posted 09.28 EST
from pre-open analysis 02-27
>>I’m seeing development down to the 715 area from here. In the bigger picture there’s little to encourage. Breadth is poor and major charts are trading below their half-high levels which puts them in an extremely weak position.<<
Two weeks ago I said that two scenarios were possible, one of which was “the most bearish is we see all the major charts trading below their 1/2H levels, the downtrend resumes and we see new lows pretty quickly” This seems to be the one playing out. Price location is extremely weak with all major charts (now including DIA and QQQQ) trading below their half highs and the SP500 index hitting a new low on Friday. Breadth is also very poor. Also the commitments of traders data reported on Friday is still bearish.
Last week we saw significant selling twice and significant buying once. When the sellers are active they effectively auction the market lower, as on Monday. On Tuesday and Wednesday sellers were inactive (resting) which gave an opportunity to the buyers. Unfortunately they were only able to generate slightly higher, but overlapping value areas which amounts to ineffective buying activity. This was recognised by the sellers who stepped back in again on Thursday. The sellers are still very much in control.
Monday is always the hardest to anticipate. ES has been below the 715 minimum development traget (pre-open Friday) already today. If sellers rest and there is no significant buying then 751 might be the upside limit early in the week.
