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So another week has now come and gone with very little in the way of expected changes to be seen for next week as high volatility is likely to continue...Whether we'll get our expected tradable bottom in early October out of this is still up in the air, but we should have a pretty good handle on this next weekend as to whether we have a "go" or not.
Seat belts fastened? Good. In what continues to be the best roller coaster ride on the planet, the equity markets maintained their wild volatility of back and forth trading this past week with the major market indices ending up by an average of only .38% when all was said and done on Friday, with the broader based barometer of market activity, the New York Composite Index, showing the largest gain of 1.18%, while the S&P 600 small cap index showed the largest loss of 1.24%. For the month of September then, the major market indices were down by an average of 3.02% in spite of it feeling much more than that with all of the trader indecision we had to work with. A quick review of our breadth charts array for this week shows that although the NYSE Common Only and NYSE Specialty CEF advance/decline lines moved below their August lows last Monday in what looked to be a capitulatory selling wave, the NYSE Composite advance/decline line did not see enough selling with the unemployment numbers on Friday to join the party, and this caused prices to rebound sharply into Friday's close. With the NYUD, NAAD and NAUD money flow lines (see cumulative charts) currently showing trend divergence with their respective McClellan Oscillators, along with the NYSE Preferred and NYSE Bond CEF advance/decline lines remaining in rising pattern structures, we've now come to an interesting juncture as we enter the time window of our tradable bottom that was forecasted by the McClellan Summation Index back in the middle of August. However, with the cumulative High Yield advance/decline line continuing to move sharply to the downside, and the BETS maintaining a highly negative reading of -60, the outlook for next week isn't quite as clear as one would want it to be if, indeed, a change in direction is upon us. Add to this the observation that the Aussie, CAC, DAX and FTSE advance/decline lines have yet to show much in the way of a rebound from their depressed levels for much of the month of September, and it's probably better to sit on our hands for a few more days to see if Friday's outside range day is the bottom we've been waiting for or not. Both gold (+2.24%) and silver (+5.11%) had a stellar day on Friday with the disappointment of the jobs report, but when we look at the Precious Metals and XAU advance/decline lines, we see that they continue to be under the heavy influence of their intermediate term declining tops lines. With the price of gold actually down $7.90 for the week, along with this negative relationship between metals prices and the precious metals stocks, the expectation is for another week of back and fill trading ahead, and maintaining a defensive posture towards this asset class because of it. So...the month of October is here, and once again, the inconsistencies we're seeing in the market internals will continue to provide us with a highly volatile week ahead as the bulls and the bears continue to battle it out for control. At this point, it's not likely that we're going to get our long awaited tradable low as the split we have between market barometers will need to be reconciled before this can actually take place. Because of this, let's allow the market to "show us" what its true intentions might be before committing our capital, and remaining defensive overall until we see better constructive evidence to the contrary. 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