(ES) Greek Debt Crisis Winds Blow Bullish Today, Define New 1,333 S-T E-Mini Risk

Technicals, February 13, 2012; 7:30am

As the 240-min chart below details, the E-Mini S&P market is bid this morning, with this relative strength a direct result of favorable news on the Greek debt crisis. Fri's setback came as a direct result of that day's less-than-favorable news. But while the direction of tomorrow's winds on this matter are unknown, technically we believe the market has defined Fri's 1333 low as the latest corrective low or lower boundary of such a correction that this market has to fail below to break the rally from 30-Jan's 1296 low that would expose a larger-degree correction or reversal lower. This short-term risk parameter is trailed from our previous corrective low at 1331 and is advised to be used by shorter-term traders with tighter risk profiles to protect bullish exposure.

On Fri, the Feb week-2 1335 calls closed in-the-money. Traders long the Feb week-2 1335 / Mar 1390 call diagonal from 02-Feb's Trading Strategies Blog have thus assumed a long futures position at 1335 against a still-short Mar 1390 call. Traders are advised to maintain this position until or unless the market fails below 1333 that we believe warrants covering the entire position.

The broader bull trend is clear in the daily log chart below, with a failure below 30-Jan's 1296 corrective low still required to confirm a bearish divergence in momentum of a scale sufficient to threaten the broader advance and expose a larger-degree correction or reversal lower. In lieu of such weakness, the major trend remains up and should not surprise by its continuance or acceleration. And per such, longer-term players are advised to maintain a bullish policy with weakness below 1296 required to warrant defensive measures.

Such a longer-term risk parameter like 1296 will come in handy if the market proves itself to be vulnerable at current levels near the upper recesses of the past year's range shown in the weekly log chart above amidst its highest reading (66%) in the Bullish Consensus (www.marketvane.net) since that that accompanied May'11's major peak and reversal. Needless to say, a break above last May's pivotal 1373 high would be a major bullish achievement that would expose an assault on Oct'07's all-time high of 1587 shown in the monthly log chart below.

These issues considered, a generally bullish policy and exposure remain advised with weakness below 1333 required to defer this call and a failure below 1296 required to threaten it sufficiently to warrant defensive measures by even long-term players. In lieu of such weakness, further and possibly accelerated gains remain expected with May'11's 1373 high the next pivotal upside hurdle.

The bullish analysis of the Mini-Russell 2000 contract is virtually identical to that detailed above for the S&Ps with 8103 ("tight") and 7846 the short- and longer-term risk parameters this market is required to fail below to defer or threaten a preferred bullish count.

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