Technical Analysis – Market pre-open 29th January 2016
See previous comments. Once again, another test of the 1870 Support was rejected, see chart, and a fifth consecutive Value Area was generated above that level. In the ST this is encouraging and in the Dayframe if ES can hold the minor (35dy) poc at 1886.50 post-open I would look for a relatively strong end to the week which would be a further positive.
The market is attempting to rally here from a deelpy oversold condition but I need to see Effective Buying marked above 1870 before considering the long-side on any timeframe. It is worth noting that Momentum for all four major stock ETFs, although negative, is up. See Key Chart SPY, below.
First Level Support = ES 1870 (previous poc)
Key Charts: Support: SPY 187.20 poc – key for the Bulls that this level holds – note that Wednesday and Thursday made low 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 18% (from 16%), Nasdaq 15% (from 13%), R2000 14% (from 12%). Numbers >50 are supportive.
Sentiment: My version of the Rydex Assets Ratio higher at 4.0. 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. Futures indicate a higher open today.
Dollar Index: A probe in early December above the March high was rejected but if the chart can now hold the minor 1/2R (98.85) off that high I would look for a break higher.
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 printed a 15day high on Thursday.
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 and is today is printing below 1.0925, the 12mn poc.
