posted 9.27 a.m. est
Pre-open Friday 29th January
Thursday: Price opened just above the minor poc at 1096.5 (red dashed line) and was immediately rejected. Responsive Sellers (red-at-top) quickly autioned ES lower. This validates the area of price around 1094 (major poc) as significant. Minimum requirement before considering longs should be Effective Buying marked above 1094. Thursday’s Value Area was wider but overlapping – that’s not yet Effective Selling below 1094.
ST sentiment indicators: My version of the Rydex Assets ratio fell slightly to 2.19 which is still high. Also the VIX reached 28 intraday on Friday and has not been higher since, closing below 24 on Thursday. The market has been down nearly 7% and I would expect to see a little more capitulation indicated here if we were going back up in the near term.
LT sentiment indicators:
The Investors Intelligence poll (newletters) showed a big decline in the number of bulls this week from 52.2% to 40%. Last time we saw a double-digit fall in bulls in this poll (March 2008) it was followed by a two month rally. Bears amongst us would be happier not to have rapidly increasing agreement in this poll.
Unless a Significant Buying respsonse is marked I would expect the next major support level at 1065 to be tested.
