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The Precise Take – Equities maintaining amidst Dollar rally

Leaders Analysis:  The US Dollar Index has surged further to strong trend line resistance, and the EuroYen is just barely holding on to support.  Equities have held their ground, however, and for the same reason as yesterday (leaders at inflection points), the leaders are equities neutral.

Medium Term Analysis:  Not much to add from previous days’ commentary.  Equities are at highs, a bit overbought and today is opex.  Next week is quiet until GDP on Friday.  The Treasury auctions could depress equities a bit.  Monday will be a big test.  With no news, will traders…

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http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_March_19_10.pdf

This is a guest post from Precision Capital Management

The Precise Take – Markets calm after flat CPI

Leaders Analysis:  The leaders threw us a big curve yesterday, but correlations appear to have righted overnight, with the EuroYen and ES falling, then rising in synch, and the US Dollar Index following inversely as well.  With the EuroYen at support and the Dollar at resistance, the leaders are equities neutral for today.

Medium Term Analysis:  CPI was a non-event this morning, so focus will be on tomorrow’s quadruple witching options expiration.  Next week is news-light until Friday’s preliminary GDP for Q4 2010, though there are some large Treasury auctions in the middle of the week.  The latter is notable because the only stumble in the equities rally that began in February was concurrent with the same auctions in the final week of February.  Besides being overbought, there’s really nothing else…

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http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_March_18_10.pdf

This is a guest post from Precision Capital Management

The Precise Take – Equity futures extend gains overnight, but leaders at inflection points

Leaders Analysis:  The US Dollar finally reached 79.53 support overnight, the 38.2% retracement of its January to February rally, which also coincides with long term pivot and 50 day moving average support.  While it could eventually reach the 50% retracement at 78.97, it should bounce here first.  Similarly, the EuroYen and 30 Year T-Bond yields are at potential reversal levels, so the leaders are equities bearish today.

Medium Term Analysis:  Yesterday, the ES cleared critical resistance at 1152.75 and is up materially overnight, having reached precisely the March contract high of 1159.50.  This should pave the way for higher prices, however, not necessarily immediately.  Given the leaders’ stance, we expect to see at least a test of…

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http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_March_17_10.pdf

This is a guest post from Precision Capital Management

The Precise Take – Equity futures back up to highs ahead of FOMC Announcement

Leaders Analysis:  The leaders are mostly consolidating ahead of today’s announcement.  Notably, gold is up and the EuroYen has a bit more room to advance to resistance.  Accordingly, the leaders are slightly equities bullish.

Medium Term Analysis:  The levels we were watching yesterday were 1140 and 1147.  After the ES traded below 1140, it looked like the chances of the rally continuing were diminished.  However, the strong rally and close just under 1147 kept the rally strong.  Ideally for longs, the ES would clear monthly R2 at 1152.75 prior to close.  Even if the expected profit taking occurs post-announcement, it would…

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http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_March_16_10.pdf

This is a guest post from Precision Capital Management

The Precise Take – Markets quiet ahead of full news week

Leaders Analysis:  After breaking its consolidating wedge to the downside Friday, the US Dollar Index is retracing a bit as expected.  The EuroYen is down marginally, and 30 Year T-Bond yields are down, but at support.  For today, the leaders are equities neutral.

Medium Term Analysis:  Tomorrow, the FOMC meets and is the first one day meeting in recent memory.  This in itself shows the Fed is a bit complacent; however, the ramifications aren’t relevant to trading over the next week.  We don’t expect any waves, and with CPI Thursday and options expiration (quadruple witching) later this week, there will be plenty of news to influence equities.  Given the bullish FOMC seasonality from the close of the day prior (today) to just after the announcement, the best scenario for swing longs is to trade above 1147.00 by tomorrow’s open and clear major resistance at 1152.75 prior to or just after the announcement.  Then, after consolidating Wednesday…

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http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_March_15_10.pdf

This is a guest post from Precision Capital Management

The Precise Take – Equity futures spike higher on Retail Sales

Leaders Analysis:  The US Dollar Index broke down through its consolidating wedge and has reached support.  While we expect it to go lower next week, there is a good chance it will retrace upwards a bit first.  The EuroYen has traded up to its 20 day moving average and 30 Year T-Bond yields are up after going down on yesterday’s 30 year auction and hitting support.  Because of the extended moves into support/resistance and possibility of reversal, for today, the leaders are slightly equities bearish.

