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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, e.g. VIX closed below 13 for the first time since 2007. But it was interesting that my version of the Rydex Assets Ratio ended the week at 3.63, down quite a bit from 4.63 reached earlier in the week which was a 69day high.
*********** 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: Has found Support just above the major poc (117.15) and closing Friday at 120.04. Price below 117.15 would be very weak price location and a further positive for equities. COT data looks supportive for Bonds.
Commodities: Oil USO is now printing above the important 1/2R and poc levels around 34.17. This is stronger price location. GLD is alos now in a stronger price location above the 161.00 poc and momentum has turned positive.
EURUSD: Chart finished the week back above 1.3117, the 24mn poc but has failed (so far) to overcome the next Resistance at 1.3416, the 1/2R off 2010 low.
Dollar Index: Finished the week in a stronger price location above the 2yrpoc at 79.80 and on Friday tested up into the major level at 80.15. Price printing above 80.15 would be an even stronger price location and be a negative for equities.
ES analysis:
Through Friday, Significant Sellers have not been marked for fourteen days and we have seen eight consecutive Value Areas printed above the 4mn poc at 1453. The market is overbought but only Sellers marked below 1453 would be a first sign of weakness in the Longer Timeframe.
*********** BREADTH
Chartprofit Market Timing System is positive for all Major Market Charts.
%Stocks>50dyma numbers: Nyse 91% and Nasdaq 81%. UK 87%. Numbers >50 are supportive. Numbers>80 usually consideed overbought.
*********** SENTIMENT
Consensus Polls:
01/18: AAII (public poll) reported Bulls% lower at 43.9% (from 46.4%) and Bears% slightly higher at 27.3% (from 26.9%).
01/18: Investor’s Intelligence Bulls% was higher at 53.2% (from 51.1%) a seventeen week high. Bears% at 23.4% is the lowest since w/e 18th May 2012. The nett (Bulls-Bears) at 30.9 is the highest since 6th April 2012 which coincided with the price high.
01/18: Market Vane (advisers) poll was unchanged at 66.
01/18: The NAAIM number (a measurement of average current equity exposure among active money managers) was higher at 84.67 which is a little below the reading of 88.1 w/e 28th Dec which was the highest since 2007
Mutual Fund Flow:
01/18: My version of the Rydex Assets Ratio ended the week at 3.63, down quite a bit from 4.63 reached earlier in the week which was a 69day high.
01/18: lipperusfundflows reported Equity Fund inflows of $286 million in the week to 16th January. The previous week’s inflow was the largest (by far) single weekly inflow for years and the the 4wk flow is at its highest level for years as well.
01/18: lipperusfundflows ex_ETFs reported Equity Fund inflows of $3.8 bill in the week to 16th January. Previous week’s inflow was the largest single week’s inflow in my database. The 4wk flow is the highest it has been since early 2011.
Volatility: VIX
01/18: VIX closed the week at 12.46 which is the first time VIX has closed below 13 since 2007.