A Significant Selling day (red) immediately followed by a Signicant Buying day (green) is rare but this is a volatile market. As I wrote yesterday “If ES prints above 1939.50, yesterday’s high, it will negate that selling imbalance”. Pre-open ES has probed as high as 1968.75. The minor 20day Value Area High currently comes in at 1977.00, close to the 1/2R off this year’s high at 1978.50. This area of price would likely be Resistance but price acceptede above this level would suggest higher. Breadth and price momentum still need to improve to be supportive but yesterday’s Sentiment (see below) suggests Bears are emaerging fast.
Resistance ES = 1978.50 dashed (1/2R off this year’s high)
possible S/R today = 1912.00 (1/2R off recent low)
Major Support = 1870.00 (formerly the maj poc)
Stocks>50dyma numbers: Nyse 14% (from 11%), Nasdaq 21% (from 20%), R2000 20% (from 16%). Numbers >50 are supportive.
Sentiment: My version of the Rydex Assets Ratio was slightly higher at 4.97. On Tuesday the ratio reached 4.23 which was the lowest level since October 2013, Bear fund assets that I follow reached their highest level since December 2013 and Bull fund assets fell to their lowest since February 2014. These are contrarian indicators.
Supporting Charts:
Bonds TLT: found Resistance last week at 126.69 (1/2R off this year’s high) and has sold off. Printed a 25day low on Wednesday .
Dollar Index: printing above 94.67, the 12mn poc. Price below this level is weak price location. There is Resistance at 96.50 (1/2R off this year’s high) and today the chart is probing that level.
Gold GLD: chart reached a 32day high early last week but retraced from there. Price below 107.78, the 1/2R off July low, would be weaker price location. Cash suggest a lower open today for GLD.
Oil USO: very volatile – printed a new low on 08/24. Rallied very strongly from there to close on Monday at its highest level since late July. Sold off sharply on Tuesday, and closed higher on Wednesday.
EURUSD: printing below 1.1340 (12mn poc) which is now Resistance and lower today. There is minor Support a little lower at 1.1083 (1/2R off March low). Price below that level would suggest further weakness.
