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Now that we have brought back some trading balance between the buyers and sellers, we look to next weeks action to initially fill the vacuum created by moving too far, too fast, without the proper technical internals to support the rebound as the market goes about its business of attempting to construct its next internal platform from where prices will be able to rally later on.
Aside from Tuesday's quick shake out to fill the vacuum of the previous week, the equity markets continued to plow higher as the majority of the major market indices in the United States settled on Friday at new price highs for the year. Looking around at this week's chart array and we see that we also had broad confirmation of these new price highs with the NYSE Composite, NYSE Common Only and NYSE Specialty CEF advance/decline lines all closing at new all time highs on Friday. Of special interest with these new highs comes with the NYSE Composite advance/decline line which has a multi month base providing support in the longer term structure. Minus any near term attempt to snapback to or toward the line just violated, the overall picture here suggests that we're likely to see continued positive money flows entering the market short term which should help to propel prices even higher from current levels. Looking at the more interest rate sensitive issues that trade at 11 Wall Street, and we see that the NYSE Preferred advance/decline line perceptively broke above its declining tops line on Friday leaving it 2261 net advancing issues from challenging its all time highs. The NYSE REIT advance/decline line also had a good week as it closed near the highs of its declining trend channel as prices remain within an inverted flag formation. We also saw continuing evidence of support coming into the NYSE Bond CEF advance/decline line this past week with the pattern now attempting to develop a rising trend formation as interest rates on the 10 year note settled within 1% of our initial downside target of 2.55% given last month. Any continued strength in the NYSE Bond CEF advance/decline line that would push interest rates below 2.45% would then clear the way for our ultimate downside corrective target in rates at 2.15%. Meanwhile, the Precious Metals and XAU advance/decline lines both got pulled up by their boot straps with the rest of the market off of their multi year lows, but this wasn't nearly enough to change the overall trend which remains lower for now. As has been the suggestion for the last couple of weeks, long positions in this asset class should continue to remain on hold until we get at least a months worth of internal constructive evidence to the contrary. Finally, the internationals also had a decent week with the DAX advance/decline line coming up short by just 8 net advancing issues from its all time highs, but prices out paced breadth into new all time high territory leaving a structural non confirmation that will need to be resolved near term. The FTSE advance/decline line showed better breadth to price interplay with its best show of strength since the June lows with prices perceptively breaking above its declining trend channel shown on the chart. The Aussie advance/decline line also showed some promise for the bulls but it continues to be weighed down by the action in the precious metals markets and this has created bearish divergence on the chart. Given that the metals markets should remain heavy for at least the short term, the expectation here is for continued weakness in the A/D line itself while prices in the All Ordinaries Index to move with the beat of global market direction. Have a great week of trading! US Equity Markets : US Interest Rates : US Real Estate : Precious Metals: Australia: England: Germany: __________________ 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