Technical Analysis – Market pre-open 21st January 2016
ES printed a new low for this decline on Wednesday, testing below the 2015 low which attracted some buying. The intraday rally auctioned ES high enough to test our First Level Resistance at 1870, see yesterday’s highlighted comments and chart. Bulls would want to see ES back above this level as quickly as possible. I would want to see a minimum of Effective Buying marked above that poc before considering the long side on any timeframe.
Key Charts: DIA is now printing time below its major poc (now 63.75). Bulls would want to see DIA recover back above this level as soon as possible. Also monitor SPY relative to the 187.20 poc, price printing time below that level indicates more weakness.
First Level Resistance = ES 1870 (previous poc)
Stocks>50dyma numbers: Nyse 8% (from 10%), Nasdaq 9% (unch), R2000 8% (from 9%). Numbers >50 are supportive.
Sentiment: My version of the Rydex Assets Ratio reached 9.17 on 12.29. It has now fallen to 3.78 which is as low as it has been for two years except for the sell-off late last year when the ratio fell to 3.00. AAII Bulls% was higher this week at 21.5%. Previous week’s Bulls% at 17.9% was the lowest since April 2005. AAII Bears% was also higher at 48.7% which is the highest since April 2013.
Supporting Charts:
Bonds IEF, the 7-10 yr ETF: Held the major Support at 105.00 following October’s decline and rallied. Now printing time well above 106.60 (18mn poc) in a stronger price location. There is Support now at 107.17 which is the 1/2R off last year’s high.
Dollar Index: A probe in early December above the March high was rejected. The minor 1/2R off that high is at 98.85 and the index is printing just above that level today.
Gold GLD: printed a 44day high earlier in the month as investors sought safe haven. Chart is still in a LT weak price location though.
Oil: On Wednesday reached its lowest level since 2003. Oil causing major problems for equity markets.
EURUSD: The rally from the November low approached, but did not test, the First Level Resistance at 1.1080, 1/2R off March low. Chart has been consolidating since early December and I am watching to see if the current 12mn poc will migrate lower.
