posted 9.25 a.m. est
Pre-open Thursday 17th September
On Wednesday, ES found support soon after the open at Tuesday’s poc and climbed higher throughout the session. I marked Aggressive Buying Activity (green at top) generating a higher, wider Value Area. Once again this is Effective Buying with no response from the Sellers. Everything looks good for continuation higher but ….
The 1070 area that ES reached overnight is a level that may offer big resistance to this rally (ES December contract current prints at 1061). I’m not considering the short side until I see Effective Sellers emerge but even with nothing but Green on the chart and supportive breadth I’m thinking ES may struggle here. Also Sentiment is getting very bullish by my measurements (contrarian bearish) – see below.
The ISE Sentiment Index (http://www.ise.com) is an options ratio that “excludes Market maker and firm trades” and therefore “allows for a more accurate measure of true investor sentiment than traditional put/call ratios”. I follow this measurement in the webcasts. Wednesday’s number for the Equity -Only index came in at 242 which is the highest reading since November 2007. The 10day moving average was fractionally below setting a new high since January 2008. By this measurement investors are extremely bullish. The warnings in the longframe analysis (webcast) of sentiment measures overheating can be notched up a little more.
