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fib_1618

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So with the BETS moving to its lowest point since March 6th, 2009 with a reading of -75, we continue to be in a full defensive posture toward equities for what's looking to be the beginning of January as long as the August internal lows are not taken out.

In what only can be described as a chaotic week of trading, the major market indexes finished on Friday by closing down by an average of .49%, week over week, with many of these same indices finding themselves at levels not seen since the September/October period, while the S&P 400 MID Cap index closed at its lowest weekly level since October of 2014.

Looking over our usual array of breadth charts for this week shows that the sharp price declines seen on Thursday and Friday were without the leadership of breadth of market. In fact, the NYSE Bond CEF advance/decline line actually closed the week at new all time highs. This lack of cumulative money flow moving in advance of the late week drubbing has created near term "trend divergence". In order to correct this anomaly between breadth (cause) and price (effect), breadth will need to quickly collapse from current levels to regain its leadership quality, or like we've seen so many times in the past, prices will provide a "reset" of their moving "too far, too fast" by rallying sharply in order to fill the vacuum created by this technical irregularity. Given that we are moving into the end of the year holiday period, a collapse in breadth from this juncture would likely propel prices toward a challenge of the lows seen in the August/September period by the end of the year, while an immediate rebound in prices would allow prices to remain buoyant into the first week of January...and maybe beyond that.

Other potential areas of good news for the bulls comes with the Precious Metals and XAU advance/decline lines that continue to improve on their divergent breadth structures from last month. With the price of gold and silver exhibiting their usual late year pattern of firmness at just below their 20 day EMA's, any sharp price advance above this same EMA, along with higher highs in cumulative breadth, would be a solid indication that a multi week price advance would be underway that would take spot prices to their respective 200 day EMA's. Additionally, applying the Parabolic SAR indicator to the daily charts would also help in increasing the odds of this technical expectation by providing a trigger point for our entry. Currently, the daily "stop and reverse" point for gold is at $1087.47, while silver's SAR is at $14.47 and its 50 day EMA.

Over in the internationals, we're seeing a mixed picture with the Aussie advance/decline line continuing to show broad weakness due to their economic exposure to Earth produced commodities, while India's Bombay advance/decline line continues to show a cumulative pattern of higher highs and higher lows and is now at levels not seen since January 9th, 2008. Over in Europe, both the CAC and DAX advance/decline lines are also showing the same patterns of breadth to price "trend divergence" as noted here in the United States, while the FTSE advance/decline line data is too close to call on it leading or lagging. Given the information already reviewed, one would think that a near term global reflex rally is in the cards going into the Christmas holiday, and depending on the amplitude provided, will dictate how things will settle for the end of the year.

So with the BETS still on a solid sell signal this week with a -75 reading, the markets are showing indications that selling may be starting to abate a bit which could be due to a combination of both quarterly OPEX passing and position squaring as we move into the end of year. With the odds of a reflex rally early next week better than 60% given the internal divergences noted in this review, the next two weeks may only turn out to be a choppy, volatile churning affair as we close out 2015. Because of this, let's continue to keep our defensive posture toward equities for now, and take our cues on how we should position ourselves going into January by how the market winds down going into next Friday's Christmas holiday.

Wishing everyone the very best this holiday season...may it be filled with love, laughter with glad tidings!!

US Equity Markets:

[breadthspx121815]


[breadthdjia121815]

[breadthspec121815]

[breadthpre121815]

US Interest Rates:

[breadthtnx121815]

[breadthig121815]

[breadthjunk121815] 

US Real Estate:

[breadthreit121815]

Precious Metals:

[breadthpm121815]

[breadthxau121815]

Australia:

[breadthaus121815]

England:

[breadthftse121815]

France:

[breadthcac121815]

Germany:

[breadthdax121815]

India:

[breadthbse12185]

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