Technical Analysis – Market pre-open 27th January 2016
I suspected that the Aggressive Selling on Monday did not represent Effective Selling, see yesterday’s comment, and during Tuesday’s session ES exceeded Monday’s high which negates any ST negative implications of that imbalance. The last three Value Areas have been printed entirely above the 1870 poc and the market is attempting to rally here from a deelpy oversold condition but I need to see Effective Buying marked above thta level before considering the long-side on any timeframe. It is worth noting that Momentum for all four major stock ETFs, although still negative, has turned up.
First Level Support = ES 1870 (previous poc)
Dayframe: The minor (32dy) poc is at 1886.50. Price relative to this level is worth watching today as an indication of ST strength/weakness.
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.
Stocks>50dyma numbers: Nyse 18% (from 12%), Nasdaq 16% (from 12%), R2000 16% (from 11%). Numbers >50 are supportive.
Sentiment: My version of the Rydex Assets Ratio was almost unchanged at 3.86. On 12/29 the ratio reached 9.17. Last week it fell 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 currently printing at that level.
Gold: chart printed a 60day high on Tuesday but is still in a LT weak price location.
Oil: The current bounce has so far held the 1/2R off last week’s low. Bulls would want to see that level hold.
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.
