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fib_1618

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No matter how it goes though, the one thing we can expect from next week is that it shouldn't be boring.

Ahhhh....check.

In one of the great reversals in market history, the major market indices were up an average of 3.19%, week over week, making up almost all of the 3.31% loss that we saw the week before. As was also seen the week before, the New York Composite Index led the way again with a 3.71% gain, while the NASDAQ Composite Index brought up the rear with a gain of "only" 2.40%. So for the 2 week period just completed, the major market indices are now down less than two tenths of one percent while taking Newton's 3rd Law of Motion that "for every action there is an equal and opposite reaction" to a more poignant degree of understanding.

Looking over our breadth charts array for this week and we see that our expected "technical reset" between breadth and price provided strong bounces in both the SPX and the NYA off their longer term rising bottoms lines, while the NYSE Bond CEF and NYSE REIT advance/decline lines nearly made it back to new all time highs. The bounce also moved the NYSE Common Only advance/decline line back up to its intermediate term declining tops line that's been controlling the pattern since the July peak. Given the velocity of both the decline and the ensuing bounce that followed last week, along with the upcoming shortened holiday period of the next two weeks, the expectation is for volatility to continue as sellers attempt to regain short term control of the action (that of days to weeks), while the buyers hold on to what's left of their advantage on an intermediate term basis (that of weeks to months) to where one side will eventually take over price control after the first of the year.

Looking overseas and we see that Australia's Old Ordinaries Index continues to be under intense selling pressure as the Aussie advance/decline line remains quite negative at this time, while over in Europe, last weeks breadth to price divergences in the DAX and FTSE advance/decline lines resulted in important technical bounces back to and off of their previous lines of support respectively. Given the fast and furious nature of these technical snapbacks in the European markets, it's likely that we'll continue to see volatility continue in these markets over the next two weeks, with the energy of these abrupt shifts in money flow subsiding in their intensity....very much like taking your arm out of a of bath tub after sloshing the water from back to front.

Over in the metals complex we saw a nice rebound in both the Precious Metals and XAU advance/decline lines towards the end of the week, but as we can see on the charts, we still don't have any kind of divergence in place between breadth and prices to suggest a bottom in this sector. As far as the price of gold is concerned, it did find good technical price support in the low 1190's area this past week, but we also saw rally's fizzle after attempting to close back above the chart's 20 and 50 day EMA's. Because of this lack of technical character, the path of least resistance in gold is currently to the downside, with any close below $1182 likely to set off a cascading effect, while any close above $1210 indicating that last weeks weakness has passed.

With the holiday season now in full swing, I would like to take a moment to thank you all for your continued business with Technical Watch. It is my sincere hope that you have profited by what is provided with our subscription services, and hope that this information will continue to be the corner stone in your goal to both capital appreciation, and more importantly, capital preservation. 

Please note that because of the holiday there will be no narrative next week...charts only. We'll pick up where we left off with the January 2nd review.

Wishing you and your family a warm holiday season...may it be filled with great joy and great expectations for the coming year!!

Have a great trading week!

US Equity Markets:

[breadthspx121914]



[breadthdjia121914]


[breadthspec121914]


[breadthpre121914]

US Interest Rates:

[breadthtnx121914]

US Real Estate:

[breadthreit121914]

Precious Metals:

[breadthpm121914]


[breadthxau121914]

Australia:

[breadthaus121914]

England:

[breadthftse121914]

Germany:

[breadthdax121914]

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