Technical Analysis – Market pre-open 5th January 2016
The market opened sharply lower on Monday. Buyers were active intraday and auctioned ES to a close near the high of the session. Overnight ES printed above 2015 and then fell back below 1995. Pre-open there has been a climb back. Breadth numbers are weak and price momentum (PriceOsc) for SPY, although negative for a while, had been climbing, – but this turned down again on Monday. Rydex ratio is concerning, see below.
Second Level Resistance 2087.00 (5mn poc) to 2094.00 (maj poc)
First Level Resistance = 2043.00 (1/2R off November’s high, Mar contract)
Support = 1965.25 (1/R off this year’s high)
Stocks>50dyma numbers: Nyse 22% (from 30%), Nasdaq 26% (from 37%), R2000 21% (from 31%). Numbers >50 are supportive.
Sentiment: My version of the Rydex Assets Ratio was slightly higher at 8.59. The ratio hit 9.17 (a four month high) just four trading days ago and has only fallen by 11.5% since then. As the market opened sharply lower many would have considered it “too late to sell” but with the S&P down more than 4% to yesterday’s low in the same time period this looks like complacency from the Rydex traders. That is not usually bullish in the ST.
Supporting Charts:
Bonds IEF, the 7-10 yr ETF: recently found Resistance at 106.60 (18mn poc) and is lower from there. There is Support at 105.00, the major poc. Next directional move will likely be signalled by a solid break from this range.
Dollar Index: A probe in earkly December above the March high was rejected. The minor 1/2R off that high is at 98.85 and today the chart is printing back above that level which is strong price location.
Gold GLD: recently printed a new five year low. Still in a very weak price location.
Oil: printed a new six year low on 12/21. Rallied a little from there but has been consolidating for seven days.
EURUSD: The rally from the November low approached, but did not test, the First Level Resistance at 1.1080, 1/2R off March low. Printing a 23day low today.
