Chartprofit Webcast – Charts to Friday 16th January 09
*********** PRICE PERFORMANCE
Low last week was below the low of the previous five weeks. Within two weeks the sellers had negated all the gains of the previous four weeks.
*********** PRICE LOCATION
In the webcast today I show all the major stock index and futures charts we follow with their current POCs. All these charts currently trade BELOW these levels. I do not advise being long until this situation changes.
It is also the case that price trades ABOVE the important Half High Levels. If these levels did start breaking down the market would be in a very weak position.
*********** BREADTH
The ChartProfit Breadth system is now neutral for all major market charts apart from R2000 which remains positive.
The ChartProfit Breadth system is positive for 10 of the 20 DJ sectors, neutral for 9 and negative for 1.
*********** SENTIMENT
Two weeks ago
>>some of the sentiment measures are at levels that would indicate over-enthusiasm.
If this is still Bear Market then that would be a problem, i.e. investors getting complacent…<<
In a bear market, over-enthusiasm is the most important thing to measure. The charts have sold off since we saw this two weeks ago.
Public sentiment has become a lot more bearish with that decline but nothing extreme: see AAII, OCC Calls%, ISEE Index (Equity only),
Investors Intelligence (newsletters) poll are still more bullish than they have been for six months.
The Nasdaq/Nyse Vol ratio is back above 150. See C/study.
Amgdata shows that the 4week flow of Domestic Equity Funds (excluding ETF data) is almost at a six month high while 4week flow of ETF (equity fds) hit a six month low.
*********** COMMITMENTS of TRADERS
Nasdaq100: Commercials are the most bearish they’ve been for 9 months, Small Traders are the most bullish they’ve been for 9 months.
SP500: Still seeing this as a bearish set of data.
************ CONCLUSION
2 weeks ago:
>>Now the holiday period is over we’ll find out whether the large players see this rally as an opportunity to sell. Bulls would want to see price hold above the POC levels shown in webcast. ….I’m interested to see how see ES reacts if it overcomes 940. If we see 940 exceeded this week, price distributions suggest we could see sellers re-emerge just above this level.<<
Last week:
>>Sentiment indicators suggest there has been too much optimism so soon after the November low. From a contrarian angle this indicates that fuel for the rally may be running out.
Critical charts to watch this week:
ES – will poc migrate lower to 872 or find support here and rally? Trendline support breaking down.
SPY – currently finding support in the area 87.10 Will this hold or break down?<<
The levels mentioned above did not support. Be extremely cautious of this market right now. All the major charts we follow are currently in a weak price location. Do not be long unless charts trade back above those POC levels. This may not happen. It is quite possible that the high earlier this month was the end of a bear market rally. With current price location it is quite possible that another leg down is coming.
Most importantly watch the half high levels; if there is extreme weakness these will not provide support although as I write all major charts trade above these levels.