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Reply with quote  #1 
However, market forces currently remain highly volatile and chaotic, so we must continue to be on guard to further price decay in order for the market to provide more uniformed divergences between breadth and price from where a more solid foundational low can then be created.

Well, we pretty much got what was expected as the major market indices capped the week on Friday by trying to make up for all that was lost the previous 4 days. However, this late effort still wasn't enough at the closing bell and the markets wound up closing down by an average of 1.17% from last week's settlement, with money flow showing near term signs of a "lessening of selling pressure" from the levels that we saw in early January, with the lone exception of the utilities sector.

Looking over this week's array of charts and we see that global markets remained under intense selling pressure with many advance/decline lines moving to new yearly lows. In fact, not only did we see a break of the rising trendline in the NYSE Preferred advance/decline line that went back to August of last year, but over in India, the BSE advance/decline line saw a sharp break to the downside from its multi month advance as well. With India being the strong link in the global chain for these many months, the timing of this break might prove to be problematic for the emerging markets sector going forward as it would likely delay future intermediate to longer term buy signals from developing.

Over in the interest rate sensitive issues, both the NYSE Bond CEF and Investment Grade advance/decline lines continue to maintain their rising pattern structures of bottoms above bottoms as cumulative money flow maintains the idea that monetary policy will remain accomodative for, at least, the next several weeks. We also see this forecast of a weaker economic tone as both the NYSE REIT and Junk Bond advance/decline lines continue to maintain a pattern of lower lows in their structures. With interest rate sector continuing to suggest that business conditions will likely to remain soft though the 2nd quarter of this year, it's not likely that we'll see a tradable bottom in equities now until sometime in late March/early April.

The big winner again this week was in the precious metals complex as both the Precious Metals and XAU advance/decline lines moved sharply to the upside with the help of gold being up another 5.49% and the price of silver tacking on another good gain of 5.06%. With our being over extended momentum wise, and sentiment becoming a bit on the zealous side, one would think that next week might be a time to see a consolidation of the 10%+ gains that we have seen so far this month in the metals. However, given that it's been a long while since we've seen this kind of upside action in what is always an emotionally charged sector, we also can't rule out a quick trip to longer term overhead resistance at the January 2015 highs in the price of gold before we finally get this "pause to refresh" sequence under way. In any event, it wouldn't hurt to take some money off the table here, if for anything else, that prices have moved to far and too fast for it to be maintained on a short term basis.

So with the BETS slipping a bit lower this week to a -45 reading, along with some A/D lines showing bullish "trend" divergences with their McClellan Oscillators, the buyers do have some things to point to as being near term positives for a short term price bottom. However, with the Junk Bond advance/decline line still until enormous downside pressure, and global money center banks continuing to ease to negative levels of return, there still doesn't seem to be enough liquidity out there from where solid price bottom can be maintained....though it could be forced to do so by this same negative rate of return on investment capital. Because of this, let's keep our volatility seat belts on and maintain our defensive stance towards equities for another week and see, if in fact, this latest round of easing helps to stabilize things on the trading floor or not. 
Have a great trading week!

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