posted 9.25 a.m. est
Pre-open Friday 7th May
Thursday pre-open: >>If ES finds itself below 1161.50 during today’s session it is in a weak position and I would anticipate it will be heading lower still<<
ES spent a few minutes after the open above 1161.50 but that was rejected. The following three hours were spent below that poc. I anticipated weakness if that occured but not a collapse. What a day!
Pre-open today ES has climbed all the way back up from a low yesterday of 1056 to 1128 as I write. Here’s the important levels:
18 month poc: 1094. This is now the most important level to watch. I will only consider long trades on any timeframe if ES can hold above that level and Effective Buying is marked.
3 month poc: 1161.50. Possible resistance if ES can rally back up to this level.
Dayframe: Sellers in control since close 27th April.
Longframe: As of last Friday the Market Timing System was still green (positive). I am anticipating that will change by close today but nothing is certain with this volatility.
ST sentiment: My version of the Rydex Assets Ratio was up from 2.4 to 2.5. On a day like yesterday to see this ratio end higher is more than surprising. There is no sign of capitulation here. However VIX hit a 12 month high and has more than doubled in five days which I don’t ever remember seeing. Just two weeks ago VIX was regsitering in the mid-teens (extreme complacency) as the market hit high.
Supporting Charts (technicals based on daily Price Oscillator)
– USDJPY: prints below the 93.60 1/2 level
– EURUSD: new 12month low on Thursday; momentum and trend down.
– UDX: new multi-month high on Thursday, momentum and trend up.
– TLT: new high for 2010 on Thursday; momentum and trend up.
These charts are bearish for equities
