Technical Analysis – Market pre-open 25th January 2016
See previous comments. ES finished the week generating a Value Area entirely above the 1870 poc. Chart needs to hold this level, now First Levelo Support, but until Effective Buying (green) is marked I remain cautious in light of the longer term analysis which remains weak.
First Level Support = ES 1870 (previous poc)
Dayframe: The minor (25day) poc is at 1886.50. At the start of this week it is worth monitoring price relative to this level for ST strength/weakness. Pre-open today ES prints very close to this level.
Key Charts: Support: SPY 187.20 poc – key for the Bulls that this level holds. DIA Resistance at its major poc at 63.75. If the market manages to sustain a rally, this level would be key.
Market Charts: All major Market Charts remained negative.
Stocks>50dyma numbers: Nyse 14%, Nasdaq 15%, R2000 14%, UK 14%. Numbers >50 are supportive.
Sentiment: My version of the Rydex Assets Ratio ended the week at 3.83. On 12/29 the ratio reached 9.17. Last Thursday it had fallen to 3.52 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.
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: The price of Oil has caused major problems for equity markets but rallied strongly from last week’s low. Is today down from Friday’s high.
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 in a range since early December but today is printing below 1.0925, the 12mn poc, in a weak price location.
