Pre-open Monday 16th May
ES finished the week near the low and during Friday’s session again tested the 2041 poc Support. Aggressive Selling (red-at-bottom) was marked but in the longer timeframe this Selling can be called Reactive because it has only managed to auction ES back to the poc. Time printed below that poc (2041) would indicate further weakness, see last Monday’s comments. I remain cautious here especially with the deterioration in Breadth numbers, see below.
First Level Resistance = 2068.00 dashed line (minor 1/2R off April high)
Second Level Resistance = 2086.00 (1mn poc)
First Level Support = 2041.00 (8mn poc)
KEY Chart: The 1/2R off last years high for IWM is at 111.38. Chart closed below that level on Friday in a weak price location.
Market Charts: Nyse and R2000 stayed positive, Nasdaq turned negative, UK turned neutral (from negative).
Stocks>50dyma numbers: Nyse 52%, Nasdaq 41%, R2000 47%, UK 44%. Numbers >50 are supportive.
Sentiment: My version of the Rydex Assets Ratio ended the week at 4.05. On 04/26 the ratio reached 5.27 which was the highest level since early January. On 02/19 the ratio fell to 2.64 which was the lowest since November 2012.
Supporting Charts:
Bonds: TLT. Closed on Friday above 131.82, the 1/2R off this year’s high, at its highest level since early April. The 7mn poc recently migrated to 128.47 and is now Support.
Dollar Index: on 05/03 printed its lowest level since Jan 2015 but rallied from there and on Friday probed 94.79, the 2yr poc Resistance. Key chart – price above this level would indicate further strength.
Gold: GLD – as long as it holds above the major poc at 118.22 it is in a strong LT price location. Cash indicates a higher open today.
Oil: is today printing its highest level since November.
EURUSD: Support is at 1.1198, the 3yr poc and as long as EURUSD holds this level it is in a strong price location.
