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A quick look at the breadth charts this week shows that any new price highs that were seen were not confirmed by money flow leading the charge. This would then indicate that much of the gains were on the back of short covering (at least initially), and if fresh money doesn't move in to support these same gains near term, we should see some backing and filling over the next week or two to provide a reset in this breadth to price relationship.
Not only did fresh money come in last week, but it came in with a vengeance as the McClellan Oscillators of both breadth and volume moved to their highest levels of the last three months. Price wise, the major market indices gained an average of 1.50% for the holiday shortened week. Taking it once around the horn and we see that the NYSE Composite, NYSE Common Only, as well as, the DAX and FTSE advance/decline lines all closed at new all time highs on Friday, while the NYSE Specialties advance/decline line came up 139 data points short of reclaiming this same historic level. Also of note is that the New York Composite Index, the broadest measure of stock market activity on the NYSE, finished the week at new all time closing highs taking out the old highs made back in October of 2007, though it remains less than 34 points from its all time intraday highs on a daily, weekly and monthly basis. Next on the new highs radar is the OEX index of the top 100 weighted stocks of the S&P 500 which settled less than 12 points from its all time closing highs and 25 points from the intraday highs that were seen back in late March of 2000. In other areas, the NYSE Bond CEF advance/decline line broke above its declining tops line earlier in the week and snapped back slightly to this same break out point after the Christmas holiday. Looking at the yield on the 10 year note, it closed Friday at its highest point since July 8th, 2011, just above the 3% level. With the yields now reaching our expected upside target range discussed two months ago, along with this recent break above the declining tops line on the NYSE Bond CEF A/D line, our new short to intermediate term expectation would be to see interest rates topping out at current levels and begin to make their way back down within the trading range to around 2.50% in what may (later) turn out to be the end of this pause in the current rising trend from the May 1st lows. We'll know much better if this is indeed the right interpretation or not all dependent on what we see come about in all of the interest rate sensitive A/D lines during this expected turn back into debt issues over the next several weeks. Finally, I would like to take this opportunity to thank all of the Technical Watch subscribers for their continued patronage over the last year. I hope that everyone has been able to capitalize on the tremendous gains we've seen in the equity markets in 2013 with the help of these weekly breadth reviews and intraweek chat sessions as the foundational base of these same gains. May the year 2014 be just as productive, happy and healthy for all of us, and may your best trade in 2013 be your worse one in 2014! 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