On Monday Significant Buying (green) was marked twice which usually indicates ST strength, but Tuesday’s Value Area was lower and Monday’s low was broken. When Aggressive Buying is marked, the green-at-top high is exceeded within one (or two) trading days, 80% of the time, so yesterday’s price action is rare and negates any ST positive implications of Monday’s imbalances. Sentiment is a concern, see yesterday’s comments, and possibly the market needs to punish the late Bulls. It is possible that 2107.00, the 40dy poc, will develop in significance in which case we will see consolidation centred around that price but Significant Selling marked below this level would be a sign of further weakness. Also, as mentioned on Monday, all four major stock index ETFs saw Price Momentum turn down last week.
First Level Resistance = 2107.00 (40day poc)
First Level Support = 2033.50 (4mn poc)
Major Support = 1962.00 (6mn poc) and SPY 200.11 (8mn poc)
Stocks>50dyma numbers: Nyse 63% (from 66%), Nasdaq 65% (from 66%), R2000 60% (from 63%). Numbers >50 are supportive.
Sentiment: My version of the Rydex Assets Ratio was lower at 13.46. Monday’s ratio at 14.06 is the highest in the database and the first ratio above 14. This is a contrarian indicator.
Supporting Charts:
Bonds TLT: reached a new high at the end of January but fell sharply in February. Chart is lower this week and pre-open today prints close to February’s low. Momentum (PriceOsc) is negative but up.
Dollar Index: has today printed its highest level since 2003. I have talked about the possibility of a turn here for the dollar but as discussed in last week’s webcast we have seen no confirming evidence from price. See EURUSD below.
Gold GLD: since probing the Resistance at 124.12 (major poc) five weeks ago, GLD has given back nearly all of January’s strong gains. There is Resistance at 117.62, the 1/2R off Nov low.
Oil USO: on 12/12 broke below the extreme low of Feb 2009 and fell sharply but rallied in early February. Pre-open today is printing above 18.6, the 1/2R off Jan low. which is a stronger price location if it can hold that level.
EURUSD: fell since May last year to major 1/2R Support at 1.1241. Chart held above that level through February but broke below it last Thursday and is today approaching January’s low.
