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fib_1618

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So with the BETS improving to a -40 this week, and our getting a mixed picture as to the timing of the next major move in prices, it's probably better to ease off of our fully defensive posture and take a more bearish bias approach to things as we move into next week where we have a whole menu of reports that should help to provide a defining answer as to what we will likely hear from the Federal Reserve two weeks from now.

With another roller coaster week behind us, the major market indices actually closed lower from last Friday's settlement by an average of .40%, with the Dow, SPX and NASDAQ Composite showing minor gains, while the mid caps and small caps were off by 1.35% and 1.29% respectively. For the month of November, index prices in the U.S. were up by an average of .78% from the close of October 30th, with the small caps leading the strength seen from the mid November lows with an average gain of 2.82%.

Looking over this week's breadth charts array and we see that Thursday's decline was a bit of a back breaker for many of the advance/decline lines we review here each week. This then helped in breaking the trading ranges in the large caps and the light advances we saw in the mid caps, small caps and secondary issues from the mid November lows. As we discussed in our chat session on Thursday, the market was then likely to see some sort of technical bounce on Friday, and that's exactly what we got though much of the rebound took place in the NYSE related issues primarily on the back of its Open 10 TRIN being the only one that was highly "oversold". Looking at the breadth McClellan Oscillator's after Friday's close, and we note that they were only able to snapback to or toward their zero lines which is part and parcel of a classic bear market rally...that in being quick and sharp in its content without the benefit of breadth leadership. On top of that, we also see that the volume MCO's showed even weaker dynamic moves than their breadth cousins. So although there may be some who may qualify Friday's gains as being that of a relief rally in knowing that the FED is now very likely to raise rates on December 16th, there are also some significant technical problems currently that the buyers will need to address quickly, or another sequence of lower prices will be on the forefront in trading as we go into next week.

The bullish divergence we noted last week in the Precious Metals advance/decline line led to a solid advance for gold (2.33%) and silver (+3.38%) on Friday as there was also significant buying improvement the A/D line as well. This is now the first real sign of good news for the gold bugs as we're seeing the technical ingredients that are necessary from where we usually see significant intermediate term price bottoms in this asset class. However, with the downside price target of gold of around $985 still on the table as an objective, and with continued weakness being seen in the Junk Bond advance/decline line suggesting the liquidity flows are still contracting, let's continue to take a more neutral approach toward this area of investment for now as there is also historic evidence that we usually see price lows on a weekly, monthly and yearly time scale in the metals markets as we move closer towards the end of December and not the beginning.

So with Friday's expected reflex rally now out of the way, we can now turn our attention to next week as to what's setting up to be a disappointing one for the bulls unless they can come in early and generate solid plurality ratios on the buy side to thwart any further attempt by the sellers to paw prices lower. With this week's BETS coming in weaker with a -55, and the lack of vigor in the small caps on Friday's rebound, the rest of the month of December is likely to be a poor one to finish off the rest of the year. Because of this, let's continue to maintain a bearish bias towards equities for next week, while at the same time, continuing to watch the breadth MCO's in relation to their low points of mid November...with any break of the August MCO lows providing a bear market confirmation that would likely last for at least the first half of 2016.

Have a great trading week!

US Equity Markets:

[breadthspx120415]


[breadthdjia120415]

[breadthspec120415]

[breadthpre120415]

US Interest Rates:

[breadthtnx120415]

[breadthig120415]

[breadthjunk120415] 

US Real Estate:

[breadthreit120415]

Precious Metals:

[breadthpm120415]

[breadthxau120415]

Australia:

[breadthaus120415]

England:

[breadthftse120415]

France:

[breadthcac120415]

Germany:

[breadthdax120415]

India:

[breadthbse120415]

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