Stock Futures Cheat Sheet: Inflection point

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The Precise Take – Inflection point

Big Picture Analysis – As we write, over two thirds of the losses from the ES’ three day slide were pared on news about the Fed (yesterday) and the ECB (this morning).  While it’s possible this most mild of correction is over and we head higher from here, traders should be mindful that headline risk from Europe is having a much larger effect on the markets than during the January and February months. Inasmuch as the Greek saga should continue to play out over the coming weeks, there is the potential that this latest price action is a bull trap.  We also have the big monthly Employment Situation tomorrow morning that often sets the tone for several days.  In the 135 minute chart below, we see price has now tested the long standing trend channel bottom after breaking it two days ago (we have removed the other trend channel lines).  It is characteristic for price to retest what was former support before resuming a down move.  Conversely, acceptance above 1365 suggests at least a test of prior highs, and a decent potential for material new highs.  All in all, traders should be cautious in both directions, as we might see volatility pick up.  For today, however, barring headline risk, we might expect a quiet day.

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To contact the reporter on this story: Bob English at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com