Pre-open Wednesday 10th March
Looks like Monday’s narrow, low-volume range was an indication of Buyers Resting. They (Buyers) were active on Tuesday, responding early in the session (green-at-bottom) to a probe below Monday’s range. All of Monday’s and Tuesday’s range took place above Friday’s poc (dotted) which is a minor sign of strength. Value Area was wider but overlapping. Most interesting were clues that there could be a change in sentiment coming (see below).
ST sentiment: After four weeks of the market rallying the Rydex timers have turned a lot less bearish. The Rydex Bear Fund assets that I follow fell by more than 25% on Tuesday which lifts my version of the Rydex Assets ratio up from 1.44 to 2. I don’t treat this as an immediate sign that we’re going lower but it greatly increases the odds of at least a correction coming. This data is interpreted in a contrarian way – this group of traders are rarely correct.
A number that came out of the blue on Monday was the ISEE (equity only) Index which came in high at 213 and indicated a lot of public call buying (bulls) relative to puts (bears) – on Tuesday that number shot up to 253 which I believe is the highest single reading since October 2007.
