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So...it was an outstanding week for the bulls as fresh money finally came off the sidelines and propelled many of the McClellan Oscillators to multi year highs with this effort. Because of this, we can now take a more friendly approach towards equities for the next couple of weeks as we attempt to work off these near term highly "overbought" readings.
After taking a well deserved pause on Tuesday and Wednesday, the major market indices finished the week on the mixed side, but up overall by an average of .43% from last Friday, with the NASDAQ Composite Index showing the largest gain of 1.16% and closing at its highest weekly levels since August 14th. Looking at our breadth charts array shows that the interest rate sensitive areas of the market had a good week with the NYSE Preferred advance/decline line closing again at new all time highs, while the NYSE Bond CEF advance/decline line accelerated higher after breaking above its trend channel last week and found itself just 327 net advancing issues from, once again, moving to new all time highs of its own. As we know from our past experience with this data, as long as money continues to move into these same debt related issues, this promises us that we will see higher equity prices as well in the not too distant future. Over in India, the BSE advance/decline line reached its highest levels since January of 2008 on Friday as money continues to move confidently into this global market. With interest rate sensitive issues here in the U.S. suggesting that the cost of money is likely to get cheaper by the way of lower interest rates, the overall affect should be good news for emerging markets ETF's over the next couple of months. Although the spot prices of gold and silver had another good week, the Precious Metals and XAU advance/decline lines continue to disappoint as both closed at or just below their low points of the previous week. Of particular concern comes with the breadth to price relationship in the XAU basket of issues as its price gain of just over 14% the week before is showing very little underlying support to these same price gains. This then sets up a very precarious situation in this asset class where a pattern reset would be likely near term to correct this inconsistency between breadth and price, and with the A/D lines themselves only 3% away from their all time lows, a challenge of the summer price lows in the metals could again be on the front burner as we move into the end of the year. So with the BETS holding steady with a -15 reading, we continue to see the equity markets improving internally, although we still have some missing pieces to the puzzle before we can safely say, with confidence, that a strong uptrend is indeed underway. With Monday being the 28th anniversary of the stock market crash of 1987, next week promises to be another volatile week of trading, with more of a bullish bias than we've seen since the early spring of this year, and a full on challenge of the 200 day EMA's on many of the price charts the major focus. Have a great trading week! US Equity Markets : US Interest Rates : US Real Estate : Precious Metals: Australia: England: France: Germany: India: __________________ Dave's LinkedIn Profile Technical Watch Twitter Page Technical Watch Facebook Page "As for it being different this time, it is different every time. The question is in what way, and to what extent" - Tom McClellan "An economist is someone who sees something happen, and then wonders if it would work in theory" - Ronald Reagan "What we see depends mainly on what we look for" - John Lubbock "The eye sees only what the mind is ready to comprehend" - Henri Bergson “Answers are easy; it’s asking the right questions which is hard” - Dr. Who - 1977 "You know the very powerful and the very stupid have one thing in common - they don't alter their views to fit the facts, they alter the facts to fit their views (which can be uncomfortable if you happen to be one of the facts that needs altering)" - Dr. Who - 1977