Pre-open Tuesday 21st July
Once again Significant Buyers were active on Monday (green) and the Value Area was higher, wider and volume expanded (just). Actually volume is still very low, ES total volume on Monday was 20% less than the 10day ma which is itself very low. With no Significant Selling now for nine consecutive days and supportive internals (CP Breadth System) this is clearly Buyers in control. I will not fade this auction higher in any timeframe until (at least) we see Effective Sellers re-appear (red).
Pre-open ES has reached 954.75 which is a new high for the rally from the March low. The crucial factor in judging whether the breakout can be sustained is market sentiment. If sentiment measures are slow to turn bullish that would be bullish (contrarian). However, if we see Bulls charging back into the consensus polls and the mutual fund timers hastily switching out of the inverse funds and cash funds we need to be on guard for a bull trap. Remember that the VIX is at a ten month low and the Nasdaq/Nyse volume ratio is still very high.
