Here we can see the recent range trade in the ES contract; we are probing the lower end of that range prior to today's open. Note how weakness in stocks has been accompanied by firmness in the U.S. dollar, a dip in 10-year Treasury rates, and weakness in such commodities as oil. As market sentiment prices in economic strength and reflation, stocks tend to benefit; as sentiment veers toward concerns over economic weakness, stocks tend to fall. I'll be watching these themes closely; the intermarket relationships aren't perfectly correlated, but they do provide a window into the thinking of money managers. Buying the dollar and buying Treasuries is part of a relative safety trade; buying commodities and emerging markets is part of a global growth trade.
I'll also be tracking volume on any early morning weakness to handicap the odds of staying within the recent trading range vs. breaking out to the downside. Updates via Twitter (follow here) will help track themes and intraday sentiment.
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