Technical analysis – Market pre-open 3rd February 2016
Immediately after Tuesday’s open ES printed below Monday’s session low (1912.50) which negated any ST positive implications of that green-at-top high, see yesterday’s comments. Aggressive Selling was marked. A green-at-top day followed by a red-at-bottom day are rare and reflects the current volatility. Overnight ES briefly probed our First Level Support at 1886.50 and has rallied a little. Ideally I would like to see that hold as a higher low but red-at-bottom lows are usually (80%) tested. Still looking for Breadth numbers and Momentum to improve as well.
First Level Support = 1886.50 (45dy poc)
Second Level Support = ES 1870 (previous maj poc)
Key Chart: DIA probed 63.75, its major poc, this week but has so far not printed any time above it. The 1/2R off the January low is just below 160 and this corresponds to the minor poc. Bulls would want to see DIA hold this level.
Stocks>50dyma numbers: Nyse 23% (from 28%), Nasdaq 18% (from 23%), R2000 18% (from 22%)). Numbers >50 are supportive.
Sentiment: My version of the Rydex Assets Ratio was almost unchanged at 4.17. On 12/29 the ratio reached 9.17. On 01/21 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 has rallied strongly to its highest level since Feb2015. Futures indicate a lower open today.
Dollar Index: A probe in early December above the March high was rejected and is today printing below the minor 1/2R (98.85) off that high in a weaker price location.
Gold: printed a 65day high on Tuesday but is still in a LT weak price location.
Oil: rallied strongly off the low in January but is sharply lower this week and currently printing at the 1/2R off that low. Equity Bulls would want to see oil printing above that level otherwise a retest of January’s low would be indicated.
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 and is today printing just above 1.0925, the 12mn poc.
