posted 9.28 a.m. est
Pre-open Friday 5th February
The green-at-top Buying Imbalance on Tuesday was obviously a misleading sign of strength in the dayframe but obeying my rule I had to wait for a red Selling Imbalance which which have now seen. And this was Effective Selling below the 1094 poc. The hunch I had that the 1066 low would be tested turned out to be correct and much sooner than I expected.
Thursday’s price action strongly suggests to me that a major distribution that began in September last year has now completed and a new distribution has begun. The market is oversold here but the more time spent at or below 1065 the more I’ll be sure about that.
The Chartprofit System (longframe) turned red (negative) on 22nd Jan – see eBook, and now Effective Selling has been marked below the 1094 poc which confirms that trend. So now, even more so than 25th Jan “we need to see plenty of evidence that the Buyers are regaining control before looking at the long side of the market.”
ST sentiment: Rydex Bull fund assets I follow were only down 4%. My version of the Rydex Assets ratio fell from 1.94 to 1.6. The VIX got as high as 26.32. Not as high as earlier this month and or when the market reached its corrective lows in July and November (VIX spiked above 30 on both occassions). That’s an increase in fear but from a contrarian pov probably not enough to call a low with any confidence.
LT sentiment: AAII (public) Bulls fell to 29.2%, the lowest since the early November low and the AAII Bears rose to 43.1%, the highest since the same point. The Investors Intelligence poll (newsletters) saw a small decrease in the percent bullish AND percent Bearish.
