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A number of Sentiment Indicators are at, or close to a Bullish extreme in Sentiment (see charts) which is a concern and the market is very overbought. But both the LT and ST analysis stay positive. First sign of weakness would be “Effective” Selling marked in the ES analysis and that hasn’t happened since mid December.
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*********** PRICE PERFORMANCE / LOCATION
Key Charts:
QQQ: The 15mn poc migrated to 66.80. This is useful as it gives us a reference level close to current price
Watch TLT relative to 117.15 and SLV relative to 31.25.
Bonds TLT: Closed the week below the major poc Support at 117.15. Time below this level is weak price location. Pre-open today it prints up a little higher but still below that poc. This is a positive for equities but that could change quickly.
Commodities: Oil USO is overbought technically but printing above the 1/2R and poc Resistance around 34.17. Price holding above this level indicates further strength. Pre-open Gold GLD is printing just above the 161.0 major poc. Silver SLV is a Key Chart. It has again rallied to 31.25, its major poc, but has not exceeded it.
Dollar Index: Up from Friday’s weak Close but still printing below 79.80, the 2yr poc. This is a positive for equities but that could change quickly.
EURUSD: Chart has cleared the Resistance at 1.3416 (1/2R off 2010 low).
ES analysis:
Last week the Sellers were more active than the Buyers and yet ES still managed to Close higher than Mon-Wed Range High which is another positive Weekly Structure (last week’s Ineffective Selling was quickly negated) .
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*********** BREADTH
Chartprofit Market Timing System stayed positive for all Major Market Charts. %Stocks>50dyma numbers: Nyse 90% and Nasdaq 82%. UK 89%. Numbers >50 are supportive. Numbers>80 usually considered overbought.
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*********** SENTIMENT
Consensus Polls:
02/01: AAII (public poll) reported Bulls% lower at 48%, from last week’s 52.3% which the highest since January 2011. Bears% was unchanged at 24.3%. The nett (Bulls-Bears) at 23.7 is down from last week’s 28 which was the highest since February last year. However the 4wkma of nett at 21.95 is at its highest since February last year.
02/01: Investor’s Intelligence Bulls% was higher at 54.3%, the highest since February last year. Bears% was unchanged at 22.3% which is the lowest since w/e 18th May 2012. The nett (Bulls-Bears) at 32 is the highest since 13th May 2011. The 4wkma of nett at 30.37 is the highest since April 2011.
02/01: Market Vane (advisers) poll. The 4wkma reached 67.25. There is only one reading higher than this since 2007 which was w/e 6th April 2012.
02/01: The NAAIM number (a measurement of average current equity exposure among active money managers) came in at 104.25 which is the highest it has been. A number above 100 represent an average position which is leveraged.
Mutual Fund Flow:
02/01: My version of the Rydex Assets Ratio ended the week at 4.51. at 4.62. Last Wednesday’s 4.81 was the highest reading since 28th September. The highest reading in my database at 5.64 was in early April 2012.
02/01: lipperusfundflows reported Equity Fund inflows of $12.7 Billion in the week to 30th January. This lifts the 4wk flow to the highest level in my database.
02/01: lipperusfundflows ex_ETFs reported Equity Fund inflows of $5.8 Billion in the week to 30th January. The 4wk flow is the highest in my database.
Volatility: VIX
02/01: VIX Closed at 12.43 on 01/22 which is the lowest since 2007.