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fib_1618

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So the bottom line for this week is that we continue to get signs of a maturing advancing trend, and unless fresh funds start finding their way on the buy side soon, we might be in store for a more lengthy corrective process that could begin in the next two weeks and might last into the end of the year.

The US markets continued to weaken this past week with the Dow and the SPX showing their worst effort since the rally began last June, off by about 2%, with the NASDAQ group of stocks off about 3%.

As we look at the global breadth charts almost all of them broke their accelerated rising bottoms lines from the early summer lows with the exception of the NYSE Bond CEF and Preferred stock advance/decline lines which remain well above these same lines of intermediate term support. These breaks of support, though minimal in their dynamics, continues to support the forecast of a probable tradable top in the making at this time. With many short term momentum oscillators now in "oversold" territory, however, the near term expectation is for an initial bounce off of these trend lines next week before we actually see this anticipated technical breakdown that should then take place sometime after next Friday's OPEX.

On a more negative note, the Precious Metals and XAU advance/decline lines continued their struggles of remaining above their rising bottoms lines shown on the charts, and they have now given
a sell signal to counter the August 25th buy signal. We'll have to watch things closely now since we're in such close proximately of some very important longer term support areas on both charts as to whether or not our upside price targets for gold and silver will have a chance of being met or not, no less, a multi year top.

All in all, market conditions continue to decay as a marathon runner would show signs of exhaustion towards the end of the race. With the interest rate sensitive A/D lines continuing to promise higher prices in the future, the technical outlook after next weeks bounce would be for a test of the longer term rising bottoms lines that have controlled many of the A/D line structures since the 2009 lows. Once this is accomplished, the expectation from there will be for another "run" to new price highs in many of the major market indices both domestically and globally into the 1st quarter of 2013.

Have a great week of trading!


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