Pre-open comment Tuesday 1st November
I said yesterday that based on the overbought nature of the market and the ST Sentiment data that the Market could well consolidate here. The price action since suggests more of a reaction than that. There was Aggressive Selling marked yesterday and pre-open ES has tested down into the important 1/2R at 1214.50 which was 2nd Level Support and could today be potential Support or Resistance. This extreme level of volatility based on latest news/hopes/fears is difficult to handle but in the LT the 1/2R levels off the May highs give us a reference.
1st Level S/R = 1214.50 1/2R off May high (SPY 122.30)
ST Sentiment: My version of the Rydex Assets Ratio was higher on Monday to 2.82 (from 2.47) which is a new 60day high. Bull fund assets that I follow reached their highest level since the market top in May. It looks as though the Rydex traders were buying the dip which is usually a negative for the market.
Supporting Charts (+ or – or ? for equities).
– EURUSD: has now broken back below the 1/2R off May 2008 high which is an important level at 1.3965.
– Dollar Index: sharply higher again today and back above the 76.27 (1/2R off the May low).
– TLT: sharply higher today above the 4mnth poc at 112.13.
imo these charts now have a negative bias for equities.
