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With intermediate term market breadth, as measured by the McClellan Summation Index, continuing to show intramarket inconsistencies between the large, mid and small caps, along with the broader NYSE and NASDAQ exchanges themselves, let's continue to look for choppy, volatile behavior with a bearish bias until we begin to see these same conflicting signs sort themselves out.
The market finished a choppy, volatile week on Friday with an average loss of 1.07% with the broadest market indicator, the New York Composite Index, along with the MID Caps, leading the way lower with losses of just over 1.50% from the previous Friday's close. For the month of September, the major market indices were down an average 2.84% with the small caps, as measured by the S&P 600 and Russell 2000 indexes seeing the largest losses with a 5.49% and 6.19% decline respectively. Taking a quick look around the breadth charts array this week and we see that the NYSE Common Only advance/decline line broke below its intermediate term rising bottoms line and it's now at its lowest levels since April of this year. The NYSE Composite advance/decline line found support at its August pattern lows on Wednesday as it finished the week off these same lows with help coming from the preferred stock issues that trade on the NYSE. In the interest rates sensitive issues, the NYSE Specialty CEF advance/decline line continued to move lower after its break of trend back at the beginning of September, while the NYSE Bond CEF advance/decline line maintained its sideways action as interest rates on the 10 year note finally fell back below its longer term declining tops line as had been the technical expectation from mid September. In other areas, we continue to see a high amount of technical damage in the precious metals asset class as the Precious Metals, XAU and the Aussie advance/decline lines all continued to plow lower as the price of gold is now within $11.00 of challenging the levels seen in June and December of last year. Any break of this level of horizontal support will push prices toward the .618 retracement level of $1156 per ounce on its way to our symmetrical triangle downside target of around $1100. So as we move into the month of October, last Wednesday's break down in prices moved many of the breadth and volume McClellan Oscillators to new reaction lows, but there wasn't enough uniformity to call an internal (flag) bottom as yet for this current correctional sequence. Because of this, we are left open to the probability of another sharp shake out to where of the index MCO's will move to "oversold" levels across the board to set a better foundational floor. Pattern wise, any break of the August lows in the ALL NYSE Specialty CEF advance/decline line would increase the odds that further price weakness is likely to be seen for the balance of the month and maybe into the December period. For now, it's one step at a time, with our near term focus in seeing if we can break above the influence of the declining tops lines controlling many of the breadth and volume MCO's, for until these lines are taken out, a full defensive posture would still be warranted as the market would continue to be vulnerable to further bearish attack. Have a great trading week! 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