posted 9.50 a.m. edt
Post-open comment Friday 19th August
Looking at the LT analysis the Market Timing System has been negative for weeks and the Weekly Structure analysis is also negative as discussed in this week’s webcast but unfortunately the dayframe analysis did not mark Selling activity earlier this week which would have helped anticipate the weakness yesterday. Market sold off sharply but applying my rules strictly I did not mark Significant Selling on this timeframe. It’s very rare to see that happen.
As I’ve mentioned many times panicky markets have a habit of being drawn quickly to the major poc so it is quite possible that the 1094 Maj poc will be tested again. If that happens we will need to see whether that level is rejected (as it was last week) or accepted and that would give us a big clue re LT directional bias.
Resistance = 1142 (1/2R off Aug low) (SPY = 115.73)
Major Support = 1094 (this is the MAJ LT poc) (SPY = 109.38)
LT Sentiment: AAII (public) poll shows Bulls% slightly higher this week and Bears% lower at 39.8% from 44.8%. I would normally interpret that as complacency in a down week and therefore bearish, but as the data is released on a Thursday and the first three days of the week held up pretty well it is difficult to draw any contrarian conclusions here. Equity Fund Outflows were -$3.1 bil according to lipperusfundsflow data and ex-ETF data showing an inflow of $1.7 bil into Equity Funds but again it would be wrong to say that is a barish indication considering the timing of this week’s sell-off.
ST Sentiment: My version of the Rydex Assets Ratio was down at 1.43 close to last Friday’s ratio at 1.40 which was a 10month low. This is an extreme reading and would usually suggest that downside is limited, however, we would need to be very careful about making that assumption if 1094 is broken.
Supporting Charts unchanged and mixed.
