Technical analysis – Market pre-open 11th January 2016
See previous comments. Value Areas on Thursday and Friday were printed entirely below 1965.25 (1/R off last year’s high). This is weak price location. The breadth numbers, see below, are at levels that often suggest the market is oversold and ready for a bounce. At current levels recovery back above 1965.25 would be the first sign of strength. Sentiment, e.g. Rydex ratio, see below, still concern me.
Second Level Resistance = 2043.00 (1/2R off November’s high, Mar contract)
First Level Resistance = 1965.25 (1/R off last year’s high)
Key Chart DIA: Tested the Support at 164.00 on Friday Time below this level would be a further negative. Price momentum (PriceOsc) for all four major stock index ETFs remains negative and down.
Market Charts: All major Market Charts are negative.
Stocks>50dyma numbers: Nyse 13%, Nasdaq 12%, UK 28%. Numbers >50 are supportive.
Sentiment: See Tuesday’s comments re the Rydex Assets Ratio. Considering the sell-off in the market I would like to see the ratio lower. My version of the Rydex Assets Ratio ended the week at 6.28. Previous week the ratio reached 9.17, a four month high and was the first time the ratio had been above 9.0 since 18th August.
Supporting Charts:
Bonds IEF, the 7-10 yr ETF: Held the major Support at 105.00 following October’s decline and rallied. Closed above the Resistance at 106.60 (18mn poc) on Friday but futures indicate a lower open today.
Dollar Index: A probe in early December above the March high was rejected. The minor 1/2R off that high is at 98.85 and the index is printing below that level today.
Gold GLD: printed a 44day high last week as investors sought safe haven. Chart is still in a LT weak price location though.
Oil: closed below 2008’s low at its lowest level since 2004.
EURUSD: The rally from the November low approached, but did not test, the First Level Resistance at 1.1080, 1/2R off March low.
