posted 8.50 a.m. est
Pre-open Monday 11th October
Last week retained the bullish weekly structure that we’ve seen almost every week since the September price low, i.e. relative weakness early in the week and relative strength late in the week. I was anticipating that ES would struggle to hold above 1160 and that may still play out but there is no evidence of this yet.
The ChartProfit Market Timing System (longframe) stayed positive for all major market charts and the most recent Profile imbalance (dayframe) was Buying (green). This supports higher prices on both timeframes. However…
My concerns are 1) the negative divergences I’m seeing in both the price and breadth oscillators; 2) the fact that price is overbought above the Value Area High measured on various LT timeframes and 3) some Sentiment readings show excessive Bulls, including the AAII poll and the ISEE index (see below).
First Level S/R is 1155.5 (minor poc established through last week’s price action).
More important support stays at 1139 (8week poc).
LT Sentiment: Participants in the AAII (public) Poll declared they were at their most bullish since May 2008. Readings like this are usually a warning. Also VIX closed the week at 20.71, the lowest close since early May.
ST Sentiment: Mixed. My version of the Rydex Assets Ratio was down from 1.82 to 1.65 which is not ST bearish. The ISEE (equities only) Index came in at 217 on Friday. The last four days have closed above 200 which is ST bearish.
Supporting Charts
– USDJPY: Friday saw a new low for this chart.
? EURUSD: 1/2R off the 2008 high comes in at 1.3965. So 1.40 level is v. important. That level in play now.
+ UDX: New eight month low last week.
+ TLT: currently printing just below the major 1/2R level resistance at 105.22
imo these charts are mixed but still have a positive bias for equities.
