Technical Analysis – Market pre-open 28th January 2016
Another late sell-off (like Monday) tested the 1870 Support, see chart, but the last four Value Areas have been generated entirely above that level which is encouraging. Bulls would want to see that continue, a Value Area printed below 1870 would suggest further weakness. The market is attempting to rally here from a deelpy oversold condition but I need to see Effective Buying marked above that level before considering the long-side on any timeframe. It is worth noting that Momentum for all four major stock ETFs, although still negative, has turned up. See Key Chart SPY, below.
First Level Support = ES 1870 (previous poc)
Dayframe: The minor (34dy) poc is at 1886.50. Price relative to this level is worth watching today as an indication of ST strength/weakness.
Key Charts: Support: SPY 187.20 poc – key for the Bulls that this level holds – note that Wednesday’s low was at this level – see Pulse Chart. DIA Resistance at its major poc at 63.75. If the market manages to sustain a rally, this level would be key.
Stocks>50dyma numbers: Nyse 16% (from 18%), Nasdaq 13% (from 16%), R2000 12% (from 16%). Numbers >50 are supportive.
Sentiment: My version of the Rydex Assets Ratio slightly lower at 3.73. On 12/29 the ratio reached 9.17. Last week it fell to 3.52 which is as low as it has been for two years except for the sell-off late last year when the ratio fell to 3.00.
Supporting Charts:
Bonds IEF, the 7-10 yr ETF: Held the major Support at 105.00 following October’s decline and rallied. Now printing time well above 106.60 (18mn poc) in a stronger price location. There is Support now at 107.17 which is the 1/2R off last year’s high.
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 currently printing just below that level.
Gold: chart printed a 61day high on Wednesday but is still in a LT weak price location.
Oil: held the 1/2R off last week’s low and has today printed a 12day high.
EURUSD: The rally from the November low approached, but did not test, the First Level Resistance at 1.1080, 1/2R off March low. Chart has been in a range since early December but today is printing at 1.0925, the 12mn poc.