Medium Term Analysis:  As of Monday, we will switch to the June 2010 contract.  Yesterday’s afternoon rally finally produced the breakout from the January high, which was continued overnight and extended on the Retail Sales report.  The spike up on the report into strong resistance and subsequent retracement is a bit bearish, and given the overbought status of the ES, we would not be surprised to see…

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http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_March_12_10.pdf

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The Precise Take – Equities still consolidating near highs

Leaders Analysis:  The leaders are mostly quiet overnight, and are equities neutral.  Focus will remain on the US Dollar Index’s consolidating wedge. 

Medium Term Analysis:  Yesterday, the ES tested to the tick the January 1148.00 high.  If we were to compare the current rally to that of July 2009, yesterday would be Tuesday, July 21 and today would be the July 22 inside day, with tomorrow the strong break up through resistance.  We note this because of…

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http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_March_11_10.pdf

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The Precise Take – Markets quiet as the S&P 500 tests the January high

Leaders Analysis:  30 Year T-Bond futures are down to moving average support, and the US Dollar Index is mostly flat.  The 10 Year Treasury auction is today and the 30 Year tomorrow, so long term rates will be reactionary instead of predictive.  The EuroYen and gold are slightly bullish, so the leaders for today are slightly equities bullish.

Medium Term Analysis:  The ES is accepting near the January high.  We remain bullish this week, but it’s difficult to predict when and how the breakout will occur.  If there is a retracement, any venture below the current value area that extends down to 1126.50 should be met with…

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http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_March_10_10.pdf

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The Precise Take – Equity futures correcting mildly overnight into news vacuum

Leaders Analysis:  Our focus is on the US Dollar, as it appears to be making a consolidating wedge formation on the daily rather than extending the down move initiated last week.  Under the consolidation scenario, it should sell off when the index hits 81.00 to 81.25 by tomorrow, then find support between 80.00 to 80.25.  If it breaks through these levels on a closing basis, a large move could get underway again, with equities following inversely.  With the EuroYen down overnight and not quite yet to support, for today, the leaders are slightly equities bearish.

Medium Term Analysis:  The ES is down overnight for the first time since late February, so it looks like equities will correct a bit before attempting to head higher.  We mentioned the weekly pivot at 1126.50 as the likely target yesterday and stand by it.  The rally is not in jeopardy, however, unless the value area centered around the 1118.00 high volume level gives way.  With no scheduled news, traders will become introspective and question whether we have a double top on the weekly, which should turn sentiment bearish over the next few days unless the rally resumes.  It is exactly this bearish sentiment that…

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http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_March_9_10.pdf

This is a guest post from Precision Capital Management

The Precise Take – Markets quiet ahead of slow news week

Leaders Analysis:  The divergences in leaders correlation that we noted shortly after the report Friday was quickly resolved intraday.  The US Dollar retraced all of its early gains and closed on its low, and is down further overnight.  The EuroYen finally got the breakout we were looking for and is up nominally overnight.  The 30 Year T-Bond yield broke above its long term trendline but, with the futures having traded down to support, may continue to oscillate around the trendline.  Until it breaks definitively away from it, this market will not provide much predictive value.  The leaders look as though they will consolidate their moves and are, therefore, equities neutral.

Medium Term Analysis:  On Friday, equities showed great strength and should be able to capitalize by extending gains this week.  The ES is within striking distance of the January 11 high of 1148.00 which, interestingly, was posted the day after the month’s Employment Situation report.  The fact that market internals calculated by a variety of methods are making new highs suggests they should avoid a similar fate this time.  If not, there should at least be warning.  Having said all that, there is not scheduled news of note over the next two days, and little else until Friday.  It would be normal in this situation to see a…

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http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_March_8_10.pdf