Technical analysis – Market pre-open 24th February 2016
See previous comments. Tuesday’s session generated a sixth consecutive Value Area above the 1870 poc but ES has sold off overnight and as of one hour pre-open has printed as low as 1896. First Level Support is at 1886.50. To keep this rally in a strong position ES must hold, or quickly reject a test of, 1870.
Breadth deteriorated, we need to see Stocks>50dyma numbers above 50.
First Level Resistance = 1956.90 (1/2R off last year’s high)
First Level Support (minor) = ES 1886.50 (70 day poc)
Second Level Support (major) = ES 1870 (previous maj poc)
Stock index ETFS: DIA will likely open below 164.25, its maj poc in a weaker price location. QQQ will likely open below 101.30, its maj poc in a weaker price location. Bulls would want to see these levels recovered quickly.
Stocks>50dyma numbers: Nyse 46% (from 51%), Nasdaq 35% (from 38%), R2000 36% (from 40%). Numbers >50 are supportive.
Sentiment: My version of the Rydex Assets Ratio was higher at 2.85. Friday’s ratio at 2.64 was the lowest since November 2012. On Monday, Bear Fund assets that I follow reached their highest level since late 2011.
Supporting Charts:
Bonds IEF, the 7-10 yr ETF: Held the major Support at 105.00 following October’s decline and rallied strongly. On 02/11 the chart spiked to a new high – is off that level but futures indicate a higher open today.
Dollar Index: on 02/11 found Support at 95.22, the 12mn poc. Higher from there and Bulls would want to see that level hold. Resistance at 97.87, the 1/2R off this years high.
Gold: GLD has rallied strongly and now prints above 115.12, the 24mn poc, which is now Support. Cash indicates a higher open today.
Oil: is printing just above the minor 1/2R off the January low. Bulls (and equity Bulls) would want to see that level hold.
EURUSD: earlier in the month probed above 1.1241, the Major 1/2R, but is off that level and is now printing below 1.1085, the 1/2R off last year’s low. Next Support is 1.0925, the 12mn poc, price printing time below that level would suggest a retest of that low.
