posted 09.00 a.m. est
Pre-open comment Tuesday 3rd December
On Monday the minor (18day) poc migrated higher to 1806 (from 1789) and I marked Aggressive Selling (red-at-bottom) below this level. We look to see who is Active and then ask, are they Effective? In the dayframe Sellers were Active yesterday but the Value Area is clearly within the range of the previous four VAs so this isn’t obviously Effective Selling – yet. Even so, new long trades are now eliminated for me, at least until Significant Buying (green) is marked again. As already noted, Sentiment has been getting excessively bullish recently so we need to watch for further evidence of developing weakness, e.g. weakening breadth numbers. Note the Rydex data below; the market may want to dampen this enthusiasm.
First Level ST Support = 1806.00 (18dy poc)
First Level LT Support = 1758.50 poc
Stocks>50dyma numbers: Nyse 61% (from 66%), Nasdaq 63% (from 68%), R2000 65% (from 73%). Numbers >50 are considered supportive.
Sentiment: My version of the Rydex Assets Ratio was higher at 5.58. There is only one reading higher than this in my database and this was 5.64 on 3rd April 2012. This indicator is registering extreme optimism which has historically been a warning for the market.
Supporting Charts
Bonds TLT: Recently probed down to probe the August low. Has bounced but still in a weak price location below 106.31, the 8mn poc. Momentum (although negative) is up.
Gold GLD: Lower on Monday and Momentum turned down again. Very weak and looks likely to test the July low.
Oil USO: Consolidated for four weeks in a weak price location below 34.13, (3yr poc) and broke lower last week to its lowest level since June.
Dollar Index: The last four weeks have been spent back in a stronger price location above the important level at 80.15.
EURUSD: Strong LT price location above 1.3416 (1/2R off 2010 low). ST price location is stronger if chart can hold above 1.3564, (minor 1/2R off October high).
