posted 9.28 a.m. est
Pre-open Friday 2nd July
Wednesday’s red-at-bottom low was tested yesterday. SPX hit a new 9month low.
In Tuesday’s webcast I mentioned four charts that were the most important to monitor this week: Nasdaq Comp, IWM, XLK and DAX. I gave the obvious support levels on these charts. All four have hit those levels but not broken below. Bulls will definitely want to see those levels hold – they are very important.
I suggested yesterday that a further decline might bring out the Responsive Buyers here but that it was too risky to play for. Well, we saw ES lower and I did mark some Significant Responsive Buying but I won’t be considering longs on any timeframe until there is more evidence that they are gaining control. Supporting charts are looking more bullish for equities but ST Sentiment is a concern (see below).
LT Sentiment: AAII (public poll) reported 24.7% Bulls (down from 34.5%). This is the lowest %Bulls since the low in early November 09. Bears were up from 32.4% to 42%. So increasing Bearish sentiment here but….
ST Sentiment: My version of the Rydex Assets Ratio was slightly up from 1.29 to 1.5. and…The ISEE index (equity only) came in at 200, the highest number since June 15th.
Looks like Investors are Bearish enough for a low but Traders seem too eager to buy which isn’t typical of a low.
Supporting Charts (technicals based on daily Price Oscillator)
– USDJPY: new low for the year on Thursday.
+ EURUSD: higher low based on the 1.2133 major halfway level was confirmed by a breakout above the June high.
+ UDX: Has broken below the 85.14 poc support.
– IEF and TLT were higher again with rising Price Osc. Price Osc is diverging negatively with price – turning down will confirm.
imo: these charts are mixed but suggest there could be a turn coming for equities.
