Please note that COT data was not available to me. I have reported the problem to the CFTC. I will update the eBook with COT charts as soon as possible.
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Although the market is overbought both the LT and ST analysis is supportive. First indication of weakness would be Significant Sellers marked below ES 1453. Sentiment shows extreme complacency, not quite extreme optimism, but bullishness is rapidly increasing. Supporting Charts are mixed – Bonds were weak Nov/Dec but “may” have found support. Dollar is in a weak position. TLT (Bonds) breaking below 117.15 or Dollar Index rallying back above 80.15 would more clearly indicate the bias for equities.
*********** PRICE PERFORMANCE / LOCATION
Unlike Equity Index/ETF charts, the following KEY Charts are printing very close to useful reference levels. Monitoring price relative to these levels should give us a good idea about the markets current appetite for risk; mixed at the moment but will hopefully give better indication soon.
Bonds TLT: Seems to have found Support just above the major poc (117.15). Closed at an eight day high on Friday and momentum has turned up.
Commodities: Oil USO Rallied to important 1/2R and poc Resistance around 34.17 eight days ago but has not overcome this level. Price printing above this level would indicate further strength and “risk on”. Gold GLD finished the week “at” the 161 major poc.
EURUSD: Chart finished the week back above 1.3117, the 24mn poc. This is strong price location and a positive for equities but today chart is approaching the next Resistance at 1.3416, the 1/2R off 2010 low.
Dollar Index: Finished the week in a weak price location below the 2yrpoc at 79.80.
ES analysis:
from pre-open 2nd Jan. >>Until we see a VA printed entirely below the maj poc at 1406 we can say that the longer term trend has not broken down.<<
Through Friday, Significant Sellers had not been marked for nine days. The four month poc moved up to 1453 last week and this is now First Level Support. Significant Selling marked below that level would suggest further weakness but only Significant Selling marked below 1406 would suggest the LT trend has turned down.
*********** BREADTH
Chartprofit Market Timing System is positive for all Major Market Charts.
%Stocks>50dyma numbers: Nyse 88% and Nasdaq 80%. UK 87%. Numbers >50 are supportive. Numbers>80 usually consideed overbought.
*********** SENTIMENT
Consensus Polls:
01/11: AAII (public poll) reported Bulls% higher at 46.4% (from 38.7%) that’s quite a jump and equal with w/e 21st December as the highest Bulls% since Feb 2012. Bears% was sharply lower at 26.9% (from 36.2%) The nett (Bulls – Bears) at 19.5 approaches the recent high three weeks ago at 21.6 which was the highest since Feb 2012.
01/11: Investor’s Intelligence Bulls% was higher at 51.1%, a seventeen week high. Bears% at 23.4% is the equal lowest (with four weeks ago) since w/e 18th May.
01/11: Market Vane (advisers) poll was lower at 66 (from 68).
01/11: The NAAIM number (a measurement of average current equity exposure among active money managers) and has moved back up to 83.27 which is a sharp increase from previous week’s 75.98 but a little below the reading of 88.1 w/e 28th Dec which was the highest since 2007
Mutual Fund Flow:
01/11: My version of the Rydex Assets Ratio ended the week at 4.40. Wednesday’s 4.44 was a 60day high.
01/11: lipperusfundflows reported Equity Fund inflows of $18.3 billion in the week to 9th January. That is the largest (by far) single weekly inflow for years. I have to go back to September 2007 to find one higher. Excessive bullishness which lifted the 4wk flow to its highest level for years as well.
01/11: lipperusfundflows ex_ETFs reported Equity Fund inflows of $7.5 bill in the week to 9th January. The largest single week’s inflow in my database.
Volatility:
01/11: Closed at 13.36 which is the lowest since 2007.